The world has really changed in just a couple of decades. It's easy to forget what life was like before the internet was literally in every pocket and in every home, but Gen Xers and boomers who were there can tell you that the whole world seemed to flip almost overnight.
The same is happening again with the advent of blockchain technology, cryptocurrencies, and non-fungible tokens (NFTs). Bitcoin (BTC 0.19%) was once a wild experiment, and no one could have guessed if it would succeed or flop, with an early valuation of about $100 per coin. Today, Bitcoin has a market cap of almost $800 billion, with each coin valued at about $41,000.
To say a lot has changed and is still changing in the world of blockchain and cryptocurrency is an understatement.
Buying houses with Bitcoin
Intrepid real estate buyers and investors have been experimenting with using crypto coins for real estate purchases since at least as early as 2017, when Austin, Texas, based Kuper Sotheby's International Realty closed its first deal using Bitcoin. In this early transaction, the Bitcoin was converted into U.S. dollars as part of the deal, but as time has gone by, more and more real estate contracts are being agreed upon using values in various cryptocurrencies, with the option to not convert to dollars.
Several third-party companies exist that can help mediate a transaction only using crypto, be it Bitcoin, Ethereum, DogeCoin (DOGE 0.06%), or something else. When properties are purchased using unconverted cryptocurrency, it can be a bit of a gamble for both buyer and seller, but one that has paid off in the past.
A lot in Providence, Rhode Island, for example, was listed for sale in early 2021 for 160,000 Dogecoin, which was about $50,000 at the time of the listing. By the time a buyer was found, however, the price of Dogecoin was way up, resulting in the lot selling for the equivalent of a whopping $116,000.
For parties that understand the nature of cryptocurrency, a transaction like this could end up being a win-win. The buyer is still giving the same number of coins, but the seller gets more money than they expected. It's an interesting chance to take, to be sure, because it could also easily go the other way; Dogecoin has plunged since then and is worth about $0.15 per coin, so those 160,000 coins are worth only $24,000.
Will Gen Z embrace the blockchain?
The real question, then, isn't will they or won't they, since clearly people are starting to use Bitcoin and other cryptocurrencies to purchase real estate, but whether Gen Z -- those between 9 and 24 years old -- will take it a step further and demand that their transactions take place using modern blockchain technology. It's not enough to simply buy or sell using crypto; what we've seen so far are mostly novelty purchases, in which the coin is used and then converted to dollars.
What's really needed is more blockchain involvement in the routine aspects of real estate transactions. Otherwise, the question might as well be "Will Gen Z buy their homes using nickels or Canadian loonies?" By integrating more blockchain processes into the real estate world, Gen Z could solve a lot of problems we now battle.
Need to verify the buyer's funds? No problem, there's a record in the blockchain. How about title searches? A few clicks and we're good to go. Deed recording can be done just as quickly and with as much confidence. Smart contracts that execute all of this automatically could reduce the amount of time that it takes to go through all of these steps, making it easier on bankers, closing companies, and county recorders.
Gen Zers are already much more familiar with these kinds of technologies than we may realize, especially considering that they're spending increasing amounts of time in metaverses built on systems that work because of blockchains. Almost certainly, they'll find better ways to implement the technology -- and they won't be abandoning it any time soon.
So, in short, yes, Gen Z won't be shy about using crypto -- including Bitcoin -- to make big purchases. I think they'll go a step further and make crypto part of a bigger change in real estate technology that will create much-needed efficiency in areas where cumbersome, manual processes have long been the norm.