wondering about bitcoin as a currency? read my experience buying gold with btc

steveben

yesterday, i decided (perhaps foolishly) to use bitcoin (btc) to buy gold from a popular bullion dealer’s website. i want to relay my experience to those who maybe be wondering about bitcoin as a currency. i apologize in advance if none of this is news to you and please correct me if i am wrong on any points. comments and questions are welcome.

btc was at just below $18k, and gold down a little at ~$1263 when this transaction took place.

i decided to put ten, 3 gram, 2018 pandas in my cart, for a total of $1496, or 0.084222 in btc at the time. (1496 is so much easier to write or say, btw)

for those keeping score this equates to ~$1218 worth of 24k gold.

when you start the checkout process, both gold and btc, is frozen in $ for 15 minutes, for purposes of completing the transaction at an agreed price.

after putting in my shipping information, it’s time to pay with bitcoin. this bullion site uses an intermediary called bitpay to accept btc payments for them. this is interesting to me because, i understand one of the main benefits of bitcoin is that it allows for peer to peer payments…with no intermediaries…hmmm.

you click a payment button and bitpay presents you with a qr code for their wallet. i scan it with my wallet to send the btc. immediately, my wallet deducts the btc from my account with a ~$20 “network fee” (this is the fee paid to the btc miners to verify the transaction taking place, which i confirmed). that was easy!

but wait…

the bitpay wallet does not get any notification of that payment. it’s still waiting and there’s a 15-minute timer window on the screen counting down. hmmm.

i wonder what the current transaction time is for btc? so, I google it. sure enough…google reports it’s at 78 minutes, currently.

i think to myself, this isn’t going to work.

the bitpay window times out after 15…and i am taken back to the bullion dealers website where they give me a confirmed order page. that made me feel better because i think it’s just going to take a while longer to confirm the payment, but they got the order. i figure i’ll save that order page just in case, because it has the order number, etc.

78 minutes later…

i get a confirmation from bitpay they received my bitcoin. however, now the price of bitcoin has gone done from 17.9k to 17.1k and my order is “underpaid” by $66. therefore, it did not go through…would i like a refund of my btc (minus another $20 network fee)?

instead, i log into the bullion site. my order is gone! no record of it…except the one i saved myself.

i look in my coinbase account: confirmed all the btc i sent…gone, plus the network fee.

i call the bullion dealer and i explain all this to the service rep. she says all she can do is email accounting to see what they say and they will contact me in the morning.

in the meantime, i get worried and figure i'm at the mercy of bitpay now and maybe i should try the refund of the btc from them instead of waiting for the bullion dealer. i decide to follow bitpay's refund procedure.

i click their link for the refund…agree the second $20 network fee. they make me type my payment address in by hand!

for those who have never used btc or don’t know this, a bitcoin address is generated by a wallet as a place to send a btc payment, and it looks something like this:

1DcZjd1JFHC3Yh41gef14GLdoYnXkjZDpZ

each address is unique…so if i screw that up typing it in…well, you can be sure i’m not getting that money and there’s no recourse whatsoever. why the hell would they not let me scan a qr to send it to? another bitcoin fail.

anyway…

i type in the right address (triple checked it myself!) and bitpay tells me it will take 1 to 2 business days for my refund!! so much for the average transaction time of 78 minutes.

later that evening, i get an email from the bullion dealer…my payment is confirmed. what? okay, i guess this might work out after all…but what about the refund request that i just made with bitpay??

the next morning, i find out they re-instated my order for me and called off bitpay on the refund. they will ship once i pay the $66 additional money. otherwise, i can proceed with the refund from bitpay and not get the gold.

at this point, i would be down about $80 in network fees with the refund and no gold, because btc is down again today. i decided to pay $66 (by echeck) to get the gold. I did this because i want those cute little panda coins and i just want this whole ordeal to be over.

i think the bullion dealer should have honored the sale as per the original agreement…but that’s my opinion, i guess.

disclaimer: this money in btc is just profit i have made…so i am not crying about any of this. i want people to know about it because i think btc has some serious issues as a currency. if you don’t believe me…

google “benefits of bitcoin” and then think about my experience when you read them!!

renman95

Great write up. Thx.

TwoSides2aCoin

Somewhere there are ten baby pandas running around without a zoo to go to.

