Gold for bitcoin new fad as e-currency count nears 500-mark
PTI Jul 28, 2014, 12.44AM IST
NEW DELHI: In a fresh possible headache for regulators, including in India, ‘gold for bitcoin’ trades are emerging as a new fad in the world of anonymous transactions, fuelling further the appetite for virtual currencies.
This comes at a time when the count of virtual currencies available in the market is fast moving closer to the 500-mark, although the price of top-ranked bitcoin has begun showing signs of stability at around USD 500-600 level after remaining highly volatile for most part of its half a decade existence.
According to bitcoin traders, the stabilisation in bitcoin rates is making the case stronger for exchanging them for gold that currently trades at less than USD 1,300 per ounce or about Rs 28,000 per 10 grams in India.
Bitcoins, which command about USD 8 billion in market value, have stumbled from one controversy to another as the unregulated currency is prone to misuse and its links to gold trades could be another.
Some firms and traders have begun aggressively selling bitcoins in exchange of gold, while new websites and portals are cropping up almost every day to cash in on this new frenzy, according to industry players.
Besides, bitcoin industry is looking at India and China in a big way as both these populous nations have a long history with gold and consume hundreds of tonnes of the precious metal every year.
‘Gold for bitcoin’ trades can also facilitate additional virtual demand for both the assets, compounding the woes of befuddled regulators, which are already finding it difficult to rein in bubbles created by gold, while the yellow metal is also being used extensively for black money transactions.
While countries and financial watchdogs have tightened the screws on bitcoin industry, especially after a series of debacles, including Silk Road episode, the failure of Mt Gox exchange and persistent money laundering charges, the gold for bitcoin trades could have wider implications.
“Both the assets need to be ‘mined’. One physically and the other one electronically. They are also limited in nature. Also, both of them threaten the paper money system as alternatives. Besides, black money can be kept in both or change hands as per convenience,” says a bitcoin trader.
The market places for digital currencies have grown at an exponential rate with over 1,400 platforms online alone. Thanks to low transaction cost and difficult to trace nature of transactions, bitcoins are also being accepted by traditional small and big businesses.
While India is yet to put in place any separate guidelines for bitcoins and other virtual currencies, RBI has already warned against their use due to potential risks associated with such transactions.
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