Jeff Clark, Senior Precious Metals Analyst
JUN 21, 2017
Can you buy gold with Bitcoin?
Even though Bitcoin was established in 2009, its price has soared, and its use as a method of payment grows by the day. Small wonder why: bitcoin is both a currency and an online payment system.
Like any payment method, though, there are both advantages and drawbacks to using bitcoin to buy gold and silver. This article reviews those factors, as well as provides a visual step-by-step guide to buying gold at GoldSilver.com with bitcoin.
Advantages of Bitcoin
There are 3 distinct advantages of using bitcoin to buy gold and silver.
1. Convenience. If you have some bitcoin and are making an online purchase of gold, it can be quick and easy. No worries about when a dealer is open, if it’s a holiday, or even if you’re away on vacation and spot a buying opportunity.
2. Outside the banking system. For those that would prefer to sidestep the banking system—which is understandable after what happened in 2008/09—then Bitcoin will allow you to do that. Don’t want to involve credit card companies? Ditto. That’s because payments are cleared through the Bitcoin system, which does not use banks or credit card companies.
3. Singular currency. Bitcoin is an “international” currency and can be used anywhere in the world that has internet access. Once you have some bitcoin, you don’t have to convert to any other currency or payment system, or worry about currency exchange rates.
Some investors will also say that bitcoin is cheaper. When compared to credit card and PayPal processing fees, this is largely true. However, Bitcoin does charge a small fee for each transaction, so those paying cash could purchase gold and silver at a lower cost than bitcoin.
Drawbacks of Bitcoin
Despite its popularity and growing use, there are currently several disadvantages to using the Bitcoin system.
1. Lack of privacy. This surprises most people, because everyone assumes that a bitcoin transaction is private. It has a degree of privacy, but it is not completely anonymous. When you use bitcoin to make a purchase, the transaction itself, along with your digital address, are recorded on the Bitcoin network. This record is both public and permanent.
2. Risk of loss. You’ve probably seen a chart that shows just how volatile the price of bitcoin can be. That level of price volatility is so extreme that in some circumstances you could be told to submit more bitcoin before your transaction is approved (if the price is falling, or that you are being refunded in bitcoin if it’s rising). At a minimum, it could make it difficult to know exactly the amount of bitcoin you need to buy the amount of gold and silver you want, or even if you have sufficient funds.
The other risk is that while crypto-currencies are growing, there is no guarantee of Bitcoin’s future. You have no assurance that it will continue in its present state, or even be around.
3. No buyer protection. Bitcoin has not yet instituted some of the safety protocols that other payment services have. For example, transactions made with Bitcoin are instant and irreversible, making fraud easier to commit—and Bitcoin currently offers no “money-back” policy. Further, it can take 1 to as many as 4 days for a bitcoin transaction to clear, which could be frustrating as a consumer. Last, a skilled operator could double-spend the same bitcoin.
As you can see, Bitcoin is still evolving and is not risk free. The system has not yet achieved full security and privacy.
Want to minimize your risk?
• Your greatest protection when buying gold with bitcoin is to use a trusted dealer.
How to Buy Gold with Bitcoin at GoldSilver
GoldSilver.com is proud to offer all customers the ability to buy physical gold and silver with bitcoin.
It’s as easy as 1-2-3! Here are the three basic steps to follow (which are clearly explained as you go through the online checkout process).
Step 1: Shop! Add whatever you want to your cart, as much as you want.
Step 2: Proceed to checkout and select Bitcoin for your form of payment. Here’s what it will look like:
Step 3: Pay your invoice. You’ll receive an invoice with our Bitcoin address.
Log into your Bitcoin wallet app and open it to the payment submission page. Or use your Bitcoin phone app to open the invoice by capturing the QR code with your camera. Then click to pay.
You have 15 minutes to pay your invoice.
Note that your order can be in a “pending” status for as long as one business day. That’s because payments need to pass through several Bitcoin “blocks” for approval. The verification process varies by dealer, but don’t fret if it takes as long as 24 hours for your payment confirmation to arrive. Even though it’s not instantaneous, Bitcoin is still the quickest form of payment.
GoldSilver currently offers bitcoin customers a 3% discount to the credit card charge, which is 1% over the “cash” price. Don’t forget that Bitcoin charges a transaction fee, too, though it is usually small.
GoldSilver currently accepts bitcoin transactions up to $100,000 per day, and a total of $1 million per customer, per year. As the Bitcoin system improves, these limits will be expanded.
• Keep in mind that for ultimate safety, gold is still the preferred financial asset. They crypto world is likely here to stay, but physical gold and silver offer unparalleled safety in a world of hackers and government interventions.
If you need help with your Bitcoin transaction just give us a call at 1-888-319-8166 (US and Canada; international 001-310-566-6655). Otherwise, happy shopping!