It’s not unusual for a Lake Tahoe-area property to sell for $1.6 million. Except when the transaction is made in bitcoins, the virtual – and controversial – online currency.
That’s what happened last week when an unidentified Silicon Valley resident purchased a 1.4-acre home site in the upscale Martis Camp development, a gated community between Truckee and Lake Tahoe.
The bitcoin-to-dollars transaction was a first for the development company. Martis Camp sales director Brian Hull admits he was a little concerned about the transaction.
“We didn’t know much about (Bitcoin).” But using an exchange company, Atlanta-based BitPay, to facilitate the transaction, it became much like any other real estate transaction – only faster, Hull said.
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“We actually closed in the quickest time frame that we’ve ever closed on a developer lot transaction.”
The sale of the property closed Aug. 6 and is believed to be one of the largest real estate transactions using Bitcoin, the online currency that’s been around only since 2009.
But it’s not the only large-scale Bitcoin transaction that has happened in California. Last December, luxury car dealer Lamborghini Newport Beach, also a BitPay client, sold a Tesla Model S electric car for 91.4 bitcoins, or approximately $103,000.
Bitcoin exists as an online currency system in which people track, store and send payments using the Internet. No banks, credit card companies or financial institutions are involved; transactions usually require both parties to have a “virtual wallet” from sites like bitcoin.org.
Although far from mainstream, Bitcoin has become an accepted form of payment by a few Sacramento-area retailers and businesses, including travel agency Travel Pangea, dumpster rental company Advance Disposal Inc., and laser eye center NVision Sacramento.
In January, the Sacramento Kings announced Bitcoin would be accepted at the team store in Sleep Train Arena and for online ticket sales.
Bitcoin is not without risks. On Monday, the federal Consumer Financial Protection Bureau warned the public that the unregulated currency is vulnerable to fluctuating rates, potential scams and hackers, with little or no consumer protection. The bureau also announced that consumers can file Bitcoin-related complaints on its website, at www.consumerfinance.gov.
Bitcoin’s volatility was vividly demonstrated by the abrupt closure in February of Tokyo-based Bitcoin exchange company Mt. Gox, which lost almost $500 million worth of bitcoins due to technical problems. Many of the company’s customers have yet to recover the money they invested with Mt. Gox.
Those risks did not deter the Martis Camp property buyer who, according to Hull, “sounds like he has pretty significant Bitcoin holdings. He was very intrigued by converting his Bitcoin asset into a Martis Camp hard asset for his family to enjoy.”
Hull’s initial skepticism about Bitcoin gave way to “full confidence in using BitPay. And the transaction … it all went really smooth.”
BitPay guarantees the value of all bitcoins in its transactions, company spokeswoman Jan Jahosky said.
“Once the invoice is generated, and the buyer pays $1 worth of bitcoin, we pay the merchant $1. So it’s guaranteed,” she said.
With a basic membership plan, BitPay merchants don’t pay any monthly or transaction fees. BitPay makes its profit from its paid plans, which cost $30 a month and up and offer extra benefits such as customer support by phone and integration with Quickbooks accounting systems.
A rival company, San Francisco-based Coinbase, charges a 1 percent fee to merchants in order to receive payment in U.S. dollars, although the fee is waived for the first $1 million of a merchant’s transactions.
BitPay allows its clients to set the price of their transactions and they can receive payment in the form of dollars, bitcoins, or a mix of both.
Martis Camp officials chose to receive payment in dollars only.
“The beauty of the transaction is that we ... never actually handled the bitcoin. We sent an invoice in U.S. dollars to BitPay, and they converted the buyer’s bitcoin into cash, which was then sent to us,” Hull said.
On the buyer’s end, once BitPay submitted an invoice using the current Bitcoin exchange rate, the buyer had 15 minutes to authorize payment.
To protect the buyer’s privacy, Hull would not reveal which Martis Camp lot was purchased, only that it is in Lodge Estates, the development’s newest release of 42 luxury home sites. The Martis Camp development offers luxury features such as a zipline park, golf course, cross-country skiing, movie theater and day spa.
“If any buyers are interested in buying Martis Camp property with Bitcoin, we’re certainly set up to help them do that,” Hull said.