How to Trade Gold Using Bitcoin

In addition to its function as a means of payment, the use of Bitcoin in trading and investment activities can also play a powerful role. In particular, investors are looking to use Bitcoin to trade gold, and here are several ways to do this.

Gold is often viewed as a store of value, as its scarcity and limited supply in the world ensure that its value will continue to grow. It is also seen as a protection against inflation, as traders buy more of the precious metal, causing price levels to rise.

Bitcoin is also considered "digital gold" because it possesses the same scarcity as precious metals. Only a limited number of Bitcoins can be mined, leading many to believe that its value will continue to rise in the long run.

As such, some people are using Bitcoin to get involved in gold trading. For example, San Francisco-based company Serica, formerly Digital Tangible, launched the first gold-bitcoin exchange last year to meet the growing demand for gold trading in multiple cryptocurrencies.

Serica uses counterparty tokens or colored bitcoins to act as proof of ownership of the gold, which is actually stored in vaults in Delaware or Singapore. The company also pays sellers in bitcoin, and sellers can mail their gold through their Bitcoin4Gold feature.

Vaulturo is another Bitcoin exchange that is based in Switzerland. This exchange has three types of wallets, namely the hot wallet which is used for online storage of daily trading activities, the warm wallet for auditing purposes, and the cold wallet which holds the majority of the user’s funds.

Meanwhile, Thailand-based Midas Reserve offers MRCoin, a meta-cryptocurrency that is recognized as a colored bitcoin. This is equivalent to one gram of gold and is also stored in different vault locations around the world.

The companies say they can use Bitcoin to trade or hold gold without having to physically exchange it, but still retaining the security of holding the asset.