If you do not trust the fiat system, your choices are basically to hold precious metals or crypto. Gold and Bitcoin are undoubtedly the leading assets within each category. Now, you can also buy gold with Bitcoin.
Before you buy gold with Bitcoin, there are a few facts and variables you should understand. Both assets have similar qualities, but they are also quite different. Here is how gold and Bitcoin are alike, how they differ and how to trade them.
How are Gold and Bitcoin Alike?
There are a few traits that Bitcoin and gold share, them attractive to the same kind of investor:
- Both can be used to hedge against inflation due to the limited supply
- They can and have been used as money
- There is a store of value element in them
But the similarities stop there. When you start studying both assets further, you understand that buying, holding and trading Bitcoin and gold, is fundamentally different.
Differences Between Gold and Bitcoin
The devil is always in the details. As much as people often refer to Bitcoin as digital gold, this is a misleading concept because:
- Bitcoin supply is limited, known and verifiable, unlike gold
- It is easier to use Bitcoin as money especially in the digital age
- Gold storage is expensive; Bitcoin storage costs are negligible
- Dividing Bitcoin into smaller units is easy, whereas doing the same with gold is cumbersome
- You can verify the authenticity of Bitcoin by looking at the blockchain; gold requires a nitric acid test
- There are different grades of gold whereas BTC is just BTC
Where can you Buy Gold With Bitcoin?
Despite all these differences, there are advantages to holding and trading both. In fact, buying gold with Bitcoin is becoming more popular as BTC matures further and cryptocurrency enthusiasts look for a hedge on their crypto.
To buy gold with Bitcoin is quite easy nowadays. If you are looking to hedge your crypto holdings with the classic store of value asset, there are a few companies you can go to. Here are our favorite places to buy gold with Bitcoin and vice versa:
- Vaultoro – the first and most well-established crypto to gold to crypto exchange that comes from the cryptocurrency sphere
- Gold Money – one of the most prominent online precious metal holding companies. It was established in 2001
- GoldSilver – a reputable precious metal broker with over 15 years of success in the market
Before you Buy Gold With Bitcoin
Before you choose your favorite broker to buy gold with Bitcoin, there are a few things you should keep in mind. After all, if you hold BTC and you are buying gold, you are going from the digital world into the physical world, so you must check your assumptions.
Make sure that you:
- Check the quality of the precious metals you are acquiring
- Make sure that you are getting physical gold for your precious Bitcoin, and not a contract or a derivative
- Are aware of the price of storing your precious metals
- Trust the company you buy gold or other precious metals from
- Can get your gold or precious metals delivered to you whenever you want
Not your Vault, Not your Gold!
When you buy gold with Bitcoin the whole philosophy behind the “not your keys not your coins” concept still applies. Just like with any other physical good, if you do not hold it, it is not really yours.
This is probably the conceptual barrier that will bother you the most when you buy gold as a BTC holder. Just keep in mind that when you ask for delivery of your precious metals, it will be more difficult to trade them. As long as the company you buy gold with Bitcoin from, holds your precious metals, selling them back for BTC is easier.
This is not the only predicament you will have to deal with. When you buy gold with Bitcoin you will also have to check your assumptions about the convenience of getting a contract or derivative instead of the physical gold.
It is only logical to conclude that if you already have to place your trust in the company that sells you gold, then you might as well find a way to buy gold contracts or derivatives, which are easier to trade.
Nevertheless, this process entails leaving the comfort of knowing that you hold something that is verifiably yours instead of a paper or a promise.
Is it Time to Go From BTC to Au?
Given all these details, you will have to understand if it is time for you to buy gold with Bitcoin. Like any other financial decision you make, this one is full of variables that go beyond market prices.
Nevertheless, it is always good to know you can buy gold with Bitcoin even if you never trade your BTC for the precious metal. The availability of this option shows just how well Bitcoin is maturing and how its adoption is still growing.