North American commodities dealer Agora Commodities has this week made a bold step by offering traders and investors the option of buying a series of precious metals including gold, silver, platinum and palladium in exchange for Bitcoin.
Virtual Currency Buys The Real Thing
Agora Commodities is the first company to offer a physical commodity which can be paid for with virtual currency, the transaction value of which is likely to be subject to extreme variations as gold has known parameters, being an established, physical resource, whereas Bitcoin does not, as it is a virtual media with only a short history and often extreme fluctuations in value.
The Price Of Privacy
Yesterday, Joseph Castillo, President of Agora Commodities stated on behalf of his firm that he believes that privacy is no longer the precious commodity that it once was, and that in allowing commodity transactions to take place using Bitcoins displays to its customers that it intends to preserve anonymity and display respect for the privacy of its clients and their investments.
Mr. Castillo’s statement reads as follows: “In today’s world, privacy is quickly turning into one of the people’s most precious commodities. I was inspired by an ISP provider in Utah that refused to give his customers data over to authorities when it was not properly requested with a warrant. Agora Commodities first and foremost respects its customers’ privacy. This was the best way to show that respect”.
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Investors Eschew Banks, Regulators Eschew Bitcoins
A point of interest here is that whilst this method of payment offers clients a means of investing in precious metals anonymously, thus circumventing government surveillance or capital controls such as exist in Argentina as reported by Forex Magnates last week, performing anti-money-laundering (AML) and know-your-client (KYC) procedures in order to satisfy regulatory requirements could prove to be an arduous process.
Last month, Forex Magnates reported that Bitcoin network BTC Global was in the process of implementing a crowdsourced regulatory structure which goes some way toward resolving the actual compliance issues associated with virtual currency itself, however if an individual or organization wishes to purchase commodities anonymously, and the payment arrives with the commodities dealer with no ownership or originator details, this is likely to attract the attention of the regulator.
Bearing in mind that since 2008, the previously water-tight trust in the banking system is beginning to wane, assisted by various financial crises in the Eurozone and North America, IMF bailouts, nationalization of banks and this year, the first bail-in which took place in Cyprus, relieving depositors of up to 60% of their own funds to help pay the unserviceable debts of two of the nations banks, and setting a pan-European precedent.
In other nations such as Argentina and China, the government exercises strict control on capital transfer, restricting citizens’ funds to domestic banking systems and markets, a practice often unpopular with those subject to such procedures.
These factors have contributed to a switch toward investment in other mediums, as money in the bank does not provide the safe haven that it used to. By offering gold and Bitcoin, Agora Commodities could well be embracing the two currencies of the future.