Get Practical With Bitcoin: Will It Buy You a House?

NEW YORK (TheStreet) -- Could you buy your next home with bitcoin instead of dollars?

Sure ... well, maybe. But would you want to?

It's actually part of a broader question: What types of bitcoin transactions make the most sense?

The computer-based currency has been in the news a lot in recent months. Its value soared in last year from near nothing to about $1,200 per unit, then plunged to today's prices around $700. Like many new things, the value whipsaws as people try to figure out whether it's the next great thing, a flash in the pan or a boondoggle. The Chinese government's hostility to bitcoin, which in theory could someday undermine the domestic currency and currency controls, has much to do with the price collapse.

Unlike traditional currency, bitcoin is not issued and backed by a government. Instead, it exists in computers that add and subtract from each owner's holdings as transactions are made. Various services allow people to convert dollars and other currency into bitcoin, and vice versa. Gradually, more and more businesses are accepting bitcoin payments, though many of these announcements sound like publicity stunts.

The chief benefit: Bitcoin values are not influenced directly by governments' monetary policies, and the currency can be used easily for transactions across national borders without having to deal with currency exchange rates and heavy fees. Some crooks believeit also makes money laundering, tax evasion, drug deals and other illegal activities safer, but that's not necessarily so.

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