We first highlighted the explosive potential of the newly-listed company BitGold (TSV:XAU.CA) on Thursday of last week. They are an internet platform for acquiring, holding, and making payments in gold. If you bought shares on Thursday, you are sitting on profit of roughly 75% in the past three trading sessions. The stock blasted 59% higher today on strong volume of 1.7 million shares.
BitGold enables users to purchase gold using various electronic payment methods and then store gold and pay for goods and services using gold as the currency. The simple way to think about it is Paypal, but with gold.
Once fully operational, the platform is intended to provide various transactional capabilities, including instant cross-border payments, merchant invoicing and processing for gold, debit card spending of gold at traditional points of sale, conversions to a customer’s external digital wallet or bank, and physical gold redemptions.
BitGold plans to eventually have a network of ATMs, allowing users to open accounts or deposit local currency in exchange for vaulted gold, which will be accessible for digital transactions. It is an innovative business model that could thrive even if they are only able to grab a small share of the enormous digital payment market.
I don’t view BitGold as a replacement to physical gold, but an interesting complement to the metals that competes with the conveniences of the digital wallets and payments.
While some have expressed concerns that the government could shut them down, the company is backed by a true government insider, George Soros, and has secured a listing on the Canadian Venture Exchange. Many hedge funds are in on it, so its emergence probably will not ruffle as many feathers as did E-gold. Despite growing to millions of users in over 100 countries, the government eventually shut down E-gold citing money laundering crimes and operating an unlicensed money transmitting service.
