Will Bitcoin eventually be the ruling currency of the world? How will this change affect mortgage and lending? What is the status of this electronic currency and how can we prepare for it?
These are just some of the questions that we all want to know considering that it is really gaining progress and ground. As of February 2015, there are more than 100,000 merchants and vendors worldwide who are already accepting bitcoin as a form of payment. There are also around 2.9 to 5.8 million unique users of cryptocurrency, majority of them bitcoin users.
What is bitcoin?
Satoshi Nakamoto invented this cryptocurrency and digital payment systems. It’s first release was as an open source software in 2009. Usual transactions of the currency is from peer-to-peer and transactions take place directly without any need for an intermediary.
Network nodes verifies transactions using this currency. All transactions using the currency will be recorded in a publicly distributed ledger named as blockchain. The system limits currency circulation to just around one million bitcoins exactly. Absence of actual central location compared to government currencies is the main consideration for the limitation.
Bitcoin Effects on Home Mortgage and Lending
A Las Vegas property had recently been sold using Bitcoin, a whooping U$7.85 million. In Canada, there had been a handful of property listings using the currency.
In a recent development a startup company called Coinshark.io wants to encourage people to pay your mortgage using Bitcoin. It is a relatively new venture in which they will only accept mortgage payments in bitcoins.
The absence of bitcoin-based banks prevents the currency from being officially used, thus mortgage loans remains in dollars. Risks in using bitcoin are still high as well since there is still an absence of actual government regulation. Actual value for money payment remains not guaranteed.
If ever this becomes a norm for the mortgage and lending industry it could empower the consumer and create a whole new process It could remove the need for third-party escrow and title companies since transactions will already be in public record plus promote transparency and lessen fraud.
Another risk would be the fact that transactions might not involve any ledger since it will utilize public record system. Without this system there might be a risk on reliability.
What is important today?
Before we over think about how bitcoin can affect lending and mortgage, the most important goal today is how to improve transactions and create partnerships which benefits both the consumers and the originators. Home Mortgage Alliance Corporation (HMAC) offers such a partnership that prepares you for the future of the industry.
For more information on our products and services please contact us or call 800-900-7040.
Reference: Bitcoin Website