Bitstamp, one of the biggest bitcoin exchanges, adds gold withdrawal option for their customers in the EU. Gold price is quoted only in US dollars and one must also have an available balance in USD. Moro & Kunst, a Slovenian precious metals dealer, provides delivery of physical gold produced by well known brands Argor Heraeus in Switzerland and Münze Österreich in Austria. Fully insured shipment should be delivered to a customer’s address within two to five business days after ordering.
Although a gold withdrawal option is not such a ground-breaking innovative step in the bitcoin industry, it's good that customers of this big exchange have another way that they can relatively safely move funds out of the exchange. “For centuries, gold has proved to be a timeless and exceedingly valuable source of capital preservation due to its unwavering value. Additionally, gold has always been an efficient hedge against inflation and currency risks,“ Bitstamp admits the importance of another hard asset in its announcement.
Is the exchange preparing for a possibility of hard times for fiat currency? “We don't expect any negative developments with fiat currency withdrawals. The launch of the product is focused exclusively on exciting possibilities of bringing bitcoin, often described as digital gold, and real gold closer together,” Miha Grcar, Bitstamp COO confirms to Cointelegraph.
Bitcoin To Gold
A similar service has been provided by German exchange Bitcoin.de together with Bitcoincommodities for quite some time and according to the founder of Bitcoincommodities Dennis Daiber it was well-received. He has an API in place that would let other exchanges or websites that handle customers' bitcoins open their own "gold shop" within their website.
To open more than a gold shop and provide true bitcoin/gold exchange is on quite a different level. Vaultoro has been doing that for nearly a year now. “We are still the only ones with a true market order-book and api between bitcoin and gold. We have just passed 2.7 million US dollars worth of gold and bitcoin traded,” CEO Joshua Scigala brags to Cointelegraph. He admits he got into bitcoin to escape fiat so he really likes that “Bitstamp is jumping onboard the true asset to asset bandwagon with us.“
When asking Bitstamp about possible bitcoin/gold exchanging their answer was rather diplomatic. “Launching gold withdrawals is just one of the possibilities presented by closer ties between bitcoin and gold. We do not exclude the possibility of introducing the option to exchange gold for bitcoin. Of course multiple factors need to be considered prior launching such products.”
Prices pretty high
“I haven't checked the prices Bitstamp offers, but the pricing on dealer's site indicates that they are a little less than competitive,” says D. Daiber. He thinks it can be worth the premium paid because the option to withdraw gold is a possible way around banking limitations. “If you were to withdraw, say 20 000 USD from Bitstamp account, that would raise flags with some banks. Going via the exchange of gold, this can be circumvented and likely worth the premium paid to Bitstamp and the loss of the margin when selling the gold locally.” Also J. Scigala sees the Bitstamp gold prices as pretty high “but maybe they will come down with volume.”
Would it not be much easier and more comfortable to exchange bitcoin to gold without the need to go through a fiat currency? It surely would be for many reasons, however the obstacles are mounting. “To be able to establish such a system, one would need proof of ownership of the gold by the exchange, physical storage (even in fractions), notarization of the whole process. There are a handful of companies that have tried or are trying to do this and most that have tried in the past have gone belly-up.”
D. Daiber considers it not to be a very attractive market because of the very narrow spread and high security costs and especially delivery expenses when offering physical receiving, which is the most cost-intensive part in the precious metals trading process. “A company offering to trade fractions of grams against bitcoin at market rates offering good delivery will likely suffer from overhead costs.”
But J. Scigala is an optimist and says that competition is fantastic because it spreads the cost of educating the market and also keeps everyone on their toes. “The more we do to help people protect their assets from another global or European financial crisis the better. We are still the fastest and cheapest way to secure physical bullion secured in your name as your property.”