Kkathyl

thank you for sharing. I just think that some will make a little and many will lose a lot at this point. I have been hearing about Bitcoin since prior to 9-11 and as I recall it has failed many times. Good for you that you managed to make some money. Now you have Gold, Even better. I agree they should of honored the original price.

291fifth

Interesting story. I wonder when the crypto currency (is that what they call it?) craze will come to an end.

Baley

Wow, think of the electrical energy, and the hardware resources, that went into creating that fraction of a bitcoin.

Now consider the life energy that you put into making this transaction for the gold, and then more into typing out this interesting story, and now we're using our precious seconds and minutes in reading and responding to it...

Maybe someday, everything everyone does all day will be in service to our New Master, the great almighty Bitcoin..

derryb

shoulda just used dollars, they grow on trees.

DrBuster

Thanks for the process write up. So a CC purchase would have wound up cheaper??

Timbuk3

Thanks for sharing !!!

steveben

@DrBuster said:
Thanks for the process write up. So a CC purchase would have wound up cheaper??

definitely and safer

mbogoman

Wow! Great write-up. Very educational. Thanks for sharing with us. There are apparently a few kinks to be worked out...

dpoole

Very thorough commentary. Thanks so much.

It says much about the current state of the technology.

jmski52

Yup, the transaction costs were supposed to be negligible. Apparently not.

ChrisRx

Wonder how it would feel if this was happening while bubble-coin was popping.

Dave99B

Great write up. I can see how this could happen, and it's a bit scary. Just another reason to avoid Bitcoin all together!

Good luck,
Dave

1630Boston

As the world gets 'easier'...........it gets much more complicated. JMO

Thanks @steveben for a great report of the experience.....nothing is simple today.

Meltdown

That's a great perspective. Thanks, it's been my plan all along to take profit from cryptos and turn them into physical gold or silver. Not as easy as it sounds it would seem.

CaptHenway

Interesting.

PerryHall

Sounds like it would be easier to convert the bitcoins to U.S. dollars and then make any purchases using the U.S. dollars.

Baley

@PerryHall said:
Sounds like it would be easier to convert the bitcoins to U.S. dollars and then make any purchases using the U.S. dollars.

And there goes any advantage of the "currency". It becomes (stays) just a speculative bet.

ricko

Really interesting...Thank you for taking the time to write it up..... All this cryptocurrency phenomena reminds me of traversing a minefield... and somehow I think the A10 Warthogs will be coming through before the minefield is traversed..... Cheers, RickO

Outhaul

You can all keep your cyber money. There's no substitute for the good old readies.

Just my eversohumble opinion.

Cheers

Bob

Pokermandude

Thanks for the post. That's actually more of a headache that I had imagined it would be. Makes sense though. It's hard enough to hit one moving target (PM fluctuations, as priced in dollars), let alone PM fluctuations plus ridiculous bitcoin fluctuation swings.

Does bitcoin also trade 24/7? If so, there's not even a period of markets being closed where you can "lock in" a bitcoin value to buy something.

PS- What do you think would have happened had BTC gone UP between you placing the order and sending payment? I'm sure the receiving party would just chalk it up to good business and say "a deal's a deal!". Rather ridiculous.

derryb

and then there's the income tax implications/complications when trading one asset for another. Uncle wants his cut from you gains and he wants them calculated in dollars.

asheland

Sounds complicated. I just don't see this Bitcoin thing working out well for many.
It's definitely not for me!

steveben

@Baley said:

@PerryHall said:
Sounds like it would be easier to convert the bitcoins to U.S. dollars and then make any purchases using the U.S. dollars.

And there goes any advantage of the "currency". It becomes (stays) just a speculative bet.

i do believe one or more of these crypto-currencies will achieve mass acceptance...but it will be the one that has the fastest transaction times, lowest fees, and least volatility. that remains to be seen.

Baley

Yes, but will it be 'blind' to the taxing authorities?

tincup

@Baley said:
Yes, but will it be 'blind' to the taxing authorities?

