Cryptocurrencies like bitcoin, ethereum, litecoin, and ripple have been gaining popularity in recent years. What’s the draw to these types of currencies/electronic payment systems? For starters, they are not regulated by any central bank. Rather, cryptocurrencies are governed only by cryptography and generated using math, computer science, and electrical engineering.
The concept of a digital monetary system with no central authority was thought up in 1998, but it wasn’t until 2009—11 years later—that bitcoin was released as open-source software.
Since then, the bitcoin network has garnered over 13 million individuals using the digital currency to make purchases and send/receive payments. In fact, hundreds of thousands of bitcoin transactions occur daily.
Many businesses—including Provident—have started accepting bitcoin as a method of payment to meet the rising demand. And that has led to an influx of consumers using bitcoin (and other cryptocurrencies) to buy physical precious metal bullion like gold and silver.
Bullion and bitcoin tend to work hand-in-hand because people who take an interest in both tend to prefer unregulated sources of money over fiat money.
Pros and Cons of Using Bitcoin
In addition to to being decentralized, other benefits of using bitcoin include the convenience of making international payments almost instantly, the speed of transactions, and the security of the bitcoin network’s cryptographic infrastructure.
But like with most things, the benefits are met with a few cons as well. One con associated with bitcoin is the extreme volatility of the currency. It has seen constant and drastic price fluctuations, causing some people to only keep as much money in bitcoin as they are able and willing to lose at any given time. Other cons include the instant and irreversible nature of bitcoin transactions and the fact that all bitcoin transactions are publicly stored on the network, though your identity is kept hidden.
These pros and cons, along with the fact that bitcoin is still a developmental currency, may impact your decision to use the cryptocurrency. However, if you decide to proceed, you can start buying metals with it as soon as you set up and fund your bitcoin wallet, which is simply an interface that allows you to access your bitcoin account.
Using Bitcoin to Buy Precious Metals
Some bitcoin users worry about the safety of their gains because of the cryptocurrency’s continued volatility. Some users have invested in bitcoin and then seen their gains virtually disappear overnight. One way to protect your money is to trade your bitcoin for physical metals, bypassing the notion of converting your bitcoin into cash first.
Metals like gold and silver have proven to be safe haven assets for centuries, with intrinsic value stemming back to ancient times. Buying bullion with bitcoin can protect your digital earnings from the roller coaster of the cryptocurrency market. Rather than risk great loss, you can reinvest your money in a stable asset and diversify your portfolio.
Using bitcoin to buy bullion also allows you to quickly respond to the spot price of metals, letting you take advantage of market changes or good deals you stumble across.
Bitcoin and Provident
Accepting bitcoin as a payment method is just one more way that Provident aims to better serve customers. We’ve heard you and we understand that the bitcoin market, though still in its infancy, is growing in size and popularity. You can purchase metals using bitcoin through our website, which offers you more flexibility with your investment choices.
What do you think about using cryptocurrencies to buy precious metal bullion? We’d love to hear your thoughts in the comments section below.
I think it a great way to get me into cryptocurrencies. I always thought cryptocurrencies to be too risky and volatile. The more I try to understand them the less I understand them. This gives me a Reason to do more research and invest in it.
Glad the topic caught your interest, Raymond!
Listening to a very interesting book on the subject, “The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order”. Brings you up to speed on the tech (simplified), history and utility of crypto currencies. Talks a lot about Bitcoin, but the basic principles apply to Litecoin, Ethereum, Ripple….
It also provides a good discussion on the overall subject of money – what it is, and what it isn’t – so as to provide context and parallels to gold, silver and fiat currencies.
Sounds like a very interesting read!