The digital coin has exploded in demand and value, encouraging investors looking to diversify their portfolio to take the plunge. Examining Bitcoin’s (BTC) trading history roughly speaking, in 2018 1.00 BTC could buy 16,721.00€. In January 2022, 1.00 BTC can buy 36,999.00€, a 45% growth in value in 5 years.

What is Cryptocurrency?

Introduced in 2009, pseudonymous developer Satoshi Nakamoto, created a digital currency protected by cryptography, a secure code, which aids in preventing counterfeit or double-spending.

One of the unique characteristics of these digital currencies, would be that they would not normally be issued by any centralised authority, hindering any possibilities of these being interfered with or manipulated by governments.

Using Cryptocurrency to invest in the Real Estate Market

Predicted to change industries such as banking, tourism, food and retail, experts are now highlighting its future influence in the real estate sector. Worldwide business partners like Microsoft, Amazon, Starbucks and Paypal have already started accepting payment in different digital currencies and experts advise that perhaps in 10 years, real estate will assimilate similarly.

As stated in Sotheby’s International Realty report, the international real estate boom, post-lockdown, was and is being facilitated as a result of low interest rates and record-high levels of inflations. According to Sotheby’s, the interest to buy property with cryptocurrency was fulled by the growing trend to work and live remotely.

According to a recent communication, Ryan Serhant, Million Dollar Listing New York star, stated that “cryptocurrency has created the largest wealth transfer of our lifetime”. In the past three years, where the first real estate cryptocurrency transactions were completed, those buyers would either use digital coin profits for property purchase or transact in crypto, “wallet-to-wallet”. Serhant predicts “a world very soon in which 50% of all real estate transactions are done with crypto”.

Could this be true? Well, perhaps for big worldwide financial hubs such as London, New York, Singapore, Tokyo. However in 2021, one of the most expensive cryptocurrency real estate transaction was purchased in Miami, sold for $22.5 million. Miami, might not be a financial hub but it is indeed a desired destination for remote work and living, which could reflect on location’s closer to nature such as the Algarve, specifically Quinta do Lago and Vale do Lobo.

What Are The Risks?

As with any investment, risks are somewhat unpredictable, nonetheless it is dependant on the type of venture. As for the emerging digital coin, four main risks are highlighted;

  1. Volatility - As seen in the close of 2021, huge price swings were noted and these have become part of the cryptocurrency landscape since its very beginning.
  2. Storage - When buying cryptocurrency, it will usually be stored in your digital wallet, using a private key, in its nature very long, alongside a 12 word phrase. All which needs to be entered to access the wallet and make or receive transfers. Meaning that the process is at the mercy of human error, which is no small feat.
  3. Security - Using mobile or desktop apps to manage your digital wallet is dependant on a constant and reliable connection to the internet, one which is 100% safe against any hacker activity.
  4. Regulation - As with some technological, specifically digital innovations nowadays, cryptocurrency is largely unregulated and decentralised in most countries and this could be its biggest challenge.

Buying Property In The Algarve With Cryptocurrency?

In a constantly evolving world and industry, one must always understand and be able to follow the latest trends and their client’s interests. That is what we aim to do here at ONE Select Properties. Given our local experience and contact with our clients we understand this could be an innovation to adopt in a decade’s time. It is very dependant on client’s perception, the agent and lawyer’s understanding of its functioning, but most importantly how Portuguese legislation will accompany it.

“Get in contact with ONE Select Properties, if you wish to discuss your Algarve property investments”

+351 289 143 940 | +351 919 514 687