Buying Bitcoin Unbanked
In 2015 it is estimated that 2 billion people do not have access to simple banking services. In the US alone one third of the population, an estimated 106 million people, are unbanked or underbanked. In my tutorials I talk about how you need a wallet attached to a bank account or debit/credit card to buy Bitcoin. This is, in my opinion, the easiest and cheapest way, which is why I started with it. But if you don’t have a bank account, you can still buy Bitcoin.
As is usually the case, if you know someone that is into the same things as you they can generally help you get started. To get the best deals it may be best to try and buy Bitcoin from a friend. Try asking your friends if they’ve heard about Bitcoin and, if they have, if they’d be willing to sell you some for cash. For the ones who have not heard of Bitcoin, this could be your chance to get them started. One of Bitcoin’s slogans is “vires in numeris”, which means “strength in numbers”.
If your friends aren’t into Bitcoin or they don’t have access to bank accounts either there are several services that try to connect people looking to buy Bitcoin with local people looking to sell. This could be a chance to make a new friend or possibly start a local bitcoin community. One of my favorite ways to do this is by using a feature of one of my favorite wallet software: Mycelium. Right on the main screen of Mycelium wallet is their Local Trader feature. Just click on Buy/Sell Bitcoin and it will give you the nearest people looking to sell Bitcoin. You find an ad you like, click on it, and it will put you in contact with the seller to set up a meet. I recommend neutral ground in a public place, like the food court in a mall, restaurant, or the lobby of a bank. Just meet up and trade.
One of the foremost businesses linking people looking to buy with local sellers is Local Bitcoins. After signing up for an account you will probably need to verify your identity using a passport, driver’s license, or other official government ID. This is done by providing a picture or two of the document. Once that is complete, you can search your local area for the nearest person willing to trade. Be sure to set the dropdown menu for Payment Method to “In-Person/Cash”. Once you find an advertisement you like, click on Buy and you’ll be put in touch with the seller to set up a meet.
Of course, if you noticed, you don’t just have to buy using cash on Local Bitcoins. You don’t even have to be local and meet up. It’s possible to buy over the Internet as well. You can put in that you want to buy using a Wal-Mart gift card you got for Christmas, or a Vanilla prepaid card, or even money you have in Dwolla, Square Cash, or Google Wallet. There are lots of other methods to buy Bitcoin and you can probably find someone that’s willing to deal. The problem with alternate payment methods is that the deals aren’t as plentiful and you’re likely to pay a higher price to get Bitcoin. It is, after all, a market.
Another way to buy Bitcoin is to sign up for a service called LibertyX. Once you sign up you can skip identity verification if you choose, but you’ll be limited in how much Bitcoin you can buy at one time. If you choose to verify your identity your limits will be raised. Once you’re set up, click on Locations and it’ll give you a list of nearby locations that work with LibertyX. You walk into that store and tell the Cashier you’d like to buy a LibertyX PIN and pay with cash. You will be handed a receipt with a PIN on it. You go to the LibertyX website, punch in the PIN and your Bitcoin address, and then click redeem. You will receive Bitcoin to the address you entered.
Another great way to buy Bitcoin is to do it indirectly through the service Purse. This service is unique because you buy things for people from Amazon and they pay you in Bitcoin. Since Amazon doesn’t accept Bitcoin directly, this service is providing a middleman so that people can spend their Bitcoin and get things from Amazon. Here’s where you come in. But without a bank account you don’t have a debit/credit card, right? All you have to do is go to a local store and get a reloadable credit/debit card. The Bluebird card from Wal-Mart, for instance, can be picked up for $5 and refilled at any Wal-Mart for free.
You sign up for the service, select Earn Bitcoin at the top, and then find an order from someone looking to spend Bitcoin. You can filter this by country or by the rough amount of Bitcoin you’re looking to buy. You’ll be shown how much you’ll need to spend to buy the items and the effective rate at which you’ll be buying Bitcoin. Again, this is a market, so the markup may be high. All you do is select an order, click to add the whole wishlist to your shopping cart on Amazon, and then pay for the order. Once you get an Amazon Order ID, punch that into the Purse website and your Bitcoin will be sent to you from escrow.
Another service is Paxful. This service is aimed at newcomers to the Bitcoin ecosystem as well. They offer a wallet service like Coinbase or Circle. It’s a web based wallet only, and a fairly simple wallet meant for people new to Bitcoin, but it works. They also offer Bitcoin buying and selling services like Local Bitcoins. They make connections between people looking to buy Bitcoin and people looking to sell Bitcoin using specific payment options. Some are in person and some are online. And they also offer tutorials and lessons like me.
As you can see, it’s possible to get into Bitcoin even if you don’t have a bank account. You may have to pay a higher price than market, substantially so in some cases, but it works. And, in many cases, it may be worth it if you’re looking to get rid of a gift card you received and don’t really want.