How to Buy Bitcoin with Cash
With as many as six million unique users, Bitcoin is seen by many as the flagship cryptocurrency. Since it was first released in 2009, Bitcoin has set the standard for the entire industry. The very concept of the blockchain — variants of which are used by all cryptocurrencies — owes its existence to Bitcoin’s originator.
Having this type of credibility and name recognition, it is no wonder that increasing numbers of people wish to own Bitcoin. The process, however, of acquiring Bitcoin is not clear to the majority of those who wish to participate in it.
This guide is structured to help you understand and realize the purchase of Bitcoin with cash.
1- The Basics
When purchasing Bitcoin with cash it makes the transaction discreet and practically untraceable. It will usually involve peer-to-peer or in-person transactions. Fortunately, there are online platforms that function as a facilitator to bring individual buyers and sellers of Bitcoin together. There are also retail level options that allow for direct purchase of Bitcoin with cash.
As with any sort of transaction that involves cash, buyers as well as sellers should always apply common sense when it comes to scrutinizing a potential deal.
2. Fees
When you purchase Bitcoin with cash it is inevitable that you will encounter third-party fees. When it comes to peer-to-peer platforms, the platform itself will usually assess a fee to one or both parties involved in the transaction. These fees can take the form of facilitation fees, escrow charges, or transfer fees.
If you bypass the peer-to-peer platforms and instead use a direct purchase outlet, such as Bitcoin ATMs or Bitcoin retail resellers, you will usually pay a purchase fee.
The presence of fees should not be seen as a negative for purchasing Bitcoin with cash. While the fees associated with this method of acquiring Bitcoin are higher relative to other methods, they are not by any means prohibitive.
As a matter of fact, if you take into account the added benefits of absolute privacy, speed, and ease involved when using cash to buy Bitcoin, the slightly higher fee structure that is associated with it would seem to be quite fair.
3- Verification and Identification Requiremens
The fact that you are using cash minimizes the instances in which you will need to present identification or fulfill other verification requirements. Some peer-to-peer platforms do require the submission of identification documents when the value of a brokered transaction surpasses a set limit. These limits will vary based not only on the platform but also in the geographical location of where the deal takes place.
The most common method used to deliver payment to the Bitcoin seller is in the form of a bank deposit. The buyer receives the bank account information of the seller so that they may make a teller window deposit to the account in question. Obviously, if the buyer were to decide to use an electronic bank transfer to make the deposit, then — out of their own volition — they would be identifying themselves vis-a-vis their own banking information.
When making a deposit at the teller window you should also keep in mind that depending on the amount involved and your country’s specific financial disclosure laws, the bank may require you to fill out a cash transaction disclosure form. In the United States, this is mandatory if you deposit an amount exceeding $10,000. However, you should also be aware that a bank may generate a suspicious activity report on a cash deposit even if it were to be below the $10,000 mark. This is something to keep in mind in the event that absolute anonymity where to be required. In that case, it would be best to keep your Bitcoin purchases with cash to small amounts that would be less likely to generate attention from the bank.
4- Get a Bitcoin Wallet
In order for you to receive the Bitcoin that you purchase with cash, you will need a Bitcoin wallet. There are many types of Bitcoin wallets ranging from those that are software-based to those that are web-based, and others that exist in a physical form and are known as paper wallets.
The only information that you need to release to the seller is your Bitcoin wallet address. Technically, this consists of your wallet’s public key. It is an alphanumeric sequence of characters that identifies where your newly acquired Bitcoin is to be sent.
Obtaining a Bitcoin wallet and releasing your Bitcoin address in no way compromises your privacy or anonymity.
5- LibertyX
LibertyX is an app available for the iPhone and Android. It functions by allowing would-be buyers to find retail store locations where they can purchase Bitcoin directly for cash.
Once the buyer enters the amount of normal currency that they want to spend for Bitcoin, the app will automatically show them how much they would get in Bitcoin as well as provide them with a listing of nearby store locations where they can complete the purchase. The buyer has the option of allowing the app to access their smartphone’s geolocator or they can enter the zip code of their location themselves.
The actual stores where the buyers pay for the Bitcoin are established retail locations that are acting as affiliates of the LibertyX Network. These include convenience stores, pharmacies, gas stations, etc.
Once a buyer selects a specific location, the app will send them a LibertyX code. The buyer must then present that code to the cashier in the store. Upon receiving payment, the cashier gives the buyer a receipt containing a different code. This code must then be entered in the LibertyX app by the buyer. Upon doing so, the Bitcoin is released to their Bitcoin wallet.
LibertyX is extremely convenient. However, in exchange for that convenience buyers must compromise a bit of their privacy. For example, when installing the app the users must create an account with LibertyX. This requires personal information to be released. Also, the cell phone number of the phone where the app is installed must be shared with the app.
