When Satoshi released his whitepaper explaining Bitcoin, the subtitle was A Peer to Peer Electronic Cash System. There’s a good reason why Satoshi didn’t call it an “electronic payment system.” Like cash, Bitcoin is intended to be used without permission or intermediaries.
Here’s another similarity between Bitcoin and cash: Neither require identification to use them. However, a person’s identity may be traced via their fingerprints (digital or physical) if they handle either form of value exchange without taking the necessary precautions.
Why Buy Bitcoin with Cash?
There are two excellent reasons:
1. 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 raft of scanned documents to verify your identity. This tactic is a lot safer, given the fallibility of exchanges and the rising risk of identity theft. And we haven’t even addressed crackdowns by tax authorities. This fate recently befell certain Coinbase users.
2. 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, and 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!
Peer-to-Peer Trading: a Key Part of Bitcoin’s Ecosystem
Experts have suggested that the majority of Bitcoin’s trading volume occurs off-exchange. The possibility of an unimpeded, voluntary exchange is critical to the continued robustness and decentralization of Bitcoin.
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: