“It’s very volatile, and of course… there is a lot of speculation,” Sommer says, referring to the wild price swings that have made some traders rich. “But there seems to be a growing amount of trade and commerce involving Bitcoin as well. So it gives me the confidence that we can accept it as a viable currency.”
Two of Sommers’ seven children have been investing in Bitcoin since around 2010, the very early days of the experimental currency. They convinced their father that the fundamentals were sound even though the currency jumped from around $20 in early 2013 to more than $1,000 by the end of the year. “My kids started picking them up at $5 and then they went to over $1,000 and they were making all this money,” Sommer’s wife Laura says. “What makes gold valuable? What makes a diamond valuable? What makes anything valuable? It’s what people want.”
“WHAT MAKES ANYTHING VALUABLE? IT’S WHAT PEOPLE WANT.”
Bitcoin is not backed by any nation; its exact origins are unknown. Some governments have passively sanctioned it, others have stayed silent, and China has banned its use. Bitcoin is also far from mature. It’s designed to have a total supply of 21 million bitcoins, but only about half of those have entered circulation so far.
There is also the matter of the transaction itself. The Bitcoin protocol is designed so that anyone can transfer any number of bitcoins to another person directly, without any third parties or fees — it’d be like handing over a suitcase with $7.85 million in cash. That won’t fly with a large real estate transaction — taxes and brokers’ fees must be paid in dollars and there is normally a 30-day escrow period, an eternity in the volatile Bitcoin market.
In order to accommodate the oddball currency, Sommer expects he would write a contract denominated in US dollars with reference to the equivalent amount in Bitcoin as well as a minimum and maximum range in order to hedge against wild price changes. Other than that, it wouldn’t be much different than accepting euro or yen for the house.
