After seeing explosive growth over the last few years, the use of cryptocurrencies to pay for real estate has practically come to a standstill in the aftermath of a precipitous decline in the value of digital assets.
Indeed, over the last five years, worldwide cryptocurrency payments for residential and commercial real estate have increased from almost nothing to about $100 million, according to Kashif Ansari, co-founder and group CEO of property technology firm Juwai IQI noted in a South China Morning Post report.
As per Ansari, last year the use of Bitcoin and crypto to pay for real estate anywhere in the world was still in its relative infancy, and it is now on hold again as a result of the crisis.
“The use of digital coins to pay for real estate globally has all but evaporated after strong growth in recent years, say property analysts” the SCMP report noted.
In particular, Ansari characterized cryptocurrencies as “just a marketing and sales tool” for real estate developers. When a buyer pays for a property using a digital asset, the developer will almost always instantly convert that amount to a fiat currency such as the US dollar.
A complete drop in the number of people paying with crypto
Elsewhere, U.S. property broker Ryan Serhant, founder of the agency Serhant, which carried out around a dozen deals using crypto last year:
“We have seen a complete drop in the number of people using cryptocurrency to purchase real estate. No one is selling their cryptocurrency right now and taking losses so that they can buy real estate.”
The market for cryptocurrencies, just like the stock market, has seen a significant decline this year. For instance, in the last six months, the value of Bitcoin, the most widely used digital currency, has decreased by 60%, briefly reaching a low of $18,000 in June.
Bitcoin is the most popular to crypto to buy property
Indeed, last year, the cryptocurrency that was used most often for the purchase of properties was Bitcoin. Autumn was the busiest time for Serhant, when Bitcoin’s prices ranged between $50,000 and $69,000.
The majority of it was spent on purchasing luxury apartments and houses in New York and Florida measuring between 1,000 and 2,000 square feet and costing somewhere in the range of $3 million
145 Central Park North, a property in New York City, was one of the developments that allowed payments in digital currency. According to Serhant, one of the inventors of the digital token Ethereum purchased a flat in the high-end building for a price of three million United States dollars.
Finally, the level of interest has been highest in countries and regions such as South America and South Africa, both of which have weak local currencies and a lack of regulatory safeguards to protect investments.