Could you buy your next home with crypto?

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The crypto market is heating up. Where and how investors can use their crypto to pay for things is becoming more and more common. In this Backstage Pass clip, recorded on November 15, Fool.com contributors Jason Hall, Toby Bordelon and Rachel Warren discuss the rise of cryptocurrency.

Jason Hall: Speaking of rising tide, mate, cryptocurrency. We need to cover a crypto topic here, and this one is really fun. Guess the New York real estate company, it wasn’t a real estate company that did it, but they’ve got a new build. It is a residential building, which has a lease on the ground floor. It’s in New York. They advertise it for $ 29 million in Bitcoin (BTC -5.11%). So here is the question. I saw this for the first time and sure enough all the alarm bells went off and I’m wondering, what’s going on?

Then I think about it and I’m like, OK, here’s the question. How important will crypto be to real estate transactions in the future? Is this a passing fad or is it just the natural progression? Tobias.

Toby Bordelon: I think it will prove to be very useful. Hope I can explain my thoughts here correctly or in a way that makes sense. I am very, very skeptical of current cryptocurrencies, including Bitcoin – perhaps especially Bitcoin. Well, I think there are some dog-based cryptos that I’m more skeptical of, but Bitcoin too. I can see the world where Bitcoin goes to zero, I honestly can. But I don’t think crypto, as an icon, is going anywhere. I don’t think blockchain technology is going anywhere.

I think when you think about real estate, all kinds of thoughts, but especially real estate, crypto makes sense. Blockchain makes sense, smart contracts, self-executing contracts on a blockchain make a lot of sense to track sales, record ownership. We’re doing it now with the county registers, but, oh man, that’s a mess. You have to research each one independently. They aren’t always related to each other, and it’s just a mishmash of how people behave in different encounters.

Hall: There are 500 people involved in every transaction.

Bordelon: Oh my God, okay, and different counties in the same state do things differently. What is that. There are so many things where I think crypto can step in and watch it really reform itself, that and make real estate transactions smoother, a lot more efficient, maybe we’ll finally get rid of escrow agents potentially. You can see it happening. I guess it will happen. I actually think it’s going to happen. When we think of crypto, something similar to what we think of now when we think of cryptocurrencies, probably becomes a default mechanism for trading at some point.

The default exchange mechanism and stores of value, I’m guessing this won’t be one of the most popular currencies we have right now. I think that’s how these things tend to go. If you had to say what your best guess is, it’s probably a crypto version of a modern fiat currency or more of the two, as you might call it a crypto version.

Hall: It’s a stable room, as they call them.

Bordelon: Exactly. I think that’s where we’re going to end up, at least in the short term. But I think it’s probably far too. I think my bottom line is that the crypto is here to stay. But I think the crypto world is going to evolve and change a lot along the way. I think it’s going to end up looking like something we’re not really thinking about right now. Yes, I think the technology is going to be here to stay and it is very useful.

Rachel Warren: It’s a really interesting story. The fact that crypto is used in real estate transactions. I think that is a testament to how quickly the technology is changing and how people recognize that it could be of great value in the years to come. I’m on Toby’s camp in the sense that I’m a little bit skeptical about cryptocurrency. I love to talk about it, I love to read about it. I am not currently invested in crypto.

But all that aside, I think it’s here to stay. I think from those digital currencies that were released there was a lot of hype around them. Some of these animal mascots [laughs]. It’s fun to talk about it, I don’t think they necessarily have a lot of resistance, but I think there are some that do.

I think Bitcoin is probably one of them. I think of the concept of digital currency and its value in the functioning of a functioning society today, where we live in this increasingly digital world. I think he’s here to stay. I think it’s going to become more of a trend where we see it becoming a way of doing these real estate deals and a lot of other kinds of deals as well.

But I think it will be a slow progression. I think there is still a lot of skepticism around crypto and I think it’s certainly healthy skepticism. I don’t think this is something that everyone would be comfortable with. But I think it’s also interesting that there are a lot of companies that are increasingly accepting Bitcoin to pay for things.

I liked a quick google search on this and it’s interesting. For example, on Overstock.com you can pay for furniture using Bitcoin. [laughs] I guess Domino’s Pizza. There is a way to order pizza using Bitcoin through a third party app I believe. I think some fast food restaurants are starting to allow you to pay in cryptocurrency.

Some event sites have accepted Bitcoin for transactions. Apparently I didn’t know because I book a lot of flights through Expedia, but you can use Bitcoin on Expedia. I think there are a lot of areas where these transactions are becoming more and more common. I think it will take a while, but then I look at this and maybe it goes faster than we think. What do you think?

Hall: As soon as I get past my first initial gut reaction, what is it and is it even legal? [laughs] Once I get past that, leave my old man lawn perspective and start thinking about it. I have really studied cryptocurrencies a lot over the past few months.

I own Bitcoin and I guarantee that in a year I will own a lot more Bitcoin and probably Ether than now and potentially other assets. I think that’s exactly, it’s like a manual use case. With Bitcoin, it has improved significantly. You get the Lightning Network which makes transactions faster and cheaper. You have stacks which are a way to create things like smart contracts using Bitcoin. Its blockchain network is not as advanced as the others. But it is catching up. I think this is increasingly going to be what we’re going to see as a valid and useful use case. The key though, is all of those things we talk about Toby today, it’s just about buying him with Bitcoin. It doesn’t solve any of those other issues.

You need to have a lot of regulatory catching up before crypto assets can start responding and fixing some of these issues with things that are heavily regulated like real estate transactions. But it’s a starting point and it’s definitely getting there. I think Bitcoin’s big use case right now and I think it’s going to stay that way is digital gold. I think just putting it bluntly and just saying the golden digital words, there I said it.

This is the use case of Bitcoin, because all over the world you have a growing cohort of people looking for digital store value. Hey guys, guess what? Gold has essentially been a digital store value for 15 years.

With confidence in gold and all those things you can buy in return. This is how most people buy gold. They don’t buy gold coins and bury them in the yard. Some people do, most don’t. They go on their broker and they buy the gold trust. This is what they do. This is the next iteration from that. I think that makes sense and that there will be enough technological innovations to keep following. That it’s going to have use cases, Toby.

Bordelon: I think so too. I mean there’s a lot of stuff now like, oh what would you buy with bitcoin? But are you really buying with Bitcoin? I mean, how much does this building cost? $ 49 million, is denominated in dollars.

Hall: Exactly. As long as we are naming things in something else, then that something else is real money.

Bordelon: That’s the trick. Yes. We are not there yet when it is still a separate system. It’s still against the US dollar.

Hall: Yeah. Absoutely.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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