Small Business

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Intellectual Property

 January 19, 2022

Real Estate Developer Will Begin Accepting Crypto for Property Payments. What Do You Need to Know About Digital Currencies?

Man in a dark room looking at information on digital currencies on computer monitor

A real estate development company will start accepting digital currency for properties.

By this point, you’ve probably heard at least a bit of the stir around currencies like Bitcoin, Dogecoin and other cryptocurrencies (cryptos). After a breakthrough in 2021 of this new way to pay, the commonality of this curious modern phenomenon is only growing.

Harbor Custom Development, a Gig Harbor-based company that develops lots, residential homes, condominiums and apartments in their operating markets, will start accepting cryptocurrency for payments on their real estate.

The company says it’s a logical step for their offerings and will separate them from industry peers and allow them to pioneer a new way to buy properties.

What is cryptocurrency, anyway?

You’ve heard of it, but what is it exactly? How does it work?

Crypto is a digital form of payment that can circulate without the government or a bank. They are created using cryptographic techniques that allow consumers to buy, sell and trade the currency online.

Why are so many people investing in crypto?

While the crypto has volatile trading history, they are trending upwards for the most part (take Bitcoin, for example). Its’ overall growth in value and innovative charm has inspired advocates to claim it as the currency of the future—additionally, some people like the fact that they remove central banks from managing the money supply.

However, it’s viewed as an unstable and experimental investment as of now. Crypto doesn’t generate cash flow, so in order for you to gain profit and the value of the currency to keep rising, other people have to pay a higher price for the digital coin(s) than you did.

4 legal considerations when it comes to crypto:

  1. Taxes: There’s a lot of ambiguity around taxes regarding to crypto, but as of now, the IRS views it as property, so any purchase using crypto is taxable. Tax proposals call for even further comprehensive reporting requirements and regulations for these digital currencies in the near future.
  2. Scams: Crypto markets are generally less regulated, so it’s easier for bad actors to take advantage of investors. Be wary of schemes that promise you’ll make money and other bold claims and be proactive about doing your homework on every platform.
  3. Payments don’t come with protections: Your payments don’t come with protections because the crypto market is less regulated than a traditional central bank or government. This is a crucial difference of this currency versus a credit card, because when your credit card gets stolen or you have mysterious charges, you can report it and cancel the card. Cryptocurrencies can only be refunded by the receiving party, so it’s easier for scammers to get away with fraud.
  4. Lots of unknown: Bitcoin and other digital currencies are still relatively new, and there is still so much vagueness around legal protections when investing or purchasing. This is also considered an unpredictable way to invest, so make sure you proceed with caution.

5 tips to protect yourself when investing in crypto:

Investing in crypto is a risky business. Here are some tips to keep in mind before going through with it:

Only work with reputable platforms.

This includes everything from the type of currency (Bitcoin, Dogecoin, or hundreds of others) you choose, to the digital exchange, to the app, wallets, etc. Do your due diligence and don’t buy a currency that isn’t fully developed, or invest in something that no trustworthy expert has invested in.

Pay attention to who is investing.

Look at what financial cryptocurrency experts say about certain platforms before drinking the Kool-Aid on something that lacks security. Do your research and see what savvy investors are investing in to determine what may be worth the financial risk.

Secure a reliable wallet.

While digital exchanges have their own safety precautions in place to prevent theft, experts recommend keeping your investments secure in what’s called a cryptocurrency wallet. You can either save it in an online wallet or a physical (“cold”) wallet. An online wallet can be created from a reputable app or on your desktop, and cold wallets are essentially USB drives that act as tangible wallets for your digital coins. The cold wallet is linked with a unique private key (a code used as a password). If you lose the key, you can’t recover your stored coins. So, whichever wallet you choose, make sure you keep your key safe and protect your coins with ample strong passwords.

Be aware of mobile phishing.

This is one of the most common ways fraudsters obtain people’s crypto credentials. The social engineering scam can come in the form of text, social media, third-party messaging platforms, or email. Malicious mobile apps are also on the rise, which is why it’s critical to do thorough research on which crypto apps to use before downloading one.

Diversify your investments.

No matter what type of investment you’re making, it’s important not to put all your eggs in one basket. In other words, if this is your first time investing in anything, don’t rely on cryptocurrency only. It’s considered the most choppy and uncertain investment because prices go dramatically up and down every day. Consider investing in more stable options, like stocks or bonds, to diversify your portfolio before experimenting with digital currencies.

Talk to your provider lawyer about your rights when it comes to cryptocurrency.

There’s a lot that’s up in the air right now regarding crypto, and as it becomes more of a conventional type of payment, more legal issues will inevitably pop up. Ask your provider lawyer for a personal consultation if you have any questions or need clarification on your rights to invest, trade, or pay with cryptocurrencies.

Pre-Paid Legal Services, Inc. (“PPLSI”) provides access to legal services offered by a network of provider law firms to PPLSI members through membership-based participation. Neither PPLSI nor its officers, employees or sales associates directly or indirectly provide legal services, representation, or advice. The information available in this blog is meant to provide general information and is not intended to provide legal advice, render an opinion, or provide any specific recommendations. The blog post is not a substitute for competent legal counsel from a licensed professional lawyer in the state or province where your legal issues exist and the reader is strongly encouraged to seek legal counsel for your specific legal matter. Information contained in the blog may be provided by authors who could be a third-party paid contributor. All information by authors is accepted in good faith, however, PPLSI makes no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of such information.

 

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