Bitcoin wallets for beginners - Part V
This article is Part V of a five part series designed to demonstrate to Bitcoin beginners how to install and use a Bitcoin wallet. This part of the series covers purchasing non-KYC bitcoin for your new Bitcoin wallet. This can also be viewed on Bitcoin Magazine's website here.
Now that you understand the importance of self-custody and the dangers of KYC; and have installed a mobile or desktop wallet, here is how you can start getting bitcoin safely and privately.
There are many ways to get non-KYC bitcoin, you can earn it in exchange for goods and services. You can mine it at home. You can buy it at an ATM machine. Or you can buy it on a peer-to-peer exchange. This article will show you how to buy a small amount of bitcoin at an ATM machine, install and setup Bisq, and then use the bitcoin to fund your first Bisq trade.
You can skip to the other parts of the tutorial with the links below:
Part I: The Importance of Self-Custody & the Dangers of KYC
Part II: Samourai Wallet on Android
Part III: Blue Wallet on iPhone
Part IV: Sparrow Wallet on desktop
Step 1: Buy bitcoin at an ATM
If you followed the instructions in Part-II or Part-III of this series, then you now have a fresh mobile Bitcoin wallet. Take your mobile wallet with you to the Bitcoin ATM so you can deposit your funds onto your mobile wallet.
Make sure you have cash in hand. The majority of Bitcoin ATM's will have varying levels of KYC requirements based on dollar-amount thresholds. These thresholds can vary by jurisdiction or ATM operator or a number of other factors. Typically, if you are buying between the $1 - $500 range the only requirement will be a phone number for a text verification.
Consider using a burner phone number for this to preserve your privacy and not have any Bitcoin ATM transactions potentially traced back to your name through your mobile service provider.
Next you will need to find an ATM near you, I like Coin ATM Radar because the have a handy mobile app and there are actually a lot of good resources about the Bitcoin ATM industry on their website.
With your mobile phone and cash, travel to your desired ATM location being cautious of security cameras at the place of business that may capture your license plate. Consider parking a couple blocks away out of view of surveillance cameras and walking the rest of the way.
Once you approach the Bitcoin ATM machine, the basic steps are as follows:
a) Touch screen to begin
b) Select Bitcoin
c) Input a phone number
d) verify the code that was sent via text message
e) Display the receiving address QR code on your mobile wallet
f) Insert your cash
g) Print receipt
h) You can expect the funds to arrive in your wallet within 1 - 3 hours typically
Here is a video of the whole process:
Now that you have your first little bit of bitcoin, you can go home and setup your Bisq client and then you will use this bitcoin to fulfill your escrow requirement on your first Bisq trade. I recommend getting at least 0.0075 BTC from the ATM, you may need to make multiple trips. This should be more than enough to fund the security deposit of your first trade as well as cover the trading and miner fees.
Step 2: Download Bisq
Bisq is a decentralized peer-to-peer network of bitcoin traders. Buyers and sellers from all around the globe can find each other over Tor on Bisq to trade safely without the coordination of a central authority or the need to expose sensitive KYC information to large corporations.
Bisq has many trading pairs such as , USD to bitcoin, Euro to bitcoin, and many more. There are also many different payment options such as Amazon Gift Cards, Revolut, Uphold, and more.
The basic idea is that you find or post a trade in the currency pair you want and for the payment method you want. Once the trade is initiated, both trading peers deposit a small amount of bitcoin in escrow as a security deposit. You exchange fiat payment with your trading peer out of band. Once both peers confirm the trade is complete then you receive your purchased bitcoin plus your security deposit to your Bisq wallet. From there you can send your non-KYC bitcoin wherever you like; to your mobile wallet, your desktop wallet, or a hardware wallet.
Navigate to the Bisq website to download the software for your operating system.
Keep in mind that your trade is only available to the rest of the peer-to-peer network when your instance of the Bisq application is running and connected to the internet. You may want to install this on a computer that you can leave running.
After you have downloaded the program, install it by running the executable (Windows) or by other installation methods if you are running MacOS or Linux. If you are familiar with verifying software, do so at this point. I recommend you learn about PGP keys/signatures by checking here & here for the basic concepts.
After you have run the Bisq installer, followed all the prompts, and agreed to use then Bisq is going to connect to a few Tor nodes and connect to a few Bitcoin nodes, this can take a couple minutes. Once everything is synchronized, you should see something like this:
Step 3: Setup a Bisq Bitcoin Wallet
You will need a Bisq Bitcoin wallet so that you can fund your security deposits for your trade escrow requirements. This wallet will be setup similar to the other wallets discussed in previous parts of this guide.
Navigate to the "Account" Tab, and then the "Wallet Seed" tab.
You will receive one warning that it is recommended to make a backup of the Bisq files on your computer.
Then you will receive another warning that you have not created a password yet, you will do that in the next step.
Write down your seed words on a piece of paper along with the wallet date. You will need both pieces of information to restore your Bisq wallet in an emergency. The same best practices apply to this wallet as you learned with the other wallets:
*This is the most important step
a) Write down your words in order on a piece of paper.
b) Secure this piece of paper as if as though it were gold or jewelry.
Do not screen-shot these words.
Do not save these words in a computer or on your phone.
Do not say these words out loud.
Never share these words with anyone for any reason.
Your bitcoin is only as secure as your 12-words & wallet date.
c) Double check your work.
d) You will also need your wallet date from above for a complete secure backup.
*Once you get more serious about Bitcoin, consider securing your seed phrases in metal instead of on paper.
