You've probably heard of Bitcoin. But have you ever thought about accepting it for rent payments?
This article is the first part of a series about using microcurrencies or cryptocurrencies like Bitcoin in the property management businesses. As use of Bitcoin and other digital currencies increases, the series will help property managers and landlords understand how they work and some advantages and disadvantages of using them.
Why even consider it? It could potentially help you appeal to a wider group of prospective landlords and tenants. Additionally, flexibility in payment method may increase the likelihood that you will receive payment for your services on time, especially if Bitcoin is popular among the landlords and tenants in your area. Here are some questions and answers to get you started.
- What is Bitcoin?
Bitcoin is a digital currency that can be traded for a number of other currencies, and is unregulated by any central authority. The Bitcoin trade and exchange processes are decentralized, with minimal transaction fees and transparent accounting standards.
- How is Bitcoin money created?
There are no formal regulation authorities for Bitcoin monetary exchanges. Bitcoin money is created through a mining process, where people use specialized Bitcoin mining hardware and software to verify Bitcoin transactions by others. The third-party verification helps ensure the security of the transactions. If the software verifies a group of transactions, called a block chain, that user gets a reward of new Bitcoins for their work. A more detailed explaination of the process is available at CNBC's website. In addition to mining, users can get the currency by accepting it as a form of payment for goods or services or by buying it on an exchange.
- What are the advantages of using Bitcoin in your property management business?
There are numerous advantages to using Bitcoin as an accepted payment method in your property management business, including the low transaction fees and the speed at which transactions take place. Transaction fees are typically less than 1 percent, and financial transfers between two parties usually occur within a very short period of time.
In addition, transactions are irreversible, which means that once Bitcoin money has been transferred from one address to another, the sender cannot cancel the transfer. Only the recipient of the funds can choose to refund the money to the original account from which it was sent. Bitcoin transfers also do not require the name or credit card numbers of the parties involved in the transaction. Although this comes with its own set of challenges for property management businesses, it also provides some privacy and information security for those involved in a Bitcoin transfer.
Before you decide to begin accepting payments in Bitcoin, you need to understand both the strengths and the challenges of using this type of electronic currency. You can find out more about the currency at bitcoin.org. And, in Part 2 of the series, we'll go over some of the drawbacks and disadvantages of using Bitcoin in property management.