A London property developer has reportedly become the first landlord in England to accept payments in the form of virtual currency Bitcoin.
The Collective, which provides co-living developments similar to student halls that offer wifi and on-site facilities such as gyms, has said it will accept holding deposits in Bitcoin.
The standard deposit at the development is £500, which would be 0.150824BTC.
It will also let tenants pay rent using the digital currency from this autumn, arguing there is a lot of demand from international students who don’t want to pay the high fees banks charge for international transfers.
There are already lettings agents accepting Bitcoins as a holding deposit. Umega Lettings in Scotland launched this service in 2013 and charges 0.075229BTC or £250.
Bitcoin is a decentralised virtual currency or cryptocurrency that has emerged in recent years. They are created or “mined” using a complicated code devised by mysterious founder Satoshi Nakomoto.
Proponents of the currency argue it is safer than traditional or fiat money as it can’t be interfered with by Governments or banks. Transactions are instant, don’t require a payment system such as VISA or MasterCard and can be tracked using each coin’s unique code on a central ledger known as the blockchain.
It works based on supply and demand but can be extremely volatile and subject to wild swings if regulators restrict its use or a platform fails. It has been particularly popular in China when limits have been placed on how much local currency can leave the country.
The value of one Bitcoin is now at close to $5,000 but this could quickly change if a Government were to ban the currency or if a new and better currency, of which there are many, replaced it.
So while using Bitcoin may make it easier for an overseas tenant to pay by limiting exchange rate fees, the letting agent would need to consider converting the money into proper currency to ensure they don’t actually end up with less.
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