You will need all of your seed words in the correct order and wallet date to restore your wallet.
After you have secured your seed words and wallet date, now you can set your wallet password. This will encrypt your Bisq wallet information on your computer.
Navigate to the Wallet Password tab now:
Set a strong password that cannot be guessed and is at least 8 characters. Once you type your password in, you will be warned that this will encrypt your wallet information on your computer and that you will need your password to view your seed words in the future. Make sure you secure this password like you did with your seed words and wallet date.
Step 4: Fund your Bisq Bitcoin Wallet:
Now that you have setup your Bitcoin wallet, you can navigate to the Funds tab and then the Receive Funds tab under that. This is where you can find the QR code for your first Bisq receiving address.
Using the mobile wallet you deposited your funds from the Bitcoin ATM, send those funds to this wallet now. Once you have received a few confirmations on your Bisq wallet deposit, you are almost ready to make your first Bisq trade.
Step 5: Setup Fiat Currency Payment Method
In order to make trades on Bisq you will need to setup a fiat currency payment method so that trading peers can agree to this payment method when trading with you.
Navigate to the Account tab and then the National Currency Accounts tab below that. Then you will want to click on the "Add New Account" button:
This will populate a drop-down menu where you can find all the supported fiat currency accounts in Bisq. Select the account that matches your available options.
Next you will need to enter all of your information correctly. When you make a trade on Bisq, your trading peer will need certain information about you in order to send you money out of band via the payment method you have selected. It is important to note that certain information about you will be exposed to your trading peer. However, this is necessary to make the out of band payment, and it has minimal effect on you considering that it is only to one other person.
*Consider establishing an LLC through a registered agent to keep your personal name off of the public record and to protect your identity and privacy by using the company name on your national currency account through your business bank account.
Once you have entered your details, select "Save New Account". You are ready to start trading.
For most national currency accounts that you setup in Bisq, they will initially be throttled to 0.01 BTC trades for example. These limitations vary depending on the account type, so be sure to familiarize yourself with the account signing and aging requirements here. Once you have completed a successful trade with a peer who has a signed & aged account, then they can sign your account. Once your account is signed, a 30-day timer will start, once you have reached 30 days then your initial 0.01 BTC limit is raised to 0.125 BTC for example. Then after 60 days, all limits on your account are lifted and you are only restricted by the limitations of your payment method.
Step 6: Make or Take a Trade
Now you can navigate to the Buy BTC tab and see all the available offers to sell you bitcoin. You can filter this list by your payment method or currency type. Be mindful of the percentage over the market price. Once you see an offer that is satisfactory you can take it by selecting "Take Offer to Buy BTC".
Alternatively, you can make an offer to buy bitcoin by selecting the "Create New Offer to Buy BTC" button in the upper right-hand corner. Then you can enter your desired trade details such as your out of band payment method, the amount of bitcoin, the percentage above or below the market price you are willing to pay, and you can even set a trigger price to turn the trade off if bitcoin hits a specified price.
You will see at the bottom that for a 0.01 BTC trade there is a 0.006 BTC security deposit required. This is why you deposited the bitcoin from your ATM purchase into your Bisq wallet. Once you post this trade, Bisq will transfer your security deposit, trading fee, and miners fee out of your Bisq wallet and into escrow. Once the trade is complete, you will receive your 0.006 BTC security deposit back.
Follow the prompts to make your trade viewable to the other peers and leave your instance of Bisq and your computer running and connected to the internet until someone takes your trade.
Once your trade is taken, you will start receiving notifications in Bisq alerting you as to the trade's progress. Typically, each trade is given a predetermined amount of time to complete. And there is an option to send a message to your trading peer.
You can monitor your trades under the Portfolio tab. Your Open Offers are trades you have posted that are still waiting to be taken. The Open Trades tab is where you will find your trades that are in progress. And the History tab is where you can find all of your trade history.
There is Bisq Arbitration standing by in the event that something goes wrong with a trade. If you stick to the rules, follow the instructions, and operate within the time limitations then you should never have a problem.
Once your trade has been completed, use the bitcoin you purchased to fund more security deposits for more trades and keep this up until you have reached your goals. It is a good idea to send your Bisq funds to Whirlpool to break the deterministic links to prior transaction history.
Buying bitcoin at an ATM has a high premium, but you only need to do it with enough money to get your first Bisq trade funded. Then from there, you have way more control over the prices you pay. You can set orders on Bisq below the market price and wait for peers to take your trade.
Even though there is no central authority with Bisq, you are still exposing minimal information to a stranger on the other side of your trade. I recommend taking every privacy precaution you can to protect yourself. Having an LLC is a great way to interact with the world in a private manner.
There are a ton of features on Bisq that I did not cover here because I just wanted to show you the basics to get started. You can save on trading fees by using the Bisq token, BSQ and you can use mempool.space as a BSQ block explorer. You can connect Bisq to your own Bitcoin node. There is a mobile app you can use to receive notifications on the go of your trade progress.
Bisq is an open-source project, check out their website to learn more: https://bisq.network/
There is also a Bisq Wiki packed full of all the information you need to use Bisq.
If you ever have any questions, jump in the Bisq Telegram channel here for community support.
Back to Part I: The importance of self-custody & the dangers of KYC
Thanks for reading! I hope that this article helped you with ideas on how to obtain non-KYC bitcoin in a safe manner. And if you have read all five parts then I hope that overall this guide has helped you understand the importance of self-custody, the dangers of KYC, as well as how to securely install and use a Bitcoin wallet.
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This article can be found on Twitter as a thread here.