Fintech Investing

Slovenian bitcoin exchange Bitstamp is now offering gold bars to customers.

The similarities between gold and bitcoin have long been acknowledged by industry watchers. However, the relationship between the two may be shifting. 
While bitcoin and gold were previously seen as potential competitors, bitcoin exchange Bitstamp is now bringing them together. CoinDesk reported Wednesday that Bitstamp has partnered with precious metals trader Moro & Kunst to offer customers the option of purchasing gold.

Gold and bitcoin unite

Bitstamp’s new service is couched as a withdrawal option for exchange users, who are able to purchase the metal directly from Bitstamp. Priced in US dollars and presented as gold bars (ranging from 1 to 1,000 grams), the gold is shipped to purchasers with a certified tracking number and expedited delivery.
Bitstamp’s CEO Nejc Kodrič explained to CoinDesk, “we want to introduce a bitcoin/gold trading pair and this is the first step in doing so. We think that clients that are long in bitcoin would prefer to take advantage of bitcoin’s volatility if they trade it against alternative store of value — gold.”
On the Bitstamp website, gold is currently priced in US dollars, with price information updated every five minutes. However, Kodrič dreams of a future service where gold and bitcoin are directly convertible.

Innovator for bitcoin

Bitstamp has long been a supporter of making bitcoin more accessible and understandable. Case in point: earlier this week it announced that bitcoin is now available to purchase via Visa and MasterCard credit and debit cards for consumers in the UK and Slovenia. The company is looking to expand this service into other EU countries in the future.
A few months earlier, the company enhanced its user experience by releasing a native app for iOS. The app allows customers to deposit and withdraw bitcoins directly, make payments with QR codes and bitcoin addresses, secure the app with PIN code authentication and receive real-time market data.

Regulatory hurdles in the US

Bitstamp’s newest service selling gold is currently limited to EU member countries since different regulations in the US would place an increased regulatory, licencing and financial burden on the bitcoin exchange. In particular, the Financial Crimes Enforcement Network has ruled that tokenizing commodities (like gold) qualifies a company as a money transmitting business, which comes with its own set of enhanced regulatory challenges.

China uncertainty to boost gold and bitcoin prices

Historically, both bitcoin and gold respond well to market uncertainty. While gold investors seek a tangible commodity, bitcoin enthusiasts find comfort in the digital currency’s decentralization. China’s current economic challenges are thus set to boost the value of both these currencies.
Looking at the current gold price, Reuters reported that it reached a four-week high on Wednesday, extending gains for a third session. Societe Generale (EPA:GLE) analyst Robin Bhar told the news outlet that “some risk aversion prompting safe haven flows has helped gold to stabilize and now test resistance. Physical demand has been pretty strong at the lower levels.”
Spot gold is currently trading at $1,093.80 an ounce. Meanwhile, the bitcoin price is hovering between $428 and $433 on the major bitcoin exchanges.

Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.


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