In 2009, cryptocurrency was worth less than 1 American cent. It’s hard to zero-in on a price today as it is growing in value every single day literally, but try something over $6000 per coin.
It’s not surprising then that the UAE announced that 2018 would be the year of blockchain, an online ledge in which all paperless bids are recorded and linked in an impenetrable network.
Part of the the Smart Dubai initiative is to allow property ownership to change hands directly through blockchain.
But is the world at ease with that?
Crypto home buying on the rise
Mansion Global, a digital platform connecting real estate buyers, announced that the value of the digital currency has tripled from $2,000 per digital coin in mid-July 2017 to more than $5,600 per coin in September 2017.
“There are more luxury properties being purchased with Bitcoins and offered to buyers who want to make transactions using crypto currency in cities including Los Angeles, London and Miami. Developers are also getting in on the action, and notably accepting Bitcoins for new projects in New York and Dubai,” Mansion Global said.
Real estate middle men, such as brokers, banks or agents, will have no role to play in crypto transactions, as these will involve peer-to-peer operations in a digital open source format.
“The cost savings come not only from cutting out these third parties who need to be paid and can slow down the process, but also from reducing transaction fees to the 1 per cent required for Bitcoin transfers,” it said.
Is Bitcoin safe?
Cash is king. Today, this applies to crypto more than anything else, because in all likelihood, even if one party is buying or selling in crypto money, his counterpart is not. Ask anyone about a new technology and the first question on their minds would be: “Is it safe?”
Safety here is not just about the transaction but also about record keeping, which now depends on how governments accelerate their crypto platforms to keep up with land and ownership transfers and perform data entry for old records into the new system.
Could Bitcoin become a global payment method?
Hussein Sayed, Chief Market Strategist at FXTM, told AMEinfo that, as more firms and nations continue to adopt the relatively new currency, the chances of Bitcoin becoming a global payment method is increasing.
“However, it requires advanced countries to legitimize the cryptocurrency and this may take long time.”
Real UAE transactions
Dubai Land Department (DLD) has announced that the total value of real estate transactions for the first nine months of 2017 reached AED 204 billion ($55.5bn), achieved through 52,170 transactions.
According to the report, there was a total of 37,633 transactions for land, residential units and buildings, generating a value of more than AED 88 billion. There were also 11,699 mortgage transactions worth AED 102 billion and 2,838 other transactions worth AED 14 billion.
How many of these will now be performed via Bitcoin?
“It’s going to be a very volatile road in the next couple months and years, but I still believe there’s bright future for the Bitcoin. I believe that as soon as governments and regulators agree on a regulatory infrastructure, it will go a long way to stabilizing the currency,” Sayed said.
Bitcoin hard to ignore
Sayed told AMEinfo that “despite the many warnings from the likes of JP Morgan’s CEO Jamie Dimon, Nobel Prize Winner Robert Shiller, and former Fed Chair Ben Bernanke, the cryptocurrency continues to outperform all asset classes,” he said.
“Bitcoin recently broke another key psychological level of $6,000 to post a new high of $6,180. There’s no doubt that it has become the most crowded trade in 2017 and the risks of jumping into the trade now are very high with patterns showing an $8,000 target for bulls and all investors should be aware of the risks around investing in an asset, that could quite possible swing in either direction by 5 +/- per cent in a day.”
He said that many investors wanted to be a part of a new monetary system and that Bitcoins were now acknowledged as a medium of exchange.
“In a recent announcement from the UAE-based Knox Group of companies, they too are willing to accept the digital currency as payment for a residential and commercial property development in Dubai that they are launching. There are also talks of Bitcoin ETF’s and close-ended funds to be launched in the near future, which is also helping drive more inflows from investors,” he told AMEinfo.
CNBC announced in September 2017 that a $325 million luxury development, called the Aston Plaza, has been launched in Dubai by British entrepreneurs Michelle Mone and Chariman of Knox Group of companies Doug Barrowman, “who don’t mind selling using virtual currency.”
Barrowman is the chairman of the Knox Group of companies.