In terms of cost, LibertyX charges a percentage-based fee in addition to an individual transaction fee. These fees vary depending on the individual store location that you choose to purchase your Bitcoin.
6- Bitcoin ATMS
The term Bitcoin ATM is a bit of a misnomer. In reality, a Bitcoin ATM is an independent digital kiosk. They are not associated directly with any established banking institution. They function as digital portals placed in public locations with a connection to the Bitcoin blockchain allowing you to purchase Bitcoin directly from the operator or through sources which the operator aggregates.
In more practical terms, it is literally a way for you to walk up to a kiosk, enter your cash in a slot, and within minutes have Bitcoin.
There are many operators of Bitcoin ATMs throughout the world. The most common are:
- Genesis Coin
- Lamassu
- BitAccess
- BATM
- Skyhook
- RoboCoin
- Bitcoin of America
While there are subtle differences in how to use a Bitcoin ATM — based on the operator and individual model of the machine that is involved — the process is fairly standard. You walk up to the Bitcoin ATM, use the keypad or touchscreen to enter the amount of cash you wish to “convert” to Bitcoin, enter your Bitcoin address, and insert the cash when indicated.
There are some Bitcoin ATMs that allow you to create a Bitcoin wallet on the spot. However, it is recommended that you already have a Bitcoin address when you approach a Bitcoin ATM. This saves time and is also more secure.
Some Bitcoin ATMs offer additional security and verification measures. On some it is optional, on others it is mandatory. These can include a requirement to open an account with the operator online or via an app. Some of these ATMs require the user to type in a transaction PIN code that is sent to the buyer before they go to the ATM. Some allow buyers to upload a fingerprint scan to the network and then have a fingerprint scanner available on the ATM to validate the transaction.
Again, not all Bitcoin ATMs offer this level of complexity and not all that to do make it mandatory. Usually, it is offered as an option that individual buyers may choose as a way to secure their transactions.
When purchasing Bitcoin via an ATM, the Bitcoin will be reflected in your account in a matter of minutes — usually the time it takes for a Bitcoin block to be processed. Total fees associated with a Bitcoin ATM will range from 3 to 9 percent of the value of the transaction.
7- BitQuick.co
BitQuick is a peer-to-peer marketplace that brings buyers and sellers of Bitcoin together. BitQuick charges a two percent escrow fee that makes it a good value when it comes to options for buying Bitcoin with cash. This escrow fee is charged to the buyer — the seller pays nothing.
Buyers can access BitQuick online and enter how much they want to purchase in Bitcoin. The platform will then match them with sellers interested in selling that amount of Bitcoin. Once a match is found and both parties agree to the transaction, the buyer is given three hours to make the payment. The payment can be made via an electronic bank transfer or as a teller window deposit.
Once the deposit is made, the buyer uploads an image of the receipt to BitQuick. Once BitQuick verifies the deposit, it releases the Bitcoin to the buyer and releases the payment from escrow to the seller.
When transactions are below $400 BitQuick does not require buyers to provide identification. Amounts above that, however, do require images of your identification to be sent to BitQuick.
8- Paxful
Paxful is another online marketplace that allows you to buy Bitcoin with cash. The cash payment can be made as a teller window deposit or it can also be submitted via Western Union. Paxful also adds the option of using online gift cards, such as Amazon, Best Buy, Walmart, and GameStop, among others, to make your Bitcoin purchase.
In terms of ease-of-use, privacy, and practicality, Paxful is a very efficient way to buy Bitcoin. In the event that a buyer does not have a Bitcoin wallet, they can create one on the Paxful site.
Buy Bitcoin With Paxful9. LocalBitcoins.com
LocalBitcoins is another peer-to-peer marketplace that boasts over 100,000 active traders and a trading volume that approaches 3,000 Bitcoin per day. This makes them an attractive marketplace to find available sellers at any given moment.
Similar to other Bitcoin marketplaces, they use the escrow model to protect buyer and seller. The difference with LocalBitcoins is that the verification of final payment is submitted by the seller. In other words, local Bitcoin does not directly verify that a deposit was made. Once a seller confirms receipt of funds, LocalBitcoins releases the Bitcoin from escrow to the buyer.
This allows for other methods of payment delivery, aside from bank deposits, to be available. This includes in-person payments. However, in-person payments can create their own set of security issues and should best be avoided.
Use LocalBitcoin Now10. Conclusion
As you can now determine for yourself, purchasing Bitcoin with cash is not a difficult process. It is easy to access peer-to-peer marketplaces or other creative methods such as Bitcoin ATMs or retail affiliates to purchase the cryptocurrency. The companies mentioned above have been in operation continuously and have a good reputation.