A buyer who purchased a house using bitcoin got a 25% windfall, thanks to this month’s jump in the bitcoin price between when the contract was signed and when the transaction took place.
Sonny Singh, chief commercial officer at BitPay, shared the story in a recent Bloomberg Markets interview (MP3) with hosts Cory Johnson and Carol Massar. He said a real estate developer approached BitPay because a home buyer wanted to buy a house with bitcoin. The real estate developer wanted help in facilitating the transaction. “We’ve actually helped facilitate several bitcoin transactions for persons with houses in the last couple years,” Singh said. “We walked him (the developer) through how it worked, and the process.”
The buyer paid around $4 million for the Los Angeles County, California home. Bitcoin’s price was $750 at the time of the signing, Singh said. When the transaction took place, the price had jumped to $1,000, delivering a 25 percent profit to the purchaser. This translated to around $1 million.
With the extra money, the buyer bought a Lamborghini from a car dealer that also accepted bitcoin, Singh said. “He got a house 25 percent cheaper as well as a free Lamborghini essentially,” he said.
While this offers an example of a wealthy person profiting from the cryptocurrency, Singh said the benefits are not restricted to the wealthy. After hearing the story about the wealthy home buyer, Massar asked Singh if bitcoin will be a currency only for wealthy people.
“Bitcoin is actually working, and it’s working for the regular people all over the world,” Singh said. Most people using bitcoin outside of America are not wealthy, he said.
In Asia, many people are using bitcoin as a more economical remittance option than other money exchange services. “It’s cheaper and quicker than international wire,” Singh said. “Internationally, it’s being used quite predominantly (for remittances).”
He said bitcoin has become more widely used in India after Massar pointed out that India’s prime minister recently announced the removal of high denomination bank notes. “It’s moved up quite dramatically since this big announcement happened a couple months ago,” Singh said.
“In these countries, you don’t trust your own currency or your own government as much as you do in America, and so you look for hedging tools such as bitcoin as a way to move your money to that, that you can then control yourself and be your own bank essentially,” Singh said.
Singh said bitcoin’s fundamentals are great despite price volatility. He said the volatility has decreased as transactions have increased significantly.
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