Bitcoin for gold in the mail. Orderbook and escrow service. Very strong rep.

[Anon136]

1/10th ounce gold eagle says "5 dollars" on it. Craaaaaap. That would almost certainly be used as a justification to slap me with transmitting money without a money transmitter license or at the very least KYC requirements.

Could still use bars like this.

But that's pretty restrictive.

I think im going to have to switch to a gram standard rather than troy ounce. Maybe 5 gram resolution with the option to use either 5 1 gram or 1 5 gram bar.

Just get the MSB license from FINCEN, it's free. I got one and it was no hassle.

Doesn't it require a 250,000 dollar bond and a license in every state?

[Anon136]

Cmon guys I need orders or else this thing is going to die. Even just place an order that you dont think will fill just so I have something to put on the spreadsheet.

Its a network problem. This service is of no use at all to the early adopters but maybe will be someday. So I need altruists to step forward.

I've been wanting to start a Bitcoin 4 Gold service for awhile, I'd definitely be interested in collaborating. I have a gold buyer who would be perfect for this and strong Bitcoin connections.

That sounds awesome! Send him to this thread for me. Or alternatively I'm happy to just provide escrow services for w/e sort of deal your parties require. I am also a general purpose escrow provider in addition to little pet projects like this.

[Anon136]

Thanks for all the info. I don't think im going to go spring for a MSB license before i even do a single trade but thanks to your comment ill probably move forward with that a little sooner than I otherwise would have if the community starts to show interest in the project. Also if msb is easy enough, i just wont worry about accpting coins with face denominations, its not like they are going to come throw me in federal prison for a few dozen trades, ill only get a knock if this service becomes sufficiently popular so i have plenty of time to worry about that in future.

So if you have an idea for what this local coin dealer would pay you, you might consider going ahead and posting up some buy orders (and potentially sell orders) that would allow enough room to arbitrage. Even if the offer is low it would be nice to have something to start filling up my orderbook with. You could supply some liquidity if nothing else.

And thankyou for your interest and advise. It is greatly appreciated.

[Anon136]

I will sell 1 Bitcoin in exchange for 0.26 troy ounces of .999 gold, of course this order will change as market prices fluctuate.

Minimum resolution is 0.1 troy ounces. So I can either place the order for 0.2 or 0.3 troy ounces. Ill set it for 0.2 at the price you specified. You can update the order in this thread anytime. More often means more bumps so feel free

[PilotofBTC]

I'll extend my order through Monday.

Also, shouldn't my order be on top since I'm offering a better rate?

[Anon136]

I will sell 1 Bitcoin in exchange for 0.26 troy ounces of .999 gold, of course this order will change as market prices fluctuate.

Minimum resolution is 0.1 troy ounces. So I can either place the order for 0.2 or 0.3 troy ounces. Ill set it for 0.2 at the price you specified. You can update the order in this thread anytime. More often means more bumps so feel free

Ok sounds good, 0.2 is fine for now. If this system works out well I will be getting plenty more.

What's the exact escrow process? Can localbitcoins escrow be integrated? I think that would work well if you're the buyer on localbitcoins, you'd still have complete knowledge and control of the trade and it would make the entire escrow process alot more official. Additionally you may end up getting alot of business from localbitcoins... it's a completely new way to buy bitcoin.

How will shipping be handled? It's $20 to overnight, which will probably be needed most of the time to really make this work. Probably easiest to set default shipping costs for the buyer and seller along with a few options (overnight, priority, standard), so those selling Bitcoins can properly account for that before placing an order.

Additionally the purity of the gold needs to be rigorously assessed, I will only be accepting very official pieces of gold like U.S. mint bullion until a strong system is in place. American Gold Eagles are good for this http://www.jmbullion.com/gold/gold-coins/american-gold-eagles/uncirculated-age/ Although if I got an ounce I would definitely want the Buffalo, it's 0.999 fine gold while eagle is ~0.91. Each order should state what sort've gold the Bitcoin seller will accept.

Sorry I don't understand your whole idea on localbitcoins. I have used localbitcoins as a bitcoin seller quite a long time ago.

I would be fine with any sort of shipping that the buyer wanted to pay for. There is a potential problem with trying to get the seller to do some sort of fancy shipping. He could just pretend like he was going to send some gold inorder to get the buyer to send him shipping money and then cut ties and never send any gold. There is also a problem with an expectation that the seller do fancy shipping. Either every single one of them does (thus making small purchases impractical) or none of them do. If you have some who do and some who dont you fracture the market. It loses its homogeneity and you have to make 2 different markets each with half the liquidity. Mainly this service is for people who arent in a terrible hurry. Of course if its some massive amount of gold than at some point shipping costs become negligible and it definitely becomes worth it to have tracking. So in sufficiently large amounts its reasonable to expect the seller to use good shipping just out of his own self interest.

It is very unlikely that you would ever receive a fake 1/10th ounce piece that conformed to weight and dimensional specifications. I don't think such a thing exists.

Ill have to think about the request for limitations on brands. I'm not sure how badly that would fracture the market. If you look at the spreadsheet you will get an idea for what im trying to do. I want it to be like a market like any of the other bitcoin exchanges. Inorder to do that people cant be requesting specific kinds of bitcoins. Each order has to be as good as any other. Now you do have altcoins, and if there is sufficient liquidity and volume in the future than we can fracture the market into two based on the sorts of distinctions that are most important to people (could be fast shipping from seller or potentially government mint vs non government mint or large coins vs small ect...). But until such a time as there is significant liquidity, its best to keep it all as one market, which entails some sacrifices.

[Anon136]

I'll extend my order through Monday.

Also, shouldn't my order be on top since I'm offering a better rate?

Updated

Rather than explaining it with words, I added a few faux orders to show the sort of thing I had in mind. Let me know if that helped.

