NOTE: In the first 8 hours since this article was published bitcoins have climbed from $13.75 to 14.30 or up 4%. If you are a Bitcoin supporter, whether a GoldMoney customer or not, then please submit the survey to show potential market demand.
[pullquote]You would think anyone who claims to be an expert in money and currency would immediately see the potential synergies and therefore it is really surprising that GoldMoney has not already integrated with Bitcoin.[/pullquote]Being a GoldMoney customer and Bitcoin advocate, on 9 Jan 2013 I received an interesting email from GoldMoney that has a surprisingly positive portent.
First, it announced the new vault in Singapore (Whoop dee doo, how innovative!) and second it requested customer feedback via the anonymous Annual Survey for 2013.
Near the end of the survey I came across significant areas regarding Bitcoin and its potential integration with GoldMoney. Since I started publicly recommending Bitcoin in 2010 and have been a GoldMoney supporter longer therefore it makes sense that they may be reading my articles or Jon Matonis's What's Your Bitcoin Strategy?.
THE GOLDMONEY ANNUAL SURVEY
The annual survey requests:
Please take the chance to tell us what you expect from us in the future by clicking on the following link to access the GoldMoney Annual Survey 2013. It takes just 3-5 minutes to complete and will be accessible until 31 January 2013. ...
12. How much are you interested in using Bitcoin for online transactions? ...
13. Please specify below which Bitcoin functionality you would like to use:
Use Bitcoin to buy precious metals with Goldmoney
Use GoldMoney to store Bitcoins in a secure wallet
On 20 Dec 2011 I received an ominous email from GoldMoney announcing the economic censorship of the payment mechanism.
Due to this growing trend of regulation we have decided to suspend the following services until further notice with an effective date of the 21st January 2012:
* The facility to make and receive payments in precious metals to or from other GoldMoney Full Holding customers.
* The facility to convert directly between the various currencies.
[pullquote]To put it simply: Your gold, silver, platinum and palladium held via GoldMoney can be frozen or confiscated.[/pullquote]WHY YOUR ASSETS ARE NOT SAFE AT GOLDMONEY UNTIL THEY ALLOW BITCOIN WITHDRAWALS
Based on the survey requests it seems obvious that GoldMoney is completely missing the point of Bitcoin. Bitcoin is the first digital currency that is censorship-resistant.
In other words, if for whatever reason, justified or unjustified, some petulant brat in a costume provides a sheet a paper with an order on it to take all the gold, silver, etc. that previously was titled to you then GoldMoney will rollover and give them the gold.
To put it simply: Your gold, silver, platinum and palladium held via GoldMoney can be frozen or confiscated. However, when you properly store bitcoins, and I teach you how in The Free Bitcoin Guide, they can never be frozen or confiscated.
But if GoldMoney allowed you to buy bitcoins and withdraw them then your metals would no longer be at much risk because within about 24 hours you could exchange them into bitcoins and withdraw to a wallet. Then the value would be immune to freezing or seizing.
[pullquote]Just use Bitcoin, which is the currency on the Internet. - Rush Limbaugh[/pullquote]HOW GOLDMONEY SHOULD MOVE FORWARD
Ironically, the questions in GoldMoney's survey imply they are looking at this issue of integrating with Bitcoin the wrong way. There is another option which would be the least expensive way to integrate Bitcoin, would add the greater value to customers and generate tremendous revenues for GoldMoney.
GoldMoney should not be seeking to bring bitcoins into GoldMoney customer's holdings to buy metals. For several reason, GoldMoney should be looking to free customers by allowing them to withdraw bitcoins from their holdings to wallet's outside GoldMoney's control.
First, the customer is king and people want to be free with their money. They want the option to stand free and independent without any third-parties or middlemen between them and it. They want it to be sovereign. This is the allure of gold and the old saying, "If you don't hold it you don't own it."
Not only is it the right thing to do but there is a ton of money to be made running an underground railroad from fiat currencies and over-leveraged politicized banks to non-politicized decentralized digital censorship-resistant currency. Just think if those customers, who currently hold $2.2B of assets with GoldMoney, were able to instantly buy bitcoins. A $2.2B market cap for bitcoin implies a price per bitcoin of about $200 or a gain of about 1,400% from current prices.
