BS2:3-Buying bitcoin with Bisq 🦞

Bisq is a decentralized exchange. The term decentralized gets thrown around a lot in the world of crytpocurrency, so I’ll elaborate a little: Bisq is a software program that lets you connect with other people running the software who want to exchange fiat money and bitcoin.

Some basic points:

  • Bisq never has control of your bitcoin.
  • Bisq does not have access to your identifying information.
  • Bisq does not keep a record of your transactions.
  • Bisq is not a company.

So, how does it work?

Bisq users post offers to buy or sell bitcoin for national currencies like US dollars or Euros. You can choose to accept an offer you like or you can create your own offer. When someone takes an offer, both parties post a deposit (in bitcoin) to a wallet address that is controlled by Bisq. The deposit is released once both parties indicate that the trade has been completed successfully.

The person buying bitcoin with national currency is shown the payment details for the person selling the bitcoin. The actual payment is then made outside the Bisq software, through whatever method was specified in advance.

Once the person selling bitcoin has received the national currency payment, they indicate this in the Bisq software and the software releases the purchased bitcoin to the buyer, as well as the bitcoin deposits to buyer and seller.

The deposit system reduces the amount of trust required to make a trade with a complete stranger. If your trading partner tries to cheat you, you can open a dispute, and Bisq moderators will adjudicate a resolution.

I have used Bisq for quite some time, and have never needed to open a dispute.

NOTE: Bisq’s deposit system means that you will need to have some amount of bitcoin in order to make a deposit for a trade. Bisq updates its minimum trade and deposit requirements, but at the moment 0.002 bitcoin is enough to get started.

Payment accounts

When you begin using Bisq to trade, you must create a payment account. Bisq users make trades with many different kinds of payment methods (Zelle, Revolut, US Postal Money Order, and many others—even face-2-face). In order to make a trade, you need to specify a payment method. You do this by creating a payment account in the Bisq software.

Again: you do not provide Bisq with your payment account details. Rather, you specify your payment method and the name and contact info associated with it (for instance, if you specify Zelle, you would list the name and phone number or email used on your Zelle account). This information is kept on your computer. When the you make a trade, your computer will send this info to your trading partner to facilitate the trade.

Bisq distinguishes between two levels of payment account: signed and unsigned payment accounts. When you create a payment account in Bisq it is unsigned. It remains unsigned until you complete a trade with trader who has a signed account. For the first 30 days after your payment account is signed, you are only allowed to buy 50% of the daily limits for that payment method. All restrictions are removed 60 days after your account is signed.

Bisq displays the age of every payment account, so you can choose to interact only with signed accounts that have been active for a long time, if you like.

Funding your Bisq wallet

Bisq creates a new bitcoin wallet for you when you install the program. This wallet is just like any other bitcoin wallet in that it has private keys and can send and receive. After you install Bisq you need to make a paper copy of your seed words in case your computer crashes. (You should also make a backup of the Bisq program because all your payment account info and trading info is kept locally on your computer).

Before you can make a trade in Bisq you need to transfer some bitcoin into your Bisq wallet, so you can make the deposit required for a trade. This is as easy as sending bitcoin from your bitcoin wallet to the Bisq wallet.

Taking an offer

You can now make and take offers. Bisq will show you the offers that exist for the payment method associated with your account (e.g. all the people selling bitcoin for your specified national currency via Revolut).

You can see how much bitcoin each trader is offering and at what rate. Additionally, you can see how much of a deposit the trader requires, as well as the age of the trader’s payment account and whether they have been signed.

If you see an offer that you like, and for which you have enough bitcoin to meet the deposit requirements, you may choose to take the offer. This will bring up a window that asks you send bitcoin from your Bisq wallet to the deposit address for the trade. Bisq makes this process very easy (just a few clicks).

Now wait for the deposit transaction to confirm on the blockchain. Bisq keeps track of this for you, and will show you when it confirms and how many confirmations (confirmed blocks after the block that includes your transaction) it has.

Best practices in Bisq are for the buyer to send their national currency payment as soon as possible after the deposit transaction has reached an acceptable number of confirmations.

The national currency transaction does not occur in Bisq. Bisq shows you the payment details for the trader whose offer you have taken (e.g. the email address associated with their Zelle account). You should send the payment to your trade partner via the agreed upon payment method. Once you have done this, you need to select a button on the screen in Bisq that will inform your trade partner you have initiated the payment.

Once your partner receives the payment, they can confirm receipt in Bisq and the bitcoin you purchased, as well as your deposit, are returned to you. You can choose to keep them in your Bisq wallet or to send them to any wallet you control. Just remember to leave a little (0.002BTC) bitcoin in your Bisq wallet if you plan on making more trades.

The bitcoin seller technically has the full duration of the trade window (determined by the riskiness of the payment method—e.g. Zelle, and Revolut have longer trade windows than Amazon gift cards, because they are easier to reverse).

Most sellers are pretty prompt, but if it is your first trade, and your payment account is not yet signed, they may wait to the very end of the trade window to confirm receipt of the payment. So don’t get too worried if you initiate payment and the funds come out of your bank account, but the trader takes their time confirming.

Making your own offer

When you start out with Bisq, it may feel intimidating to make an offer. Don’t be afraid! Making offers on Bisq is the best way to buy bitcoin. You will almost always get a better price than if you are just lurking for offers to accept.

The great thing about buying bitcoin this way is that you get a feel for the market. You can look at all the current offers for your payment method and make your own based off what you see. Maybe you like where the price is at and you just want to get a trade in quickly—you can post your offer a slightly better rate than the current best offer. Alternatively, if you are looking for a discount, post an offer that is not quite as good as the top offers and wait and see.

When you make an offer, you pay a small fee to Bisq to post the offer. This fee will not come back to you if no one accepts your offer and you take it down. For this reason, don’t make outrageous offers (e.g. more than 10% below market price). If you make an offer and no one seems interested, just leave it up. It doesn’t hurt.

Because Bisq is decentralized, the record of your offers is only kept on your computer. This means that if you post an offer and then close the Bisq app, shut off your computer, or lose your connection to the internet, your offer will disappear from the available offers list. You must keep your Bisq app open to keep your offers posted. (You won’t be charged any fees for losing connectivity or shutting down the program, and your offers will reappear as soon as you relaunch the program or regain connectivity).

Once you post an offer, remember to check Bisq at least once or twice a day to see if anyone has taken it. When another trader takes your offer, they must post the deposit amount and once this transaction has at least one confirmation, the trade timer is begun.

It is your responsibility to pay attention to your offers and to respond when they are accepted. If you post an offer and forget to check in before the timer expires, it is possible you will lose your trade deposit.

Once you see that someone has accepted your offer and that their deposit transaction has at least one confirmation, you should initiate your payment to them via the agreed upon payment method.

For more information about Bisq, check out their excellent wiki. They have a very active community, and lots of resources to help answer any questions you might have about Bisq. You can find Bisq’s detailed guide to getting started here.