Buying Gold With Bitcoin: A Simple Guide
The emergence of Bitcoin and the cryptocurrency ecosystem as a whole has opened up new avenues for the payments industry. It is also stirring up interesting debates in monetary policy circles.
More and more people are buying bitcoin. Hence more and more businesses are accepting Bitcoin as payment. The gold industry is no different.
Gainesville Coins accepts several different cryptocurrencies. In addition to Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC), you can also pay with Bitcoin Cash (BCH), Dai (DAI), and USD Coin (USDC). Our crypto price for an item is listed right on every product page.
Gainesville Coins accepts several major cryptocurrencies to buy precious metals.
This article will walk you through the steps of how to purchase precious metals with cryptocurrencies. Understanding how to acquire Bitcoin and how to buy physical gold with Bitcoin may still be sources of confusion. The crypto market is still in its infancy, relatively speaking.
Cryptocurrency Wallets and the Buying Process
Cryptocurrencies are traded 24 hours a day on crypto exchanges. They're not so different from other types of trading markets, such as the New York Stock Exchange or foreign exchange (forex) platforms. You can place a buy order for any crypto you like using most major currencies (dollars, euros, etc.).
Before you buy a cryptocurrency, you'll need a place to "store" it. Crypto wallets are almost exactly what they sound like: a digital holding place for your cryptocurrency. You can quickly download a wallet to your computer or mobile device.
BitPay is one popular option. There are many different wallets out there—each one specific to the type of crypto you’re holding. You can typically make your cryptocurrency purchase through whatever wallet application you're using.
Your wallet will have a unique address—a long string of letters and numbers—that corresponds to your account. You can often use a QR code that can be scanned by a smartphone rather than typing out the address itself.
Every wallet also comes with a set of private keys, which is essentially a recovery password. It is made up of about a dozen randomly-generated words known as a seed phrase. If you forget or lose your private keys, you won't be able to access your wallet if you want to withdraw funds later.
Luckily your wallet software probably won't require your private keys for every transfer, only withdrawals. You won't have to type the long seed phrase every time you pay for a gold bar or silver bar with Bitcoin. Be sure to write down your private keys just in case.
Buying Gold With Bitcoin Is Simple
Most gold dealers with an online presence will accept Bitcoin as payment. Some online gold retailers will even accept certain other cryptos, as well.
However, the chances are good that your local brick-and-mortar gold seller still doesn’t deal with cryptocurrencies. For the most part, you're going to need to place your order over the internet if you want to pay with cryptos.
Luckily, the process is very easy:
- Download a cryptocurrency wallet. The software application (app) should be compatible with any smartphone.
- Purchase Bitcoin (or whatever other cryptocurrency you want) through the wallet using a credit card. You may be asked to verify your identity.
- Find a trustworthy gold seller who accepts cryptocurrency.
- Enter the amount of cryptocurrency you want to spend. Most crypto wallets will conveniently convert the amount from U.S. dollars or your local currency.
- Enter the blockchain address provided by the seller, or scan their QR code.
- Wait for your transaction to be confirmed on the blockchain.
Bitcoins aren't actual physical tokens, contrary to what their name (and these glossy images) may imply.
Anyone can buy Bitcoin and hold it. Your digital wallet will also give you the ability to send a cryptocurrency to any other wallet address on the blockchain. This can either be done by manually entering the address or by scanning a QR code provided by the seller (Step 5 above).
Most transactions on the blockchain are confirmed in a matter of minutes. Smaller amounts will generally take longer.
Despite Bitcoin's reputation for anonymity, sending cryptocurrency from your wallet still requires some form of identification. The third parties that offer these digital wallets must adhere to Know Your Customer (KYC) protocols. You will likely have to submit a photo of your driver's license or other ID card before you can transfer crypto.
The Basics of Bitcoin
Bitcoin is a digital currency based on a blockchain network. It operates in part on principles of cryptography, hence the name “cryptocurrency.”
Bitcoin offers convenient means of transferring money over the internet without paying the merchant's fees associated with credit card transactions.
In the simplest terms, Bitcoin is a digital currency. It has an underlying network called the blockchain. This is where the validation of Bitcoin transactions occurs thanks to a voluntary community of hardware operators known as "miners." By using computing power to verify transactions on the blockchain, miners are rewarded with newly-created Bitcoin.
It's a pretty elegant idea. This mining arrangement, known as proof of work, also ensures an automatic and very gradual growth of the supply of Bitcoin. It regulates the amount of Bitcoins that are in circulation without needing any intervention, unlike a government-issued fiat currency that can be printed by the central bank at will.
By design, only 21 million Bitcoins will ever be in existence. The mining process slowly releases more BTC into circulation. So far about 90% of the Bitcoin supply has been released. Every four years or so, the rewards given to miners are cut in half. This design has contributed to the rising Bitcoin price since its inception in 2008.
Fractions of a Bitcoin are called Satoshis. They are named after the apocryphal creator of Bitcoin, Satoshi Nakamoto. It takes 100 million Satoshis to equal 1 BTC.
Bitcoin Is Still a Developing Technology
Some creative "hodlers" did create symbolic tokens with QR codes that directed to their digital wallet address.
There are still drawbacks to using cryptocurrencies despite their advantages. One drawback is that Bitcoin and other cryptos are still subject to rather high price volatility. This volatility isn't a desirable quality in a currency or medium of exchange.
Another drawback is network capacity. Cryptocurrency networks cannot handle the high transaction volumes that are routinely processed by credit card issuers, for instance. When a lot of people are sending BTC at the same time, you will have to choose between paying a very high fee for your transaction or enduring long wait times of several hours (or even days).
If you'd like to track up-to-the-minute cryptocurrency prices, I recommend checking CoinMarketCap. You can view prices for all of the various cryptos, compare the "market capitalization" of each coin, and check their circulating supply.
The information provided herein is intended solely for informational purposes. It should not be used or construed as investment advice.
More information about Bitcoin and cryptocurrencies from the author:
Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.
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