Bitcoin Step by Step

The Best Way to Get Started

Local Trading

If you are earning BTC and you want to spend them you could look for a place that accepts the BTC for goods or services.  However, until there is an abundance of places to spend your BTC you will at times need a place to convert BTC back to cash.  If you are not earning BTC either by selling goods and services for BTC, or through mining, then you need a way to obtain BTC.

There are a lot of different methods to convert BTC to currency and or the reverse.  The methods covered in the Bitcoin Step by Step book are:

– You can use a wire transfer to move currency to/from your bank account to the exchange of your choice.

– You can use services like BitInstant that let you fund through MoneyGram and deposits at a bank to move money to an exchange.

– You can use OTC on the Internet relay chat

-You can use eBay and pay much higher prices (not actually covered in book, but does exist)
The first two options have transaction fees to cover the middle men involved.  The second two have issues around trust.  While the book does describe how to manage the trust concerns, it does inject additional fees.

You can also trade locally with other users like yourself.  Using a service like Local Bitcoins, https://localbitcoins.com/ allows you to forgo issues or trust or mediation, eliminate the middle men and both sides of the trade can maximize their interests.  There may be a factor of fuel and time to implement the trade.  You certainly can get creative with ways to compensate for this.  Local trades are not always safe though.  This article on Bitcoin Money, explains the dangers of counterfeit government money, http://www.bitcoinmoney.com/post/36244271879/counterfeit-fiat-currency.  When exchanging large sums of money you will want to make sure you do it in a public location so that you are not robbed before or after the transaction.

With any of the mentioned methods there are trade offs.  If you can establish a local contact with whom you can build a relationship with you may find that when you have larger transactions they will work better than ones which take a percentage.  You also have the option to negotiate with the local contact.  The bottom line is the bottom line.  When you trade your BTC for currency or currency for BTC you want to maximize your efforts.  Local Bitcoin attempts to expand your options.

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This entry was posted on November 25, 2012 by in Exchanges and tagged , .
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