Vaultoro: Old Gold vs New Gold

Vaultoro launched way back in the wild west bitcoin days of February 2015, when BTC was $245 and men were men. It was a pretty straightforward idea to build a company around the BTC/Gold pair which their punters can trade one with the other and it remains so now. But doing one thing and doing it well is oft repeated business advice for startups, so no bad thing. First I will go through some specs so the product is explained and then give my user experience.

The Product

As of writing Vaultoro’s holdings amount to 150kg of gold and 372 bitcoin (over $6m combined) and has around 760 clients. The gold is allocated and held in a Pro Aurum AG vault in Switzerland, is insured by Helvetia and audited once a week by BDO. The bitcoin is held hot wallet, warm wallets (by proxy) and various multi-sig cold wallets. They prove they have these coins by moving a pre-announced number of them from cold and warm to hot every month. Buying/selling is peer to peer with a 0.5% charge which lowers with 500g trades and above and storage costs of 0.4% per annum calculated on a 15min basis. Daily volume of trade is around the 3kg mark at mid May 2017. The privacy approach is quite original with the clients ID known only to the client. In fact they publish an anonymised list of every account on Vaultoro showing how much gold and bitcoin every account holds. Account holders can go for ID verified (mainly Government ID) for unlimited deposits of bitcoin or capped deposits of unverified users to $5000 USD per day. Delivery can be taken of the gold for a price.

User Interface and the Market

The main page of the website is the trading page where you can place orders setting the amount of bitcoin you are going to trade and the price you are asking for (or just take the last good price). There is a graph for outstanding orders, a price chart (which, rather irritatingly, is only set to a month time period), order book and your orders. It is all refreshingly simple and straightforward. The holdings page and the wallet page are one glance pages. Apart from that there are the FAQs and audit pages. There is a referral page as well to earn some bitcoin from introductions.

As far as the market goes, there could hardly be two more chalk and cheese pairs. Bitcoin has snowballed uphill for a good six months, doubling in price since the start of the year. Gold is (late May 2017) at the same price more or less as the turn of 2012. Gold will surely never be cheaper ($1250) than now but who knows where the bitcoin pump will stop. At some point it will make sense to bail the bitcoin for the gold heavyweight before a major correction through profit taking. I feel that point could be approaching fast but when I pull the trigger will take some gunslinger eyes.

Conclusion

I have been using Vaultoro for a while now. Well, to be accurate, I have had bitcoin in the Vaultoro wallet, nervously checking one chart against the other for the above reason. I have not yet actually bought gold, though I have gold in some other areas which you can read about in other reviews. But this is not really a trading platform like Poloniex or Bittrex. No margin trading, no pump-and-dumps, no triumphs and disasters. Not much fun really. I think the model, like the trading pair, has two powerful elements. Firstly the dynamic tension between something that has been coveted and valued for all of human history, and the audacious attempt to recreate it as a computational concept. It is an almost aesthetic dance which perfectly mimics the relationship between our material existence and our virtual existence. Secondly it is illustrative of the difference between a true free market price discovery and the constantly manipulated gold market price. Vaultoro is a great way to leverage the free volatility of bitcoin with the dammed up (by derivatives) price pressures of gold. Until, that is, the dam bursts and the torrent rages and down will come Banker, derivatives and all. Vaultoro isn’t the most sophisticated platform in the world, even with hints at additional functionality in the future it would still not be sophisticated. But it has achieved what must have been the original objective: it does one thing and does it well.