How to Buy Bitcoin with Cash – The Complete Guide
Last updated: 11/23/18
Looking to buy Bitcoin with cash? In this short guide, I’m going to give you all of the options available today.
4 Options for buying Bitcoin with Cash
- Buy from an individual through LocalBitcoins
- Buy Bitcoins from a Bitcoin ATM
- Buy Bitcoins through a cash deposit at a bank
- Buy Bitcoins with cash through the mail
If you want more information about each method keep on reading, here’s what I’ll cover:
- Why buy Bitcoin with cash?
- Bitcoin peer-to-peer trading
- Buying Bitcoin with cash in person
- Buying Bitcoin through a Bitcoin ATM
- Buying Bitcoin with a cash deposit at a bank
- Buying Bitcoin with cash in the mail
There are advantages for buying Bitcoin with cash, if you take the necessary precautions (more on that later). Here are two excellent reasons:
Cash purchases are far more private.
Unlike using a regular Bitcoin exchange, cash purchases usually don’t require you to unnecessarily reveal information by submitting a ton of documents to verify your identity. This tactic is a lot safer, given the rising risk of identity theft. Another reason is to avoid crackdowns by tax authorities (e.g. Coinbase users)
Cash purchases are faster for first-time buyers.
This reason exists mostly because there’s no waiting for the arrival of bank transfers, or for verification by an exchange. Deposits usually take 1 to 3 business days, while verification can take 1 to 3 weeks. Cash trades save a lot of time. When Bitcoin’s price is skyrocketing, even a few days can equate to a lot of money!
Experts have suggested that the majority of Bitcoin’s trading volume occurs off-exchange. This is actually a good thing; If cryptocurrency only becomes tradable with state approval, then it’s reduced to little more than a new form of fiat. Therefore, all serious Bitcoiners should gain some kind of experience with cash trading. If your local government ever cracks down on Bitcoin, it’s good to have a Plan B in place…
Perhaps the best practical example of the importance of peer-to-peer trading came in late 2017, when China banned Bitcoin exchanges. Nevertheless, OTC trading of Bitcoin continued. These charts depict known Chinese volume for two popular services that facilitate peer-to-peer trading:
Paxful’s volume in China also noticeably spiked. Over a few months, it increased at least 6x.
If you have trusted friends who own some bitcoin they’re willing to sell, you’re all set. To make such trusted friends, consider attending Bitcoin conferences or meetings in your area. To locate these events, search Meetup or Facebook for local Bitcoin groups.
Another thing to remember, unless you plan to meet near an ATM, is to make sure you bring the agreed-upon amount of cash. Also make sure to bring your phone or laptop with an installed Bitcoin wallet. If you only bring an address, you won’t be able to verify receipt of your coins.
Two Great Options for Escrowed In-Person Trading
LocalBitcoins buyer/seller matching
LocalBitcoins have been running since mid-2012, and they’ve grown to service most countries and regions. Over that time, they have established a reputation for reliability, and they have become well-known as the go-to site for OTC trading.
To buy BTC on LocalBitcoins:
- Visit the site and sign up.
- Click the “Quick Buy” link in the top menu.
- Enter your location, and select “Cash” as your desired payment method:
A list of sellers will be displayed. If there are none, you’ll have to wait for one to appear, or consider a different method. The seller’s list will display the number of successful trades, as well as the feedback score for each.
- choose a seller with many trades and a positive reputation.
- Enter your desired purchase amount, which must fall within their limits.
- Arrange the further details of your trade via messaging.
For a complete demonstration this short video:
Since you can trust LocalBitcoins to send the coins to you, there’s no reason to wait for multiple confirmations after the seller releases the coins. You can read my LocalBitcoins review here.
Mycelium Local Trader
The popular Mycelium mobile wallet includes a feature known as Local Trader. This tool serves as a cash-only matching and escrow service for Bitcoin traders. Depending on your area, you may find more or (probably) fewer sellers on this site than on LocalBitcoins.
Pretty much everything you need to know about the Local Trader process is available as a guide on Mycelium’s site.
After payment, the seller releases the coins from their Mycelium wallet to yours. In other words, Mycelium provides an escrow service, and guarantees that the seller possesses the amount of bitcoins that they advertised as being for sale. However, they don’t take actual possession of the seller’s coins, as LocalBitcoins does. Instead, the coins are directly released from the seller’s wallet to yours.
