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Investing & locking the value of btc

Last update: April 22, 2016

The first thing that a trader comes up with when looking for a solution to Bitcoin volatility is diversification. That’s easy, you don’t have to hold Bitcoins. Stick some in altcoins that are dipping of before the rise but remember it’s a blatant gamble since altcoin markets are too small to be predictable.

The second thing one naturally comes up with is probably gold or some other commodity that is (incorrectly) perceived as of a stable value. That said, gold is probably not a bad investment but be prepared you need to a/ trust a third party to keep your gold, b/ trust your gold exchange that there actually is some gold and c/ probably not being able to sell back for Bitcoin. Thus far, only Vaultoro is real BTC/GOLD market in both directions.

If none of this looks like what you are looking for, you might want to sell BTC for fiat (which with Bitcoin VCC can be somewhat “reversible”) or to hedge Bitcoin USD value with futures.

Buying Gold with BTC

If you are a Bitcoin trader and not only want to invest Bitcoin but will also want to make profit on that investment in Bitcoin, be careful here. Selling gold is a service like any other and while some providers will let you buy gold with Bitcoin, they might not let you sell it for Bitcoin.

The only pure Bitcoin-gold market right now, standing completely outside the banking system, is Vaultoro.

##BitGold

BitGold has a reputation of a suspicious place.

There were discussions on Reddit whether BitGold is scam or not but failed to reach other point that the BitGold staff Emily who showed up on Reddit avoided answering questions she was asked:

It looks shady and kind of raises the question if all of the gold in third-party storage actually exists. I have not ventured into this to find out, to be honest.

BitGold requires full AML/KYC for their customers. First step is to verify your phone number which then determines the country of your address.

The important part, and the biggest disadvantage, is that while you can use Bitcoin as a fast way to deposit money, you cannot possible sell gold back to Bitcoin:

##Vaultoro

Vaultoro Gold Exchange is the only network where you only operate in gold vs. Bitcoins. They have public audits to prove their holdings, as explained on Reddit.

What’s the public audit? Well, as you register you get your public account ID. That ID (a random string) is published at audit.vaultoro.com along with your Bitcoin and gold holdings. Everyone can check their own holdings, users don’t have to be logged in.

From cointelegraph.com:

Joshua Scigala is reported to have lost a chunk of change in Mt. Gox’s collapse, and he went on to found Vaultoro as a “glass books” bitcoin-gold exchange.

The exchange uses three types of bitcoin wallets. They include “a hot wallet that is hosted online and used for daily trades, a warm wallet for auditing purpose that holds an amount of BitcoinCT r: 8 slightly above the amount in the hot wallet, and finally, mutisignature cold wallets, which hold the majority of users’ funds.”

Vaultoro’s vaults are located in Switzerland, and are audited bi-annually by BDO International. No government papers are required to purchase through Vaultoro unless the user buys more than US$5000 worth of gold per day. Services are not offered to anyone from Iran, Syria or North Korea.

Your gold is stilled stored and insured somewhere and redeeming it is not so easy. Vaultoro owns mass of gold so you need to pay the expense of cutting off your slice and sending it to you. The costs of this will be individual.

On Vaultoro you don’t need to verify yourself, you just cannot sign up from those three forbidden countries mentioned above.

But finally, because Vaultoro is a bitcoin-gold exchange, you can sell gold for Bitcoin too. You even can use Coinigy, the Bloomberg-style trading platform, to trade BTC/GOLD.

Sign up here!

##JMBullion

JMBullion is a respected provider of not only gold but all precious metals. They are reputable so naturally it was good news for many traders that JMBullion started accepting Bitcoin too. However, they are no bitcoin-gold exchange like Vaultoro.

Bitcoin into fiat

If you don’t want to invest in gold or ony other commodity, you might find it better to just sel Bitcoin for cash.

One stop shops

If you just want to pay out with no intention to use that money for trading again, you can either withdraw the money to your bank account or to PayPal. BitcoinLTD and other places are recommended in this article.

Reversible exchange

Wirex

If you want to get fiat but you still want to keep that backdoor of switching back to Bitcoin easily, you need Wirex card (formerly E-Coin). Their prepaid card has this option. Keep in mind the exchange rate will be different for each exchange (to and from fiat) since the market price will probably have changed.

Sign up with this link to get 25% discount.

PerfectMoney

Another option is PerfectMoney. It is a centralized eWallet similar to PayPal or Skrill but payments are not reversible. With PerfectMoney you cannot do chargeback.

That makes PerfectMoney more Bitcoin-friendly as selling BTC for PM money is not as risky as for PayPal or Skrill money. People on LBC won’t charge so much above market and generally the transfer will be a lot easier.

BTC to PerfectMoney and back - Your options

Bitcoin Futures

Using Bitcoin futures to hedge the Bitcoin dollar value is the most advanced way to do this. It is probably of some use for you only if you plan to accept BTC in your business or if you plan an expense in BTC in, say, three months time.

So, if you rent a VPS or two with quarterly payments, if you also pay your VPN subscription around that time or if you hire people for Bitcoin, hedging with futures could help you quite some with your finance management. At least if the price for those services is pegged to USD.

##The gist of hedging Bitoin dollar value:

You are expecting to get certain amount of Bitcoin on certain date and you will need to use those coins to cover other expenses as soon as you get them. The expenses are all pegged to a fiat currency.

You want them to have certain dollar value, possibly the one they would have today. That means you sell a future contract that will be mildly leveraged.

By selling the contract you open a short position and by leveraging it (say, 3x) you don’t need to put in the full amount of hedged Bitcoins (since you probably don’t even have them yet).

##The day you receive your Bitcoin comes:

If you want to learn more about futures try

As for hedging, the best platform is definitely CryptoFacilities but sadly, not available for US identities.


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