Friday, March 23, 2018

The Nonsense of a House Being Sold for Bitcoin

An EPJ reader sends a link along to this story: NYC Apartments Sold For Bitcoin, Report Says.

Patch reports:
New York City real estate has reached a new frontier: Cryptocurrency. Developer Ben Shaoul of Magnum Real Estate Group has entered a contract to sell two Upper East Side apartments for Bitcoin, according to reports.
The two apartments being sold for Bitcoin are located in Magnum Real Estate's condo conversion at 389 E. 89th St, located between First and Second avenues, the New York Post first reported. The sale is believed to be the first time Bitcoin is being accepted in exchange for real estate in New York city, according to the report.

"It wasn't easy, but we are doing it," Shaoul said.

The transaction will go through a third-party business called BitPay, which will receive the Bitcoin payment and then pay the cash equivalent to Shaoul, the Post reported.
Look, this is a gimmick. The apartments undoubtedly were not priced in Bitcoin. That is the seller had a dollar ask price for the apartments that he was willing to accept in Bitcoin which he immediately flipped into dollars. It's a silly transaction to go through the extra step.

Actually selling apartments in terms of Bitcoin would go this way: I am selling my apartment for x number of Bitcoin.

If this was the case, it would mean that if the seller set terms in December 2017 when Bitcoin hit its all time high of $19,000 plus, the apartments in dollar terms would be now selling for 60% less in terms of dollars. No seller is going to take a 60% discount in dollar terms, he is going to ask for more Bitcoin. The Bitcoin part of the transaction is an extra step for nothing. The sales were ultimately dollar based.

-Robert Wenzel 

1 comment:

  1. Plus, the Bitcoin owner is probably going to owe capital gains tax on the difference between his actual cost for purchasing a particular Bitcoin and the apportioned fraction of the house purchased with it.