It could of course just as easily be done the completely opposite way from top to bottom, and that wouldn't be wrong in any way, and in that situation your order would be on top. Just to me this way makes every so slightly more intuitive sense.

[Anon136]

I will do some research on which purity test is the most accurate and affordable and post it here later. I am very interested in seeing this market succeed and I plan on doing alot of business through it, this will be huge as long as proper precautions are taken.

Yes both will be sending to me and and I will be forwarding along after performing quality control.

Yes please do let me know what you find. I have been wanting to buy an ultrasonic thickness gauge which is pretty foolproof and works great with thick bars. I'm not sure how well it would work with 1/10th ounce. Also as far as conductivity is concerned, im not sure, but i dont think you would get a different reading in terms of conductivity with thick gold plate tungsten core vs solid gold. I think the current would simply take the path of least resistance around the core.

*edit* can you find any examples of fake 1/10th ounce gold coins on the internet. like a video with someone showing one or some good pictures and a convincing story. im having a hard time finding evidence that such a thing even exists. And if there are, as a bonus, can you find any example of one that would have conformed properly to all specifications? (besides gold content  )

[Blazed]

How is this better than a straight up escrow? You take 2x the chances of a shipping issue. Why not use an escrow to hold coins while the other party ships. Also it requires 2x the trust of the escrow here.

[PilotofBTC]

How is this better than a straight up escrow? You take 2x the chances of a shipping issue. Why not use an escrow to hold coins while the other party ships. Also it requires 2x the trust of the escrow here.

What?  One party holds the BTC and the coin/gold and once has both releases them to buyer/seller. What is 2x risk about that?

I assume it would work like this.

Joe decides to sell Pilot (me) a .1 ounce of gold for $95.

Escrow agent (Anon) tells me to remit BTC to him. Once it's received he tells Joe to send him gold. Once that is received Anon sends Joe the BTC and Pilot (me) the gold.

That is "straight up escrow."

[Anon136]

How is this better than a straight up escrow? You take 2x the chances of a shipping issue. Why not use an escrow to hold coins while the other party ships. Also it requires 2x the trust of the escrow here.

what pilot said

as far as increased shipping risk. yea that's pretty unfortunate. hopefully the service is still useful to some people despite this.

[Blazed]

How is this better than a straight up escrow? You take 2x the chances of a shipping issue. Why not use an escrow to hold coins while the other party ships. Also it requires 2x the trust of the escrow here.

What?  One party holds the BTC and the coin/gold and once has both releases them to buyer/seller. What is 2x risk about that?

I assume it would work like this.

Joe decides to sell Pilot (me) a .1 ounce of gold for $95.

Escrow agent (Anon) tells me to remit BTC to him. Once it's received he tells Joe to send him gold. Once that is received Anon sends Joe the BTC and Pilot (me) the gold.

That is "straight up escrow."

The risk was that the gold coin needs to be shipped twice. I am not saying this is a bad idea by any means.

[Anon136]

How is this better than a straight up escrow? You take 2x the chances of a shipping issue. Why not use an escrow to hold coins while the other party ships. Also it requires 2x the trust of the escrow here.

what pilot said

as far as increased shipping risk. yea that's pretty unfortunate. hopefully the service is still useful to some people despite this.

Insurance is absolutely essential on both legs of the journey for liability mitigation. It is quite cheap so I think you should make it mandatory https://about.usps.com/publications/pub370/pub370_010.htm

Insurance claims are an arduous process, so you need to have some protocol in place for what happens if there is a claim and require both parties to agree to the rules before initiating a trade.

I doubt its worth it on a 1/10th ounce gold coin unless you have particular extenuating circumstances. Let me give example. Say your gold coin is worth 100 dollars, and shipping in a box with insurance is 10 dollars instead of the 49 cents it would have been standard post. In this situation you would need to have > ~9.5% chance for the letter to be lost inorder to make insurance an net positive expected ROI. Those are just rough numbers, but I think it illustrates the principal which makes it the case that it will be highly unlikely that insurance will have a net positive expected ROI.

[Anon136]

I doubt its worth it on a 1/10th ounce gold coin unless you have particular extenuating circumstances. Let me give example. Say your gold coin is worth 100 dollars, and shipping in a box with insurance is 10 dollars instead of the 49 cents it would have been standard post. In this situation you would need to have > ~9.5% chance for the letter to be lost inorder to make insurance an net positive expected ROI. Those are just rough numbers, but I think it illustrates the principal which makes it the case that it will be highly unlikely that insurance will have a net positive expected ROI.

Aside from protecting you legally in the event a package goes missing, insurance is also something you can advertise and it will boost sales. Some people will decide not to use your service if packages are uninsured. It will be $16 for priority shipping + $5000 of insurance ($12 for $100 of insurance + priority), including both legs of the journey, and this cost goes entirely to the participants in a trade.

It doesn't matter who pays it. Its all just moving numbers around. If acquiring 1/10th of an ounce of gold costs 12 dollars more than it otherwise would have, than there is the potential that people wont want to use the service for that reason also. They dont care if they have to pay that money to the post office or to me in the form of bitcoin. Its all just a cost.

In order to justify 12 dollars on insurance you have to have >12% chance that a gold coin worth 100 dollars will be lost. Else its a losing proposition. Now once you get into bigger orders definitely. At like 1/2 ounce im sure it becomes worth it. But i dont have to enforce that. If a senders gold gets lost on the way to me he doesnt get bitcoins because i have no way of knowing he really sent it. So he is incentivized to make the right choice for him. And similarly the buyer can pay for any kind of shipping he wants by just sending me the bitcoins that it costs. I have no problem with that at all.

[Anon136]

Bitcoin is now classed as a commodity within the United States

Relevant news for the purposes of this project.