Bitcoin does not exist as a physical asset, but cash does. There are currently a few bridges between the electronic world of cryptocurrencies and the physical world of cash. Please keep in mind that the marketplace for Bitcoin and cryptocurrencies is changing rapidly and that additional options may be available in the future.
Buying Bitcoin with Cash Only
There is an important distinction to be made before describing the ways of buying Bitcoin for cash, and that is between physical cash and bank deposits. Physical cash is cash held in your hand. Bank deposits are often treated as cash since they can be withdrawn easily or accessed electronically. The options described here are for individuals using physical cash, not bank deposits
Individuals can have a variety of reasons for choosing to buy Bitcoin with cash, including the desire to remain anonymous. One of the primary purposes of Bitcoin is to allow untraceable transactions, and individuals valuing this feature may want to start with a “blank slate”. Others may be concerned with using any type of electronic transfer over the Internet for fear of exposing their account information to hackers.
5 Ways to Buy Bitcoin for Cash
Cash transactions have their own risks, and care needs to be exercised anytime you are carrying cash. This is of particular concern since the amount of cash necessary to purchase even a small amount of Bitcoin can be significant. The risk that comes from this reality may make some of these methods more attractive than others.
LocalBitcoins is an intermediary that allows individuals to buy (and sell) Bitcoin to other individuals. It matches people based on location and provides quotes that specify price and quantities of Bitcoins available from each seller. Individuals make their own arrangements for meetings, which increases the element of risk.
The website has acknowledged that it has listed scam transactions, and fees are generally higher than on other exchanges. However, many sellers do not require any identification at all, making this a completely untraceable transaction. The website also lists online alternatives to meeting in person.
BitQuick allows matches buyers and sellers but is functionally more like an exchange. Sellers place Bitcoin into escrow and buyers deposit the funds for the purchase in the bank account of the seller. The transaction is completed when the buyer provides evidence of this deposit.
The fact that money changes hands at a bank and the parties do not meet makes this a safer transaction. However, the website does require registration with identification and is only available in the United States (excluding New York).
WallofCoins connects buyers and sellers while acting as an intermediary. It lists sellers like LocalBitcoins, but works off bank deposits like BitQuick. This means that the most convenient banking location may not be associated with a seller who offers the lowest price.
WallofCoins prices include fees, which can make comparisons with prices on other platforms more difficult. However, it also offers a live chat feature and a toll-free number for customer service. These features make it an attractive option for first-time buyers.
LibertyX is the closest any exchange comes to a retail operation. The website directs you to an affiliated retail location based on your zip code. A mobile app is available to find locations when you are on the road. The payment and transfer take place at the retail location, increasing personal security.
However, identification is required and the service is only available in the United States. In addition, the participating locations add their own fees on top of those charged by LibertyX. Each location also sets its own minimum, and there is a $1,000 maximum platform daily limit.
MyCeliumWallet is one of several mobile applications that is available through GooglePlay to buy, store and send Bitcoin. Most of the applications include a feature that allows buyers to find sellers based on location.
These applications do not act as intermediaries like other platforms listed here. The terms of the exchange are negotiated between the buyer and the seller individually, as is the price. While this increases the potential risk, it also allows the buyer to select sellers who will provide the desired level of anonymity.
Keep in mind that the cryptocurrency market is extremely dynamic, and changes in purchase limits and operational systems are taking place continually. In addition, fees are expected to experience rapid change as a new way to buy Bitcoin for cash come into the marketplace and create competition.
There is a second method of purchasing Bitcoin for cash that does not involve meeting with the seller, either in person or through an intermediary. This is the Bitcoin ATM. These are Bitcoin kiosks that are connected to the Internet and which accept cash as the means of payment.
Please note that the use of the phrase “ATM” can be confusing, as it typically associated with a bank. Bitcoin ATMs are not stand-alone tellers and are not connected to any banking institutions. Rather, they can be thought of as computers with input devices that accept currency and transfer Bitcoin to a new or existing wallet.
Several trading platforms offer Bitcoin ATMs, and the number of locations is increasing rapidly. Although they are most prevalent in the United States, most countries offer at least one location. It is not unusual to find Bitcoin ATMs located in convenience stores and gas stations in the United States since they generate revenue for the store owner with little to no maintenance.
Operation of ATMs
Because they operate on several different platforms there is no standard procedure on how to use a Bitcoin ATM. However, each version is equipped with a touchscreen and provides step-by-step instructions. Bitcoin ATMs are clearly designed for the beginning purchaser.
The basic safety precautions that apply to using any ATM also apply to using a Bitcoin ATM. These include The amount of Bitcoin that can be purchased also varies by machine.
Some Bitcoin ATMs create a new Bitcoin wallet for each purchase, and some allow the newly purchased coins to be deposited into an existing wallet. Instructions on how to select from the available options will appear on the screen. Bitcoin ATMs that do create a new wallet either as an option or by default will then print a paper wallet for each transaction.
The paper wallet is a QR or alphanumeric code that includes both the public key and the private key. The Bitcoins are actually stored on the blockchain, and the information on the paper contains all the necessary information to access them. This is vital information and should be treated carefully.
Key Decision Points
Evaluating all these options for buying Bitcoin with cash can seem like a complicated process, but keep in mind that not all options may be available to all buyers. Some, like Bitcoin ATMs and LibertyX, are not common in rural locations. However, for buyers who have a range of options the following decision points may be helpful.
Safety Comes First
It is reasonable to put personal safety at the top of the list of considerations when purchasing Bitcoin for cash. In general, as buying and owning cryptocurrencies might be risky, there are some methods and tips to secure your device and crypto coins. Meeting an unknown person to transact business is more concerning for some individuals than others. These concerns are highlighted by the fact that many exchanges that facilitate meeting in person stress that it is advisable to bring someone along.
Each of the different methods of buying Bitcoin for cash has a different lower and upper limit on the amount that can be purchased. This is clearly a determining factor in choosing a platform. Like the rest of the Bitcoin market, these limits are changing quickly and should be reviewed at the appropriate website before selecting an option.
References to the “price of Bitcoin” are slightly misleading. The market for Bitcoin has different prices. A review of the options for personal sales, as an example, shows Bitcoin offered at various prices. Other platforms have only a single price. The volatility of the price at the time of purchase may make one option more attractive.
Fees are difficult to evaluate because they are not always transparent. Of course, this is unfortunate since lower transaction fees are attractive. However, given the difficulty and the variation in price among platforms, the most sensible approach may be to look at the total cost of the transaction rather than the level of fees charged.
This factor can mean both the location of and travel time to the exchange or Bitcoin ATM, but it can also mean the level of anonymity provided by the platform. Some purchasers will prefer to travel in order not to provide identification. For others the safety
Balancing these factors means that there is no “best” way to buy Bitcoin for cash. The developing market has created a range of options that, depending on location, may make it possible for most buyers to find the venue that meets their needs. As the market continues to grow, the platforms described here will continue to expand and other options may become available.
This article was originally posted on FX Empire
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