Bitstamp offers gold - review

Thursday 04 February 2016

Bitcoin exchange Bitstamp is now selling real, physical gold, sending it straight to your door. I take a look at the service and fail to be deeply impressed.

Recently I’ve been seeing adverts for Bitstamp’s new gold service plastered across the web. I’ve looked at Vaultoro’s service in the past and have been impressed at how easy they make it to buy gold. In this instance, it’s locked away in a fully insured and audited vault, and it will cost you extra to take physical possession. Bitstamp are doing the opposite. They’ve partnered with a Slovenian reseller to deliver you bars of gold from 1g up to 1kg.

Read also: Vaultoro: gold for bitcoins

Essentially, you can think of this as another way to withdraw funds. Instead of a SEPA or wire transfer, or a Ripple transaction, you can use your USD balance on Bitstamp to buy gold and have it shipped to your home.

Now, just as a disclaimer, I’m not a big fan of gold. I like the idea of it - a shiny store of value outside the banking system - but the reality is a bit of a let down. You can’t spend it, for example, and selling it for money you can spend is really awkward. It’s not safe to hold lots of it on the premises, either. This is one of the reasons I like bitcoin; it’s like a very liquid, portable, spendable form of gold. But I digress.

Gold

Gold: it's expensive and shiny, and you can't actually do much with it

I’m already registered on Bitstamp but if you want to buy gold it turns out you have to go through another round of KYC. Bitstamp does love their KYC. So they duly gave me a brisk full body search, inside and out; took fingerprints, DNA and photos of my kids; implanted me with a tracking device and tattooed a unique ID code on my inner thigh. (Also they asked for my mobile number and sent a verification code.)

Finally, a little sore and disoriented, I’m ready to buy some gold.

You buy with USD, not BTC - that is, you need a USD balance, rather than bitcoins being converted at the time of purchase. The price of gold is fixed at the moment you buy it. Unfortunately, there are some economies of scale at work here, and they don’t make it attractive for the smaller buyer.

First up, the price per gram is really bad for small amounts. Buy 1g of gold and you’ll pay $53.10 at the time of writing; buy 1kg and it’s $37,140.99, which means it’s 40% more expensive per gram to buy in small quantities. Ouch. Not only that, but you’ll pay for delivery for 1g - $25.17 - which you won’t have to for 1kg. Or you can pick it up yourself from Ljubljana, Slovenia, free of charge. Since you’re evidently a thrifty soul you might like to take a budget airline home again. The delivery charges are between about $25 and $30 until you order an ounce of gold, which will set you back $1,187.85. For reference, the spot price right now is $1,112.30, so one way or another there’s quite a premium built in here. Or rather, one way and another - it seems like they're taking a little extra margin at every turn.

Bottom line: there are better ways to buy gold. I like Bitstamp as an exchange - barring their very extensive KYC, which is just part of the world we live in - but this is little more than a bolt-on service you’ll pay through the nose for.

So sorry, Bitstamp. I wanted to like this, I really did. But if you’re really insistent on buying gold for bitcoins I’d have to point you to another service, like Amagi


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