'He has to take his lumps': Behind a Rhode Island real estate deal involving 160,000 dogecoins
What could have been a low-risk Rhode Island property sale has turned into a wild bet on the price of meme-inspired cryptocurrency Dogecoin.
Earlier this month, real estate agent Kyle Seyboth accepted an offer of 160,000 Dogecoins (DOGE-USD) worth approximately USD 50,000 (or approximately USD 0.31 per digital coin) in return for the residential property on behalf of a client.
Then the wild ride began.
At the time the contract was drafted on May 8, the 160,000 Dogecoins were worth $ 116,000 (or around $ 0.72 per digital coin).
Kyle Seyboth represented a real estate investor who sold a residential lot for 160,000 Dogecoin.
But digital currency fell late one night after Elon Musk, CEO of Tesla (TSLA), referred to Dogecoin as a "hustle" while hosting Saturday Night Live.
The digital currency, created in December 2013 by two software developers as a joke inspired by the internet meme featuring a Shibu Inu dog, briefly fell below the contract price this week during a widespread crypto sell-off on Wednesday.
"That was one of the risks - that he might be able to take his lumps," Seyboth told Yahoo Money of the seller's land-for-doge deal. "But he's an investor and he's pretty smart. And in his opinion, he wanted to get the deal with the potential for the currency to go up and get more money."
The deal will close on June 15th. As of 3:12 p.m. ET on May 20, the 160,000 Dogecoins were worth $ 63,520 (or around $ 0.40 per digital coin).
"There's a lot of speculation and gambling with crypto."
On the other side of the transaction, according to Seyboth, is another real estate investor who bought a lot of Dogecoin and bet that "the currency risk would work in their favor".
The buyer plans to build a special house - a new, ready-to-move-in house - on the property prior to the sale.
The fact that there are long-time real estate investors on both sides of the crypto-only real estate business did not surprise Seyboth.
"Real estate is very difficult for investors right now," he said, noting that others have since contacted him about selling their properties for a type of cryptocurrency. "There's not a lot on offer, and investors are struggling with the offer to sell it. Crypto was a good way of offsetting."
The number of properties for sale at the end of March was 1.07 million units, according to the National Association of Realtors, a decrease of 28.2% year over year and near all-time lows. At the same time, the proportion of home sellers willing to use cryptocurrency to buy hit an all-time high in April, albeit still at a low level.
Two of the sellers previously surveyed by Yahoo Money were real estate investors.
"Their risk appetite is very similar," said Seyboth, comparing real estate investors and crypto investors. "Stocks are harder to understand. They are an entirely different animal with profit, EBITDA. There is a lot of speculation or gaming in crypto and a lot of momentum."
Janna is an editor for Yahoo Money and Cashay. Follow her on Twitter @JannaHerron.
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