Buyer cashes in bitcoin fortune to buy $1.1 million Fort Collins house

In what may be the first residential sale involving bitcoin in Northern Colorado, a Kansas attorney cashed in the virtual currency to purchase a $1.1 million home in north Fort Collins.

The home was purchased by Matt Bristow, a 34-year-old CSU alumnus who decided to return to Fort Collins after selling his law practice and losing a bid for Kansas state Senate.

"Fort Collins was always my favorite place to live," Bristow said. "When I had an opportunity to move back, I took it."

The Group Inc. Real Estate believes it is the first real estate transaction here involving bitcoin.

If you don't know or understand how bitcoin works, you are not alone. Most people may have heard the term but don't really understand how a virtual currency can be converted into cash.

Created in 2009, bitcoin transactions are made without a central bank and can be used to anonymously buy goods online. Some people buy bitcoins as an investment, hoping they'll rise in value.

"At its core, it is a revolutionary way of doing business," Bristow said.

People can mine or acquire bitcoin by solving complex mathematical computer problems. The number of available bitcoin is limited to 21 million, so the value can swing dramatically.

Once bitcoin is acquired, the value changes, just like a stock.

Over time, bitcoin values have soared. Those who got involved with bitcoin in its infancy, like Bristow, have yielded great profits.

The value has fluctuated greatly but rose to a high of more than $19,000 per coin in December. As of Friday, it was valued at about $6,700 per coin. That means the cash value of 100 bitcoin would equal $670,000. That same 100 coins in December would have been worth nearly $2 million.

Bristow grew up in the Denver-metro area and credits CSU professor Bill Shuster with teaching him how to evaluate companies and "separate the wheat from the chaff." He said he saw "how disruptive the (cryptocurrency) technology was going to be a long time ago."

The key to making a bitcoin purchase work is finding a seller who is willing to accept bitcoin. Realtor Andrea Schaefer of The Group said she had never dealt with a bitcoin transaction and "had to be educated on what it was. For proof of funds, Bristow provided a screen shot of his portfolio."

The seller "was very trusting in the fact that he was going to legitimately provide all those funds," Schaefer said. In the end, "It was a very smooth transaction."

Because of fees and tax implications, Bristow cashed out his bitcoin over a period of time and deposited the resulting money into a checking account before wiring the money at closing, Schaefer said.

According to the IRS, bitcoin is considered property and every transaction is subject to a capital gains tax.

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Nationally, more real estate transactions are using bitcoin, or, like Bristow, converting bitcoin into cash for the purchase. But it's not screaming through Colorado's real estate industry, according to the Colorado Association of Realtors.

Fort Collins Realtor Sean Dougherty said cryptocurrency has not captured the attention of the industry yet. "You might see a class here and there." While millennials may understand it, "there is so few number of real estate agents who understand it."

Dougherty said he would not recommend to his buyers that they accept bitcoin unless it was converted to cash. "Cash is king when it comes to a purchase," he said. "The dollar is a lot more stable than bitcoin, as we've seen over the past six months."

Despite the volatility, there are websites that can help connect bitcoin buyers and sellers, according to openlistings.com.

Once a buyer accepts an offer, parties must find a title insurance and escrow company that's comfortable handing virtual currency transactions, according to openlistings.

It's more common to require the buyer to cash out his bitcoin so the transaction works more like a traditional purchase.

The first bitcoin purchase is believed to have been a single-family home in Austin, Texas. Like Bristow's purchase, the seller wanted the bitcoin converted to cash.

A two-bedroom condo traded hands in December for 17.741 Bitcoin, or the equivalent of $275,000, in what brokers said on social media was the first "bitcoin to bitcoin" real estate transaction in the U.S., according to Barron's.

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