Consumers are becoming more and more comfortable using virtual currencies for making purchases — including residential and commercial real estate.

The United States Internal Revenue Service describes virtual currencies as digital representations of the U.S. dollar or foreign currencies that function as a unit of account, store of value and medium of exchange. Some virtual currencies are convertible with an equivalent value in real currency or act as a substitute for real currency.  

Cryptocurrency is a type of virtual currency using cryptography to secure transactions digitally recorded on a distributed ledger, such as a blockchain. Two of the more recognizable cryptocurrencies are Bitcoin and Ethereum.

 More than 100 countries are exploring or piloting central bank digital currencies (CBDCs), a digital form of a country’s sovereign currency.

Even the White House recognizes virtual currencies. President Joe Biden recently signed an executive order on ensuring responsible development of digital assets.  According to a White House fact sheet, digital assets, including cryptocurrencies, have seen explosive growth in recent years, surpassing a $3 trillion market cap last November. That’s up from $14 billion just five years prior.  

According to surveys, about 16 percent of adults in the U.S. — approximately 40 million people — have invested in, traded or used cryptocurrencies.

While the use of virtual currencies to purchase real estate isn’t yet widespread, momentum is building. There has been a significant uptick in the number of properties advertised for sale in which the seller is willing to accept Bitcoin or another cryptocurrency.  

There are pros and cons to buying and selling real estate with virtual currencies.

The biggest drawback is volatility. And at least for now, banks, title companies and some others don’t accept cryptocurrency as payment. Some cash will still be needed at the close of the transaction.  

While paying with virtual currency might not be the first choice in buying real estate today, it can be an option.