Second, the main issue with bitcoins for a company like GoldMoney or any bank has to do with the source of funds. GoldMoney already performs all the necessary Anti-Money Laundering and Know Your Client due diligence required by regulated financial institutions.
If GoldMoney starts off only allowing customers to buy bitcoins and withdraw bitcoins they buy from GoldMoney then they do not need to worry about the source of funds because the only way to fund the holdings is with wire transfers where GoldMoney is already incurring the AML/KYC fees.
GoldMoney can acquire bitcoins from a few trusted sources, like the large exchanges, and remain within the safest legal areas without incurring any additional costs.
Third, despite gold collapsing against Bitcoin in 2012 they still remain an extremely speculative asset. Sure, they have performed extremely well but that is no guarantee of future performance.
Although bitcoins, like gold, are not subject to counter-party risk the holding bitcoins is not necessarily a very safe strategy. Bitcoins could become completely worthless. After all, that is why one buys gold instead of silver; gold is the penultimate store of value.
Fourth, the payment business is heavily regulated and those regulations are constantly changing. As GoldMoney has already discovered, that industry is a real pain in the rear end because of economic censorship.
But there is one person who gets it; Erik Voorhees, who was invited in Sept. 2012 by the Brazilian Central Bank to present about Bitcoin and other attendees such as several Federal Reserve officials, the SWIFT Director of Brazil's office, Santander, BM&F Bovespa, PNC Bank, National Bank of Canada, HSBC, and a high-level representative from Chile’s equivalent of the ACH system.
My take away from this last session was the revelation that Bitcoin eviscerates entire statutes of law. Bitcoin will result in a number of “legal impotencies,” while simultaneously offering an alternative to the business and money that is being stifled by these same laws in the normal economy
Then in Oct 2012 the European Central Bank released a 55 page report and focused about half of it on Bitcoin. It appears that this scrappy upstart censorship-resistant digital currency is sure getting more attention than it deserves.
Fifth, bitcoins are currently legal in all countries and have not been made illegal by any. A French court has even ruled that a bank must reinstate banking services to a Bitcoin exchange after the bank froze the account because they did not want to be facilitating money laundering.
How particular businesses interact with Bitcoin can result in some interesting legal uncertainties and these likely will not be resolved for a long time. But the suggested method of moving forward for GoldMoney would not be materially different from current practices.
Allowing customers to buy bitcoins and withdraw them is not materially different from GoldMoney's current business of allowing customers to buy gold and take physical possession. After all, the customers own title to the gold and can take possession at will (perhaps to only a specific address previously authorized for the account via a signed document sent by the customer to prevent any potential fraud, compromise, etc.) and so likewise would presumably own title to the bitcoins and should be able to take possession at will.
Sixth, once customers have bitcoins in their possession then they can avail themselves of the Bitcoin payment mechanisms. Just like Erik explained to the Federal Reserve attorney presenting on Dodd-Frank bill Section 1037 so likewise this strategy would allow GoldMoney to disentangle from the payments related regulation.
Think of all the attorneys that will be out of work when GoldMoney no longer needs to worry about thousands of pages of relevant law in many different countries that is constantly changing.
CONCLUSION - WHAT YOU CAN DO
So, this email requesting input for the Annual Survey was very encouraging. If GoldMoney integrated with Bitcoin then it would likely be the ultimate tool for standing free and independent with your money. Plus, it would give them a competitive advantage over BullionVault and its other competitors.
Really, you would think anyone who claims to be an expert in money and currency would immediately see the potential synergies and therefore it is really surprising that GoldMoney has not already integrated with Bitcoin.
What can you do? Well, the Annual Survey is anonymous, takes about 3-5 minutes to complete and does not close until 31 JAN 2013. So, I would recommend you complete the survey along with the suggestion to "Integrate with bitcoin and begin by allowing me to buy bitcoins and withdraw them to a wallet."
If you are not currently a GoldMoney customer then I suppose you can still complete the Annual Survey because it is anonymous. Plus, you can always open a GoldMoney holding for free and send the customer support a question about when they will integrate with Bitcoins.
SOME INTERESTING BITCOIN RELATED VIDEOS
15 SEP 2012 - I discuss some of the basics of Bitcoin.
20 SEP 2012 - James Turk discusses Bitcoin and gets hung up on whether Bitcoin is tangible; which it is, just not corporeal.
25 NOV 2012 - Chris Odom discusses how Bitcoin is universal glue.