Bitcoin may be the original cryptocurrency, but it can still learn new tricks.

In an industry where bitcoin has taken a backseat to networks like ethereum, at least when it comes to enabling more complex and exotic transactions, both founders behind the peer-to-peer exchange platform Hodl Hodl believe people are underestimating bitcoin's potential. Unlike many of the new startups creating their own blockchains, Hodl Hodl is doing these complex transactions on the bitcoin blockchain, countering the narrative that bitcoin is only good as a store of value.

The exchange platform debuted in March, and within weeks it garnered more than 5,300 registered users in over 30 countries, all transacting directly through either the bitcoin or litecoin blockchains by using what's known as a multi-signature smart contract.

Hodl Hodl never touches bitcoin deposits or traditional fiat payments. Rather, it simply provides listings for people to connect, plus an interface to help users apply smart contracts directly to bitcoin.

Those contracts rely on multisig wallets, where one key belongs to the exchange and the other to the seller. The seller's keys are generated on the front end, in the browser, never stored on the company's server or database.

Because of that setup, Hodl Hodl CTO Roman Snitko said:

This paved the way for a disparate real estate platform by the same team, called Househodl, which is set to launch in July with similar multisig contracts in lieu of the banks and lawyers who typically hold funds in escrow.

"It's better than dealing with banks and being unreasonably scrutinized time and again for every penny, even though your money is clean,"  Snitko told CoinDesk.

This underscores the reasons why Snitko and CEO Max Keidun chose to work directly with the bitcoin blockchain rather than build a platform in parallel. They wanted a simple solution that didn't require the startup to take on all the compliance responsibilities of a bank, the way some might argue exchanges like Coinbase have.

Hodl Hodl's private key is useless by itself – a relief to traders spooked by the long history of multimillion-dollar thefts of user funds held at traditional crypto exchanges. Their verification process varies by jurisdiction, staying as hands-off as they can be within local regulations, to give users more responsibility and freedom. Unlike Coinbase, Hodl Hodl gives users their own private key.

"No single party controls the funds on that address," Snitko said. "That, in turn, means increased security, but also that we're not exactly a money transmitter from a regulatory point of view."

By coupling compliance with decentralized security features, the Hodl Hodl team strives to show that bitcoin itself can also be leveraged for peer-to-peer business transactions. The team's upcoming platform, Househodl, will take that idea even further by applying it directly to real estate purchases.

"Because it's safer," Snitko said about why they chose bitcoin. "I do think it is the only secure, decentralized blockchain that stood the test of time."

First and foremost, Hodl Hodl's interest in bitcoin derives from its security.

According to the founders, it's much harder for intermediaries to misappropriate money frozen in this transparent, multi-sig escrow process, because no one has complete custody and all the parties involved can look at the blockchain to see what's going on.

As such, multisig on a public ledger represents an upgrade to the centuries-old practice of depositing funds with a third party until a future condition is met.

Applying this exchange's smart contract to real estate first occurred to the Hodl Hodl team when a friend tried to sell her apartment to buy more bitcoin. The transaction took months because there were numerous bureaucratic intermediaries, from bankers to real estate agents.

Snitko said:

The team realized the a multisig process in Hodl Hodl's flagship business could also offer a more transparent escrow system for buying property with bitcoin. Such transparency is lacking in traditional escrow processes, a situation often exploited by the intermediaries buyers trust the most.

For example, according to the New York Law Journal, the Lawyers' Fund for Client Protection paid $10 million in 2017 to victims of lawyer misconduct that included the theft of escrow funds. In March of this year, another New York attorney was disbarred for hiding client funds in his personal escrow account, veiled behind the trappings of bank paperwork.

Even if such conduct is rare today, the fact that it can happen suggest that there's room for improvements that reduce reliance on trusted third parties. "I think real estate is the best use case for bitcoin payments right now," Snitko added, "Because it's relatively huge amounts of BTC that are being transferred so even if transaction fees go up, they would still make sense."

Unlike the flagship exchange's pure P2P model, Househodl contracts will require a third cryptographic key held by a neutral third party, such as a lawyer, plus more paperwork and identification than online currency swaps on Hodl Hodl.

Funds only move if everyone cooperates, which would prevent the type of lawyer misconduct seen in New York. Yet, all of this still happens directly on the bitcoin blockchain, thanks to the exchange-tested workflow.

"You will even be able to sign all the papers remotely on our [Househodl] platform, a one-stop-shop," Keidun told CoinDesk.

Several American real estate agents have already expressed interest in signing up for Househodl, Keidun said. But, due to the unclear regulatory landscape in the U.S., Househodl will probably launch in blockchain-friendly Dubai first, then steadily expand to Europe and North America.

In the meantime, new confidential trading options might give Keidun's small startups a competitive advantage over other P2P platforms, both exchanges and blockchain startups in the real estate industry.

Many P2P platforms broadcast all live offers to all participants, the same way CraigsList organizes listings by category. So Hodl Hodl allows private offers, which are only visible if the seller sends a direct link to the buyer, or vice versa. This is one advantage Hodl Hodl has over its competitors. And the users don't even need to sacrifice transparency for privacy, since the transactions are still on-chain, it's just that they aren't broadcasting the details a stranger would need to find them.

In addition, neither Hodl platform requires the user to cash out, the way incumbent P2P exchange LocalBitcoins does. Yet again, that points back to the fact that the escrow takes place on the blockchain itself.

"That's one difference we have from LocalBitcoins, where your funds are essentially held on LocalBitcoins," Snitko told CoinDesk.

Come summertime, Househodl will also offer such private listings for buying or selling real estate directly with cryptocurrency.

"The idea is that you don't need to cash out into a fiat currency to buy property," Snitko said, touching on the broader issue of balancing compliance with the bitcoin community's cypherpunk ethos by adding:

Keys image via Shutterstock