The seller was looking to vend several properties in Louisville so that he could invest more in Bitcoin, an increasingly popular decentralized digital currency. The buyer, someone who has been familiar with Bitcoin for years, suggested he could pay for the house using the cryptocurrency.
That had never been done in Louisville before, officials behind the sale believe — until February, that is.
"(I told the buyer) I didn't know if (using Bitcoin to buy the home) was possible," Brown, an agent with Louisville-based Homepage Realty, told The Courier Journal. "...I wasn't sure if it was legal."
The seller sold the two-bedroom property in the Iroquois neighborhood to the buyer for $65,000, according to Brown. After paying for commission, title fees and recording fees in U.S. dollars, the final purchasing price was roughly 1 Bitcoin, which was worth a little more than $36,196 by the end of Thursday.
The buyer told The Courier Journal that he first owned Bitcoin six or seven years ago when he was college as he was attracted to "the technology aspect of it."
"I'm happy that I can help try and bring this technology to the future," the buyer said about the sale. "There's so many uses for (Bitcoin), and I think we're at the very, very early stages of it. It'll be interesting to see where it goes."
The buyer, who invests in residential real estate around Louisville, said he plans to renovate the property and turn it into a long-term rental.
To help put all of the pieces together on this historic purchase, Brown turned to Chip Ridge, president and owner of Millennial Title Company, a regional real estate settlement services company.
Ridge said he has been exploring Bitcoin and Blockchain, which is a secure decentralized technology spread across many computers that manages and records transactions, to help with his business.
"From the title and escrow perspective, we saw potential use-case opportunity to leverage the Blockchain technology to enable us to do several different things," including transfers via cryptocurrency and recording information, Ridge said.
According to Ridge, for the Bitcoin home purchase, "we essentially did all the normal things that we do in a normal transaction." This includes signing a contract that was agreed upon in U.S. dollars, which served as the base currency for the transfer value, as Ridge said the deed has to reflect dollar increments for tax purposes.
Ridge also said that keeping dollars as the base for conversion is important in assuaging the fears of cryptocurrencies' volatility, or how much their value may fluctuate on a given day.
Therefore, no matter how the value of Bitcoin changed, the purchase was completed at the fixed dollar amount the two parties agreed to upon closing, Ridge said. All that changed is how much Bitcoin the buyer needed for the purchase.
Ultimately, the two parties did a "wallet-to-wallet" transaction, in which the buyer and seller were able to complete the deal with digital wallets at the click of a button in roughly eight seconds, Ridge said.
And unlike a typical deal that may require a $25 to $30 fee for a wire transaction, the Bitcoin purchase only cost the buyer about 70 cents.
For Ridge, he thinks this purchase is just the beginning of cryptocurrency taking on a bigger role in real estate in Kentucky and around the country.
"I think in two to three years, (using Bitcoin in home purchases) will be more commonplace," he said.
"Not saying it's going to be 50% of the closings — it might be 5%. But I think it's going to be relevant."