Bitcoin In Luxury – Store Value Or Form Of Payment? Critics say it will take years before Bitcoin can be used to buy and sell goods, given its volatility and relative slow mass adoption. Moreover, some markets will adopt Bitcoin as a form of payment much faster than others. One of the markets that show growing interest in Bitcoin is the market for luxury goods. The latest ‘exchanges’ in the market of real estates reveal a keen interest in using digital currencies to transact luxury mansions.
A few months ago, a house in the trendy London district of Notting Hill went on sale for £17 million. The asking price did not raise any eyebrows among the wealthy investors since the six-storey stucco- fronted residence, near Portobello Road, is in a recognised upmarket area. What was surprising was that the owner asked to be paid in Bitcoin, a form of digital currency which is grabbing headlines all the world.
Bitcoin In Luxury – Growing Fast
It seems that the reason for the owner’s request lies in the potential Bitcoin has, as a form of long-term investment. At the time when the owner put his mansion on sale, he asked for 5,000 Bitcoins which were the equivalent of 17 million sterling pounds at the time. As of right now, the 5,000 Bitcoins received for the mansion clock over £35 million. To highlight further the value accrued by Bitcoin since its inception, in 2010 someone bought two pizzas for 10,000 Bitcoins. See if you can convert that in fiat without having a heart attack!
One of the earliest ‘Luxury-Bitcoin’ transactions was recorded in 2013, when a property developer asked $7.85 million to sell a luxury mansion in Las Vegas, insisting to receive payment in Bitcoin for the deal. At that time 1 Bitcoin was $100. Right now, based on that transaction the seller should have over $880 million, assuming he kept the Bitcoins.
Since then, the use of Bitcoin in luxury transactions has been on the rise. In January 2016, Auto Outlet Helsinki Oy sold a Tesla Model S P85+ for the equivalent of €140,000 in Bitcoin. Following the trend, the Finnish yacht rental company NAMI introduced Bitcoin as a form of payment for its goods and services in 2017. Dadiani & Partners, a London based art dealer began accepting Bitcoin and altcoins for purchases by launching – what the company calls – the UK’s first luxury cryptocurrency exchange, and more recently, a Manchester car owner has listed his Gold Rolls-Royce Ghost for sale on Autotrader, for the equivalent of £117,000 in Bitcoin.
Bitcoin In Luxury – Payment Or Investment?
The market of luxury properties – central London – has risen by 38% over the last 10 years. Diamonds are up in value by 5.5% over the past year, according to specialists Stanley Gibbons, and fine art has appreciated by an average of 7%, again, over the past year. On the other hand, Bitcoin’s value has increased more than tenfold in 2017 alone. For example, in January, 1 Bitcoin was $1,000 on Coinbase. By the end of April, 1 Bitcoin doubled its value rising currency investors’ attention who began flocking to buy the digital currency. And by the end of the year, 1 Bitcoin was trading at a staggering $19,000.
There are many advantages the digital currency has over the fiat money, such as total control over the amount of money that can be transacted at any given time, bypassing bank’s daily limits and accounts freezing by governments, banks or any other legally entitled third parties. Moreover, Bitcoin has almost zero transaction fees, instant transactions and a global reach but this is a debatable issue of BTC vs BCH and we’ll touch more on it later on.
Going back to the initial question, ‘Can Bitcoin be used to buy and sell luxury goods?’ we must first understand the reasons behind the rise of value in Bitcoin.
Bitcoin In Luxury – Sharing Scarcity Value
As national currencies are controlled by governments, these centralised forms of government are allowed to print money whenever they want. By doing so, the value of their currency can fall overnight, as it is the case in Venezuela. However, with Bitcoin, there’s no central bank or government to issue Bitcoins, no government control, no printed money, therefore no currency devaluation.
Moreover, given Bitcoin’s scarcity by design (there are only 21 million Bitcoins in circulation) the result is a global economy where no government can intervene, with the value of the given currency (Bitcoin) only going up as more users adopt and use it. If at this stage buying luxury with Bitcoin is the question, in less than five years – if the growth patterns continue – Bitcoin itself will become a ‘luxury’.
Bitcoin In Luxury – BCH or BTC?
Still, analysts insist that it will take years before Bitcoins can be used to buy and sell luxury goods such as mansions, jets, yachts, rare diamonds and unique luxury garments for two reasons:
- Bitcoin is pushed by its team of developers to become a form of a digital store of value (digital gold if you like) ignoring its potential value as a form of digital exchange. However, for that, there is a fork of Bitcoin called Bitcoin Cash or BCH, seen by many experts and government agencies* see as the original Bitcoin, just as intended by Satoshi Nakamoto, the creator of Bitcoin.
- Either version of Bitcoin that becomes more popular, be that BCH or BTC will have to be strictly regulated by government agencies or an international coalition, and also stabilise its volatility. Only then it could be used by retailers, investors, and in luxury transactions.
If interested to know more about the BCH vs BTC debate you can download the official document titled ‘Blockchain Technology Overview’ published by the National Institute of Standards and Technology under the US Department of Commerce* which claims that Bitcoin Cash is the real Bitcoin, from here.
We would love to hear your take on the BCH vs BTC debate and your Bitcoin prediction for the years to come.