Sequoian Investments, a San Diego real estate lender specializing in private money financing, will now accept Bitcoins from borrowers for monthly payments on their real estate investments in an example of how the cyptocurrency may be used as an investment tool.

Unlike everyday commercial activity, real estate transactions involve delays and fees; the sort of roadblocks where paying in Bitcoins is a natural advantage. For businesses, benefits lie in reduced transaction fees and guaranteed funds; for consumers the benefits are primarily savings on cross-border remittance fees and wire transfer fees. However without any significant consumer incentives, and considering there are more risks than benefits to holding Bitcoins, adoption will not dramatically increasing until the cryptocurrency stabilizes and provides some consumer protection.

“The marker that Bitcoin is gaining traction isn’t with how many businesses are accepting Bitcoin, but with how many consumers are abandoning traditional banking methods for the digital currency,” said Nathalie Reinelt, analyst with Aite Group.

“Bitcoin is definitely unstable, but the risk is almost entirely held by the consumers.

“Accepting Bitcoin is a simple process, provided that recipients immediately convert the funds to fiat currency upon acceptance. Holding Bitcoin, as many of these consumers are doing, is where the real risk lies, because the currency is constantly fluctuating in value and there is no protection if their Bitcoin wallets are compromised.”

Attaining tangibles intangibly
Sequoian Investments will accept Bitcoin from borrowers for monthly payments on their real estate investments, meaning those individuals can now finance their investment projects to bypass traditional bank and third party processes and associated fees.

Sequoian chose to extend customers the option to pay with Bitcoin for several key reasons. For one, it offers investors a unique opportunity to convert their Bitcoins into payments for tangible hard assets.

While Bitcoin has seen an increasing use for real world purchases, Sequoian is one of a select few companies allowing consumers to enter the market of real estate investments by utilizing their Bitcoins. Additionally, Bitcoins are uniquely suited for this type of transaction, providing nearly instantaneous transactions from anywhere around the world with no risk of fraud.

Overall, Bitcoin will allow Sequoian investors the opportunity to finance their investments with greater speed, convenience and security.

Peer-to-peer
Bitcoins are a digital currency that are exchanged directly peer-to-peer and stored via a wallet software on one’s personal computer, mobile device or other customized wallet system.

Additionally, bitcoins can be exchanged for currencies such as the U.S. dollar through online Bitcoin exchanges and payment processing systems. Bitcoins are fully open sourced and decentralized, with regulation coming from heavily peer-reviewed cryptographic algorithms and are generated through a mining process, where powerful super computers solve complex equations to unlock Bitcoins from the predetermined finite supply.

While bitcoins are one of the first purely electronic currency, they are increasingly being used to purchase very tangible real world goods.

Euro Pacific Precious Metals recently began accepting Bitcoin to complete large transactions on a regular basis and chose to accept bitcoin to maximize profit while keeping their premiums low.

Earlier this year Facebook connivers Cameron and Tyler Winklevoss purchased two tickets to space with bitcoin aboard Richard Branson’s space tourism company Virgin Galactic, which began accepting bitcoin for tickets back in November.

Similarly, a California-based Lamborghini dealership transacted its first Bitcoin purchase within the same month. The luxury sports car dealership decided to accept bitcoin to cut their transaction costs, as most models average $200,000. Cutting costs by 2 percent can in turn save thousands.

As Bitcoin becomes viable for real estate purchases, there may be a peak in interest to avoid fees and cut costs. Kansas realty firm Tim Hoelting Homes has had success using Bitcoin to build a custom home for over one thousand Bitcoin. One bitcoin currently equates to $ 626.06. The company saved thousands and completed the payment with only a 1 percent transaction fee.

“I don’t think it is overtly significant,” Ms. Reinelt said.

“Right now we are seeing businesses from varying industries sign up to accept Bitcoin because firms like Coinbase make it easy to integrate the cryptocurrency.

“With the ability to immediately convert Bitcoin to USD, there is no real risk to Sequoian Investments bottom line, and perhaps they will see a slight increase from Bitcoin enthusiasts and Bitcoin investors,” she said.

Final Take
Michelle is editorial assistant on Mobile Commerce Daily, New York