Is Bitcoin Coming to Your Association?
Bitcoin has been steadily on the rise in recent years. What began as more of a niche currency has now made its way into everyday life for some people and industries. If you’re on the board of directors for an HOA or COA, you may have heard chatter about how crypto could be changing things for you very soon. Is Bitcoin coming to your association? Maybe! Let’s take a look at the current state of the industry.
What is Bitcoin?
Simply put, Bitcoin is a digital currency also known as a cryptocurrency. Bitcoin is supported by source code that uses complicated algorithms intended to stop anyone from duplicating or creating more Bitcoin units without proper authorization. The underlying principles behind this currency are based on the most groundbreaking engineering and mathematics, making the source code as close to unbreakable as it gets.
These digital “coins” are stored in the Cloud or on the owner’s computer hard drive. Bitcoin can be instantly passed from one party to another anywhere in the world. While Bitcoin is a secure way to make online payments, it’s not only useful for electronic transactions. It can also be an alternative to paper checks and credit card payments.
Bitcoin is not the only cryptocurrency, but it’s one of the oldest, most trusted, and most widely recognized. It’s been around for a little over a decade. No one knows who actually created the currency because they used an alias, Satoshi Nakamoto. Unlike other forms of currency, Bitcoin is not regulated by countries or banks.
Anonymity is one of the benefits of Bitcoin. The system was created to record Bitcoin transactions publicly using certain relevant data but not actually revealing the identity of the parties behind the transaction.
Bitcoins can also be represented by much smaller numbers. The smallest Bitcoin unit is 0.00000001 Bitcoin, and it’s known as the Satoshi after the inventor’s alias. Bitcoin does not have to stay Bitcoin. You can also exchange it for fiat currencies, including U.S. dollars or Euros at their respective exchange rates.
How is Bitcoin Being Used for Real Estate Transactions?
Bitcoin is frequently discussed in terms of investing. But now, it’s becoming a more commonplace currency for buying goods and services. Bitcoin is becoming way to fund real estate transactions, including some sellers requesting that their buyers must use only Bitcoin to fund the purchase.
It’s not just real estate purchases that are being financed by Bitcoin. It’s also rent. While not all landlords will accept cryptocurrency, some welcome it due to some of the benefits of the cryptocurrency. Alvic Property Management in New York became the first property management company to accept Bitcoin, not just for rent but also maintenance payments.
Bitcoin makes transactions fast and easy. It allows payments to be sent from buyer to seller anywhere in the world. So, if the buyer is in a different place than the seller, there doesn’t have to be any travel delays for them to make their payments. Typically, eChecks also take 24 to 48 hours to process. Depositing old-fashioned checks also takes time. Bitcoin is faster than both these options.
Bitcoin can also actually save the user time and money because there are no additional fees for processing the payment. For example, credit card fees can be steep, sometimes up to 30% of a transaction. If you want to opt out of paying the fee, you have to wait longer for the money to arrive. Bitcoin allows you to send or receive money quickly without paying the extra fee, saving you time and money and making this form of currency is incredibly versatile.
Some sellers are also seeing Bitcoin as a way to appeal to more buyers. This is especially true in areas like Miami that have a market saturated with luxury real estate. Sellers who accept Bitcoin should proudly advertise this to entice more buyers. The lack of regulations in place related to Bitcoin can also be a benefit of the currency.
Although a lack of regulation can be beneficial, it can also be problematic. For example, some people worry that using Bitcoin may make money laundering easier.
Because Bitcoin prices fluctuate frequently, some consider it to be a risky way to finance real estate. However, since Bitcoin can be quickly converted to cash, not everyone shares this fear. Keep in mind that exchanging Bitcoin for a fiat currency will cost you. The cut is usually less than 1% of the transaction, but this is still something to consider if you are wanting to convert your Bitcoin to cash.
How Bitcoin Payments May Be Used for HOA Assessment Charges
With Bitcoin becoming a more commonplace form of payment, it’s worth looking into for your association. After all, the benefits that are true of using Bitcoin in real estate transactions are still true when it comes to assessment fees. Your COA or HOA can collect money from members faster than the old-fashioned methods.
While smaller fees can be a pain to process with traditional methods of payment, they aren’t as problematic with Bitcoin. Since you don’t have to pay a processing fee, it’s easier to make Bitcoin payments of small amounts “worth it.” With Bitcoin, you also don’t have to worry about getting charged for non-sufficient funds.
Improve Your Assessment Fee Collection Process with Bitcoin and LM Funding
While using Bitcoin in this way is a fairly new concept, it’s still a good idea to make sure your association is ready to receive Bitcoin if necessary. If it’s not already something you’re doing, it’s worth bringing up in your next board meeting, especially if you’re having trouble with members not paying association assessment on time. Bitcoin gives them another way to pay, which can make things more convenient for them.
If you’re still looking for solutions to improve your process of collecting your members’ dues, you should look into using LM Funding. Our services help protect your association from the lengthy, expensive process of dealing with delinquent assessment fees. For more info, contact us today!