Buying Silver With Bitcoin

Silver is one of the oldest ways to invest money; it’s been valued for thousands of years and used as currency since at least 600BC. It’s still popular today as a solid, reliable investment that gives a consistent return over time, and a good hedge against economic collapse. Bitcoin, on the other hand, is the latest concept in currencies. Fully digital and with no central banking system behind it, Bitcoin offer a whole new level of security and anonymity for online purchasing. They’re also as easy to use as PayPal – you can “mine” or buy Bitcoin, and once you have them they’re stored in an online wallet. It’s simple to either buy things with them or exchange them for cash.

The anonymity of Bitcoin makes them an ideal way to pay for silver bullion online. You probably don’t want the world to know you’re investing in silver, especially if you plan to store your metal at home. Unfortunately it’s usually pretty hard to conceal your purchases from everyone. At the very least your bank or credit card issuer’s records will show you made payments to a precious metal dealer. If you’re worried about seizure of assets you probably want to avoid that, and Bitcoin could be the perfect solution. Every transaction you make is completely private and protected by strong encryption, so nobody except you and the silver dealer will be able to see the sale. There really isn’t a more discreet way to buy.

Because Bitcoins are relatively new (they went online in 2009) they’re not as widely accepted as other payment methods, but an increasing number of metal dealers will take them as payment. One point to be aware of is that many dealers will set a minimum purchase value for Bitcoin that may be higher than for other payment methods. There will also probably be a processing charge for using Bitcoin. Bitcoin themselves won’t charge, but from the dealer’s side there are costs involved in converting the digital currency into dollars, and they almost always pass this cost onto the customer. Expect to pay a premium of between 2 and 4 per cent for Bitcoin transactions.

With an additional fee for using them, does it actually make sense to use Bitcoin for your silver purchases? That’s a personal decision, but you have to weigh up the charge against the anonymity of the system as well as its speed. Unlike a check or wire transfer a Bitcoin transaction will be completed in minutes so your silver will be shipped that much sooner.

A final question that’s often asked is why convert Bitcoin to precious metals in the first place? After all the “mining” system ensures that the supply of Bitcoins is limited, and they’ve gained value at a rate that often exceeds the silver spot price. There’s no doubt, Bitcoins can be an excellent investment in their own right. On the other hand you don’t have the security that actually owning a stock of physical silver gives you. A server fault in the wrong place could wipe out your Bitcoins, so instead of keeping all your eggs in one basket using some to buy silver really is an excellent idea.