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Editorial
Imaginary money now accepted for real real estate
Wednesday, July 25, 2018
Say “money” and an image of that silver coin rattling in your pocket or that green bill folded in your wallet comes to mind.
When it comes down to it, however, money is anything two people, the buyer and seller, agree it is.
The Pacific islanders who use huge, round stones with holes drilled in the middle come to mind.
This is the 21st century, however, and a slicker alternative is gaining acceptance — cryptocurrency such as bitcoin.
Pay for something in bitcoin, and a chunk of data will be transferred from you to the seller. Both you and the seller have anonymous addresses, but the transaction is recorded on a network of hundreds of computers, so that no hacker can hope to manipulate or destroy all records of it.
Called blockchain technology, the system rewards “miners” who maintain the computers by occasionally spitting out a bitcoin.
The system naturally makes governments nervous, since they have no control over it and it is difficult to tax and prone to use in transactions in illegal activities such as drugs and child pornography.
There was also a major scandal and millions lost through an early bitcoin exchange in Japan, Mt. Gox. Numerous other cryptocurrencies have been created since then, but bitcoin remains the dominant form.
The IRS treats bitcoin as property, and expects your accountant to calculate capital gains on every transaction.
Bugs are still being ironed out, but a bitcoin, worth upwards of $8,000 today, is being accepted in more and more places — fractional amounts to pay for your coffee or haircut, of course.
Home sales in Texas and Delaware were recently in the news, since the sellers accepted bitcoin — all without going through a bank.
It’s a little disconcerting to think that we might be selling a home for nothing more than a series of ones and zeros — but in truth, how much cash do most of us really handle these days? We’re already exchanging ones and zeros as a thing of value today, except we’re calling them “dollars” instead of “bitcoin.”