With the last bitcoin bull run, buying a vehicle with digital currency is easier than ever before. Many who happened to hit it just right with crypto investments can now purchase a vehicle and a nice one at that. But before you starting spending big, here are six considerations that can help ensure the process of buying a vehicle goes smoothly.
Bitcoin is volatile
Bitcoin is a great way to transfer funds from point A to B. Unfortunately, digital currency is subject to massive price swings that may be hard to predict. As a result, what may be more than enough to pay for a vehicle may quickly fall far below the value of the car. Therefore, the volatility of bitcoin can make buying a car with bitcoin a game of chance.
To help hedge against these price swings, some dealers will determine a fair price for a vehicle at a set point in time and have buyers sign off on it. Alternatively, sellers may transfer funds to a denomination in stablecoins or fiat money to help minimize the price fluctuations until the transaction goes through. Still, some online portals will only give buyers a short window to complete their purchase. The reasoning behind doing so is that the price should still be relatively consistent for those few minutes but may be subject to change anytime after.
Transactions are irreversible
A secondary consideration that you must make when purchasing a vehicle is that there are no transaction reversals. Therefore, purchasing online or from someone you don’t know must be done with the utmost caution since there is no going back. Unfortunately, there is no way to tell if a buyer is genuine and will have the funds they claim they have. Similarly, there is no way to know if a seller will send the vehicle after getting paid.
For these reasons, a vehicle escrow service can be necessary to help manage the transaction. An escrow service provider acts as a neutral party to monitor the events that occur in the transaction. As a middleman, escrow agents will receive the vehicle purchase price on behalf of the seller. The agent will verify the funds are in holding and alert the seller. Following this, the seller can send the vehicle to the buyer. Once the buyer receives the vehicle, the escrow provider will give them a brief inspection period to determine any major problems. If they determine it to be in good condition, they can inform the escrow provider, who will release the funds to the seller.
Car escrow services create an environment where buyers and sellers can feel safe. For larger transactions such as a vehicle, most buyers prefer the added security an escrow brings. Costs to use these services will depend on the platform, although they are typically small compared to the total value users could lose if a deal were to go wrong.
Not all dealers accept cryptocurrency.
Although cryptocurrencies have been around since 2009, many dealerships have still yet to make it a viable payment option. Not accepting bitcoin may be a decision for many reasons, such as the complexity of engaging with the blockchain or an overall lack of knowledge for using it.
While many of the most well-known dealerships in your area may not accept bitcoin, there are a growing number of online marketplaces that do. Before you decide on a platform, buyers are encouraged to do some background research on the company. Research should also include the company’s transaction process and the history of how they deal with customers. Doing so will ensure that the platform is legitimate, and the buyer will receive the vehicle they wanted to purchase.
Buying with bitcoin is almost instant.
In comparison to bank transfers, purchasing a vehicle with bitcoin is significantly quicker. While a wire transfer may take days or weeks if they are coming from international accounts, a bitcoin transaction will take an average of one hour. Therefore, for sellers who want to get paid quickly, using cryptocurrency is often a favourable choice.
Bitcoin transactions offer high security.
Bitcoin is not a physical currency, making it harder for users to steal a person’s cash. Hackers can still steal a person’s cryptocurrency, but they will need access to the user’s private keys. Therefore, buyers do not have the same risks as when they conduct an all-cash transaction.
Bitcoin is also secure for another reason, which is its blockchain backing. When volunteers sign hashes validating a cryptocurrency transaction, they are irreversible, guaranteeing the data security of Bitcoin.
Users can conduct transactions from anywhere.
A final consideration worth noting is that when it comes to bitcoin transactions, time or location do not limit bitcoin transactions. Many platforms now provide mobile wallets that allow users to make purchases online and on the go.
These six considerations are essential to determining how to conduct a safe bitcoin transaction. The benefits of using this digital currency are great in number, and with a few additional security protocols, buyers are in good hands when they make a vehicle purchase.