Calling all Bitcoin buyers: £5.3 million plot on a Caribbean island will only be marketed in cryptocurrency
One week ago the Bitcoin value passed £7,400 for the first time ($10,000). This week it reached a record high of £12,600 ($17,000) in the frenzy to buy the digital currency.
As a result, an investor who had just 600 Bitcoins worth £440,000 at the start of 2017 would have been able to afford to buy the £5.3-million parcel of land earlier this week.
What is Bitcoin?
Bitcoin was the first major digital payment system, or cryptocurrency, when it was created in 2009 by a still unidentified inventor who uses the pseudonym Satoshi Nakamoto.
It has been described as a “peer to peer electronic cash system” that, unlike a physical currency, is independent of any government or central bank.
It is essentially just a piece of code. Bitcoins are bought at an online "exchange", where you can swap real-world currencies (like Sterling) for virtual currencies.
This allows you to move money without being traced, because all transactions are anonymous.
Bitcoin investors buy into this virtual currency with a perception that it will gain value over time as it becomes more widely used.
The protocols behind Bitcoin limit its circulation to a maximum of 21 million. They can be used to buy other currencies and increasingly, products and services, or held as an investment.
BITCOIN PROPERTY BOOM
The land on Union Island is one of the growing number of high-value assets to be up for sale in the virtual currency.
The Aston Plaza & Residences at Dubai Science Park was one of the first major developments to offer flats for sale valued in Bitcoin, hitting the headlines in September this year.
Apartments at the £190 million development have a starting price of 30 Bitcoin (BTC) - or £100,000 - and were launched by British entrepreneurs Michelle Mone, who founded lingerie brand Ultimo, and her venture capitalist partner Doug Barrowman.
They both believe it is a currency of the future and that using Bitcoin to purchase property is the next step for BTC investors who have already made significant gains.
Chief economist at Colliers International, Walter Boettcher, says his clients are unlikely to be comfortable buying and selling property in BTC until the currency stabilises.
But he says: “Don’t write it off just yet, once the first large scale deal is complete the floodgates will open.”
A £17 million six-storey mansion in London's Notting Hill was also put on the market in Bitcoins in October.
It has already received two offers and the sale is currently going through the legal process, where tax issues such as stamp duty will need to be worked out.
The sale is expected to be completed within the next month - if so, it will be the first property in the capital to be sold in the cryptocurrency.
However, head of research at Cluttons, Faisal Durrani, warns that developers should be wary of jumping on the bandwagon and using BTC to boost sales.
He says: "Bitcoin has emerged from obscurity this year, but it is really tiny part of the investment universe. Two-thirds of the cryptocurrencies were created in 2017."
The major appeal of selling in cryptocurrencies is that it makes property available to a global audience who can buy online.
"But the market is volatile so there's significant risk involved, within hours the Bitcoin value may halve," Durrani says.
The digital currency also has a distinct lack of transparency, with buyers and sellers able to operate anonymously, which has led to accusations of tax evasion and money laundering.
As such, the UK Treasury announced plans to regulate cryptocurrencies forcing traders to reveal their identities and report suspicious activity by the end of this year or early in 2018.
While investment in BTC, and other digital currencies, is becoming more popular, many financiers warn that the bubble could soon burst, especially once the imminent EU-wide regulation comes into force.
Interested buyers of the land on Union Island should enter their details at www.bloodybaybeach.com