First Bitcoin mortgage taken out by former Mighty Ducks star, Brock Pierce

- Advertisement -

Crypto trend-setter Brock Pierce has taken out the world’s first bitcoin-backed mortgage to buy a home in Amsterdam. The former actor, who rose to fame in the 90’s comedy, Mighty Ducks, purchased the $1.2 million property using Bitcoin as collateral, according to a statement from lender Nexo on Wednesday.

It’s already possible to buy a home and complete the entire transaction on a blockchain, and the technology is fast making inroads into the real estate business. Now, cryptocurrency looks set to enter the home-mortgage market too. The move to offer bitcoin-backed home loans, by Swiss-based Nexo, has game-changing potential among those who need a loan to buy a home but are not keen to liquidate their crypto assets.

Pierce, who was an early cryptocurrency adopter, co-founded VC firm Blockchain Capital. He was also a big investor in the Ethereum blockchain, supported the early days of the Coinbase exchange and was co-founder of Block.one, the entity behind the EOS blockchain. He reportedly holds over 95 percent of his net worth in cryptocurrency and was named by Forbes as one of crypto’s top 20 richest people in February 2018.

Startup 3.0 Email

Handpicked weekly highlights from Web 3.0’s startup ecosystem.

Startup 3.0 Email

“Being able to borrow against one’s crypto assets gives one options, when wanting to purchase a property,” said Pierce. “I was able to hold on to my crypto and settle the transaction in fiat.”

- Advertisement -

Tax advantage

However, Pierce’s renovated chapel-turned-home in Amsterdam did not come without cost: Nexo charges interest rates of 8 to 16 percent. To obtain the mortgage, Pierce also had to put up more than $3 million worth of Bitcoin which was stored with a third party custodial service that neither the lender nor borrower has access to.

Crypto-backed loans are not only an attractive way to gain access to fiat currency without selling off cryptocurrency, but would seem to offer tax incentives too.

In its statement, Nexo, which raised $52 million in a private-token sale last April, explained that it hedges against price fluctuations in cryptocurrencies and so requires borrowers to put up at least $2 for every $1 of crypto loaned. In just the last seven months, it claims to have processed more than $313 million.

- Advertisement -

Crypto-backed loans are not only an attractive way to gain access to fiat currency without selling off cryptocurrency, but would seem to offer tax incentives too.  

Under current laws, converting crypto to fiat would attract taxes on the converted assets, which would be seen as capital gains. But left intact, the crypto assets cover the mortgage without a tax penalty, since the IRS has not addressed borrowing against cryptocurrencies directly.

It’s a loophole that companies such as Nexo, BlockFi, Celsius, InLock, and others are keen to exploit.  Nexo, however, appears to be the first to the mortgage market and is offering customers “instant loans of up to $2 million in 45 different fiat currencies within 24 hours.”

Shaking up real estate

Blockchain and cryptocurrencies are making headway across the real estate market.  It may not yet be possible to buy a home on the blockchain in a day, but blockchain-enabled trials are successfully slashing the time it takes to complete real estate transactions.

UK banks, Barclays and RBS, and enterprise blockchain firm R3 successfully completed a trial on Thursday to put property transactions on a blockchain in super-quick time. On average, it takes three months to complete the process. The new trial demonstrates that blockchain-based tech will achieve that in under three weeks.

The trial claims that this could save the global property market about $160 billion annually, and noted high interest in their experiment from the wider real estate industry—law firms, estate agents and property data aggregators.

As he enjoys his new Amsterdam abode, Pierce will be feeling vindicated in his philosophy that real estate and tokenization will be a quadrillion-dollar market, and secure in the knowledge that his Bitcoins are tucked up nice and safe.


This post was originally published on Decrypt. Bitnewsbot curates, examines, and summarizes news from external services while producing its own original material. Copyrights from external sources will be credited as they pertain to their corresponding owners.

Previous Articles:

- Advertisement -

Latest

Czech Justice Minister Resigns Over $45M Bitcoin Donation Scandal

Czech Justice Minister Pavel Blazek resigned after controversy over accepting and selling Bitcoin from a convicted criminal.The Justice Ministry auctioned nearly 500 Bitcoin, raising...

Uniswap (UNI) Rebounds Above $6 After Brief Uptrend Breakdown

Uniswap's UNI token dropped below its key uptrend line following a failed hold above the $6.00 support level.High trading volumes accompanied the decline, including...

Michael Saylor Invites Joe Rogan to Discuss Bitcoin on Podcast

Michael Saylor has shown interest in discussing Bitcoin on The Joe Rogan Experience podcast.The idea has generated excitement in the Bitcoin community, with some...

Congress Debates Stablecoin Bill Amid Rising Bank and Crypto Tensions

U.S. lawmakers are moving forward with the Senate Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, with debates set to resume after...

American Engineer Drugged, Robbed in Sophisticated London Crypto Heist

An American software engineer lost approximately $123,000 in cryptocurrency after being drugged and robbed in London.The victim was targeted by an impersonator posing as...

Must Read

The 10 Best Crypto Podcasts You Can’t Miss

Table of ContentsBest Cryptocurrency Podcasts To Add To Your Playing List1. The Money Movement2. The Crypto Conversation3. The Pomp Podcast4. What Bitcoin Did5. The...