I find it hard to believe that it could be totally 'blind', given that blockchain has a permanent trail of every transaction that takes place?

steveben

@Baley said:
Yes, but will it be 'blind' to the taxing authorities?

doubtful, very doubtful.

hchcoin

Can someone tell me how to short bitcoin

TwoSides2aCoin

My experience with money is that it costs more than it’s worth. Take a dollar bill, for instance. Take a clad quarter, or a zinc Cent, for that matter. The juice is hardly worth the squeeze.

So, back to the coin star machine thread to find something worth reading, while I get $.89 on the dollar for my money.

derryb

@hchcoin said:
Can someone tell me how to short bitcoin

shorting GBTC is an indirect play.

mbogoman

That gold looks pretty nice given today's BTC plunge. Great timing, even with the $66 extra you had to cough up!

BLUEJAYWAY

Wonder if this Bitcoin craze appeals more to the younger millennial crowd. Any breakdown stats on this, which groups of the population are into this currency?

derryb

currently a $200 billion market cap with bitcoin, actually small compared to other markets.

CaptHenway

I think today's SPLUNGE! illustrates pretty well why the company has a 15 minute cutoff time.

astrorat

Thanks for the write-up. What a pain ... glad it was all "profit."

cohodk

@derryb said:
currently a $200 billion market cap with bitcoin, actually small compared to other markets.

There are 30 companies with larger market caps.

AUandAG

So, why not just use your credit card for the gold purchase and then transfer the bitcoin to your credit card account? Or, can that not be done? Or to you Bank account and then pay your credit card? That would boggle my mind to try to do that...not for me, much too complicated. I'm just a retired simple man.
Yes, great timing!

bob

tincup

@BLUEJAYWAY said:
Wonder if this Bitcoin craze appeals more to the younger millennial crowd. Any breakdown stats on this, which groups of the population are into this currency?

A few days ago ZeroHedge had an article that claimed young Japanese men were some of the main drive behind this recent speculation. I do not care to try to dig that article back up, but it should be there if you care to look.

steveben

@AUandAG said:
So, why not just use your credit card for the gold purchase and then transfer the bitcoin to your credit card account? Or, can that not be done? Or to you Bank account and then pay your credit card? That would boggle my mind to try to do that...not for me, much too complicated. I'm just a retired simple man.
Yes, great timing!

bob

i could have sold the bitcoin using coinbase, which would have transferred to my account...then paid with a check. that would have been cheaper too...but i wanted to see how it would work.

renman95

Easy comrades. Y'all remember the internet in the late 90's? Most here had dial up. Pages took minutes to appear. Remember thinking why do I need all this information from smoe 'highway'? Or how about the anxiety of buying smoething online with a credit card. Oh the security! Now we can't put our mobile devices down. No one writes letters anymore, everyone is on smoe kind of social media. Your TV can stream hundreds of movies, dramas and sitcoms. Bitcoin and other cryptos may be difficult to use today, smoe may even fail as a usable currency (with the help of gov't regulation) but blockchain is here to stay. We haven't fully imagined its potential. What does it look like on the other side?

guitarwes

Great perspective Renman. Bitcoin was created less than 9 years ago. A lot of the innovations in it (and the blockchain) have only advanced and come forth in the past couple of years. (Remember the Commodore 64 computer? Put that up vs. and new MAC now? Heck, there's not even a disk drive on a bunch of the new desktops now. Try a Blackberry now vs. a iPhoneX, and that hadn't been that long ago). Same as diap-up vs. a fiber optic line as Renman mentioned.
Bitcoin core (BTC) is slow and expensive but secure. Bitcoin Cash (a fork off of the Bitcoin core protocol with bigger blocks) is much faster and cheaper. There are multiple other cryptocurrencies (Litecoin being the best IMO) that are approaching Early Adopter and subsequent Mass Adopter phase that are lightyears faster than any of the Bitcoin protocols.
6 months from now is going to look totally different. 6 years from now (in technological terms) is going to be lightyears ahead of today due to continued developments of the blockchain and it's potential.

derryb

Bitmania is clear evidence of a speculative frenzy desperate for easy profits. Question is, how crazy will it get before sanity returns.

WildIdea

There is always a learning curve and a hassle factor to such things. Pressing through that can open opportunities.

I'm looking to reduce hassles in my life. Simplify. My personality isn't properly suited for internet checkout ques and powerless restarts like you described. Frustrating, I could feel my blood pressure rising just reading it.