Robert Demeter 
Unless you’ve been living under a rock for the past year, chances are you might have heard of Bitcoin or came across the term ‘cryptocurrency’ at some point. Unregulated by banks, these encrypted digital currencies managed to penetrate almost every market in 2017, including real estate. Despite transactions being considered safe, the crypto market in general is categorized as highly risky, due to massively fluctuating currency values. Nonetheless, it continues to entice both investors and industries.
Designed to serve as an electronic form of payment, cryptocurrency is mined (created) using mining rigs—essentially computers with a high number of GPU’s (graphics processing units)—which are connected to a blockchain (a digital ledger). Out of more than a thousand crypto coins, one sticks out the most.
Launched back in 2009 and used by a niche audience for quite some time, Bitcoin’s popularity gradually rose throughout the years, and exploded in 2017 as high-profile businesses adopted it as a payment option and a few governments completely banned it. Mainstream media coverage and pop culture references also facilitated its unprecedented growth.
Real Estate: One of The Many “Links” of the Blockchain
Listings accepting Bitcoin as payment started to pop up, with Florida and California seeing a fair share of transactions. After news broke in March that two NYC condos at 389 East 89th Street were about to trade exclusively for Bitcoin, we wanted to determine if Bitcoin payment in real estate would actually be sustainable, given the currency’s abnormal fluctuations.
We picked a $45 million luxury condo sold in April 2017 and calculated its monthly price tag in Bitcoin for each month, from the time of the sale until March 2018. The results were impressive.
Formerly owned by Demi Moore, the apartment is located in the iconic San Remo building, and, if it had sold in Bitcoin last year, it could’ve fetched roughly 37,000 BTC, as 1 digital coin in April 2017 amounted to $1,206. Fast forward to May, Bitcoin’s value increased to $1,895, which means the condo’s price would’ve gone down to 24,000 BTC—13,000 BTC less in just one month.
Bitcoin kept its upward trend throughout June 2017, and decreased a mere 4% in July, keeping the condo’s price hovering at 17,000 BTC. In August and September, you would’ve only needed about 11,000 Bitcoins to buy the 14-room residence, and by October, close to 8,000 BTC.
It wasn’t until the end of November that the digital currency started heavily surging. At this point, the property could’ve been purchased for only 6,000 BTC, and with the historical spike that occurred in December, it could have traded for under 3,000 BTC. At the currency’s peak point in December 2017 (1 BTC = $17,000), the condo’s price tag would’ve been around 2,700 Bitcoins.
Bitcoin’s value started contracting through January and February 2018, and by March, the apartment’s price would’ve been about 4,800 BTC. In hindsight, the amount of Bitcoin that was needed to buy a $45 million condo in April 2017 could have landed you 13 condos by the end of the year.
Back in 2017, some crypto investors undoubtedly knew where the market was headed, and that Bitcoin was poised to grow, but nobody would have guessed it would blow up the way that it did. Looking at the data, selling an apartment using Bitcoin would’ve made sense in early 2017, but at the time, the market was uncertain—as it is now.
Trading in cryptocurrency requires in-depth knowledge of the business, not just speculation or luck. It’s safe to say that the technology is here to stay, although there’s a long road ahead for improvements.
Methodology:
The 12-month Bitcoin data set was extracted from coinmarketcap.com. We used the “Close” column values to calculate the average value of Bitcoin for each month, from April 2017 to March 2018.
