Bisq: Fiat Methods

This is part of a series of posts on Bisq, the peer-to-peer Bitcoin trading platform. This series will serve as a primer to a Meetup presentation planned for February 2024.

Background

One of the good things about Bisq being an open protocol is that all the trade info is transparent. Anyone can download the entire history of trades and use that info to see where the liquidity is, increasing your chances of a successful trade. But that's only one of the things to consider when chosing a payment method.

Every US dollar payment method has trade-offs regarding privacy, security, convenience, and cost. In 2021 the top two methods were Zelle and money order by mail (MO). These are basically the most convenient and most private, respectively. Zelle is as quick and easy to use as any "neo bank" app but others like Cash App and Venmo have a higher chargeback risk, so they aren't currently used on the platform. MO is more work; it requires getting cash from the bank (better for privacy), going to a post office (and actually interacting with a clerk), and taking pictures of the items and loading into the envelope. The trade-off is that it can be done with strong payer privacy. It's slightly less private for sellers as the MO has to be made out to a person or entity (like business or trust).

In 2021, Strike and cash by mail (CBM) were added as payment methods. They're similar to Zelle and MO, respectively, but gain some privacy advantages (and trade-offs). They are both taking volume away from Zelle and MO.

Privacy and Security
With fiat payments, you're likely exposing your personal info and activity with one of the following groups:

• Your bank
• Your peer's bank
• Big tech
• Your peer
• The government

The best you can do is limit your privacy exposure to fewer of these entities. For example, Zelle requires you to share name and email or phone with your peer, but the banks connecting also likely share this information and more. Strike might be better, as you're only sharing usernames, but the tech/bank data sharing doesn't seem to be better. CBM, on the other hand, can be anonymous for a buyer if you pay for tracking in cash and provide a fake return address without a name (note this obviously puts you at risk of loss if the mail needs to be returned).

Fiat security, on the other hand, leaves you at risk of losing funds. It doesn't necessarily correlate to privacy risk, but that's a longer conversation. Some examples of risk include:

• Banks (blocked/frozen payments, closed accounts)
• Mail (loss/theft)
• Malicious peer

There's not much you can do about banks going out of their way to screw you over. I've heard of people being questioned about why they're making such payments.

You can mitigate mail loss risk with tracking and insurance. But the insurance cost isn't really worth it. For MO, you should keep the receipt until the trade is completed. It can be used to regenerate the MO, although it can take months and I've never heard of anyone trying.

Being stolen from by a peer is unlikely due to Bisq's security model. If they try to steal your fiat, you should be able to take their deposit in addition to the bitcoin being sold.

Annual Review

No new payment methods were added in 2023. These are the most recent additions

There were 14 different payment methods used for USD-BTC trades in 2023. Zelle remained the top payment method, accounting for 70% of trades. Strike came in second with 15%, followed by Cash by Mail, Amazon gift cards, and Money Order. Over 15k trades, 335 BTC were traded for $9.7 million.

Understandably, the lower-cost lower-privacy methods are used for smaller trades.

Notable Trends

There was a smaller increase in trade count from '22 to '23 (4.4%) than '21 to '22 (25.6%). Most of that was Zelle trades. TransferWise, Domestic Wire Transfer, and ACH Transfer all had slightly more trades in 2023, but all other methods saw a decrease.

Interestingly, there were only 3 face-to-face trades in 2023.

My Experience/Opinion

I started out using Zelle, then over the years moved on to MO, and just had my first CBM trade. I'll probably stick with CBM moving forward.

MO and CBM both have risk of being lost in transit. This is cheaper to mitigate with MO, as you only have to worry about the cost of the money order ($2 for up to $500, $2.90 for up to $1000). To get peace of mind for a CBM trade, I was quoted $20 for insuring a $900 parcel, adding 2.2% to the trade cost.

If you are a buyer interested in privacy but worried about being lost in transit, I would stick with MO. If you want the cheapest version of the most private option, CBM is for you.