Mycelium has an algorithm that monitors the blockchain, and gives you an estimate of your transaction’s likelihood of properly confirming it. Nevertheless, for larger amounts, we’d advise waiting for actual confirmations.
We recommend that you only trade by enabling escrow. In this case, escrow means that a trusted service holds the seller’s Bitcoin.
We also recommend that you only do in-person trades in a secure location. Good choices are bank lobbies, police-station foyers, and courthouses. When dealing with a seller for the first time or when trading large amounts, it’s wise to choose a location with access controls, metal detectors, security cameras and guards.
Overall, exercise common sense; although rare, there have been reported incidents of mugging and fraud.
If you’re on a tight or irregular schedule, arranging a meeting with a suitable cash seller of bitcoins can sometimes prove to be troublesome. Bitcoin ATMs are a convenient way to trade 24/7. BTMs accept cash and in return send you Bitcoins to your Bitcoin address.
Although BTMs have become more and more popular since their introduction some years ago, there are still many regions without one. The best way to locate a nearby BTM is to use the CoinATMRadar.
When you click on a BTM on this site, you will see a display with its precise location, fees, limits, and ID requirements (if any). The site will also provide contact details for the operator. You should notate these details, in case there are any issues.
When you go to the BTM, remember to also take your Bitcoin wallet or address! Also, just like when using a regular ATM, be on the lookout for suspicious characters who are lying in wait.
Both LocalBitcoins and Paxful, another peer-to-peer trading site, offer cash deposits as a payment option.
With this method, the seller provides their bank details. You then visit the relevant bank, and fill in a deposit form. Sellers may specify a particular bank. You then make a cash deposit to the seller’s account via the bank teller.
This method is more reliable and physically secure than meeting with a stranger. Specifically, the seller has no way of knowing which bank you’ll be using. The downside is that such services are only available within banking hours. And they’re slower than face-to-face transactions— particularly if there’s a long queue at the bank, or the service is slow to verify your trade.
As with face-to-face cash trading, you should only conduct bank-deposit trades via a reputable escrow service; this action will protect you from fraud.
You can prove to the escrow service that you made a payment by photographing or scanning your bank deposit receipt. Then in the event of a dispute, they’ll release the seller’s coins to your Bitcoin address. So ensure that you keep your receipt. Unlike a bank transfer, it’s really hard to prove that you made a payment without it!
As mentioned, bank-deposit sellers may be found worldwide on LocalBitcoins or Paxful. In the US, there are two more services which specialize in arranging and securing bank deposit purchases: BitQuick and Liberty X (which require smartphones).
Finally, Wall of Coins provides this same service within the US, the UK, Argentina, Australia, Brazil, Canada, Germany, Latvia, Mexico, Poland, the Philippines, and Romania.
LocalBitcoins and Paxful also offer services for finding sellers who accept cash through the mail. You may also find suitable sellers on darknet markets. As with in-person purchases, try to only trade with established users who have a good reputation. Choosing a reliable seller is your best protection against fraud, and escrow should always be employed.
This method involves some obvious downsides, such as slowness and the risk that your envelope may get lost or stolen en route. We recommend wrapping the bills in a couple of layers of paper, so that they can’t be easily detected without opening the envelope.
In the event that your envelope never arrives, or arrives empty, certain sellers may compensate you. To qualify, you may be requested to film or photograph yourself placing the money within the envelope, sealing it, and mailing it.
For greater safety, we advise using registered mail, then having the seller sign after they receive it. This method creates a degree of proof that you paid via escrow, although the amount of cash within the envelope may still be disputed.
Given the drawbacks of this method, we only recommend it for cash buyers who are too remote for other purchase methods.
If I’d have to choose one method out of the four I covered it would definitely be the Bitcoin ATM. BTMs offer a reliable solution for cash purchases and are usually located in central areas which are more secure.
While buying Bitcoin with cash is faster and more anonymous than conventional methods, it’s still riskier than most of the online methods today (credit cards, wire transfers). If you don’t have to use cash, it would probably be safer to use an online method assuming you purchase through a well known and reputable exchange.
If you know of other methods or have questions or comments, be sure to leave them in the comment section below.
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