Bisq: Tips and Trade-Offs

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.

Tips

These are some tips from the Wiki and my personal experience.

General

• It adds privacy from your peers and other peering eyes to coinjoin before and after trading on Bisq. It doesn't have to be immediately after, just before you send to someone else.

Running Bisq

• Be patient with initial Sync. Bisq can be resource intensive, especially when first starting up. Your computer's fan might run during this time. To track how close it is to being synced, go to Dao -> BSQ Wallet -> Transactions. Under the transaction list box, it will show how many blocks until synced.
• Keep your software running. If you follow my advice and become an offer maker, you'll need to keep your software connected to the network in order for people to find you (this is a peer to peer network). You also need to have your software on while a trade is in progress (really you can just turn it on once or twice a day but if your peer needs to chat with you for any reason this will hinder that).
• You will probably be asked to resync the DAO. This is pretty annoying and it happens to some people more than others. When there's an issue with the DAO sync, you'll keep getting pop-ups to resync it. This entails closing and reopening the software and it will take 10 or more minutes to resync. You can keep hitting Close instead of resyncing but it will keep popping up.
• Connect to your own Bitcoin node for added privacy. If you have one running on the same machine, it will automatically connect to this and only this node. If you have it on another machine, you can connect over Tor (and probably LAN but I haven't been successful with this)

Creating Offers

• The bigger the trade, the better for lower fees.
• A low security deposit is probably fine. The offer maker decides the security deposit for both peers, from 15-50%. The wiki recommends a higher deposit during volatile price swings, as a peer might be incentivized to bail on the trade if the price changes enough to cover a lost deposit. I always just do 15% because it's annoying to tie up a lot of funds in a trade.

Backups

• Backup your wallet seed phrase (once), fiat payment accounts (at least the ones that are signed i.e. Zelle), and your data directory (every time a new trade is initiated).
  • Wallet seed phrase will allow you to recover funds not locked in a trade.
  • Payment accounts will prevent you from having to get signed again.
  • The data directory has a lot of other info like trade history, transaction history, and (crucially) the multisig information if you're in the middle of a trade. I lost my directory in the middle of a trade once and almost lost the bitcoin. I needed a lot of help and it was scary. Now I back up the directory each time (probably overkill but it gives me peace of mind).

Money Order and Cash by Mail

• Use cash to purchase a MO and buy <$3k at a time. You have to fill out forms to buy $3k or more per day (regardless of how many locations you visit).
• Keep receipts and photos/videos until the trade completed. You never know what you'll have to prove.
• Layer a sheet or two of paper around the money order before putting in the envelope.

Trade-Offs

I've already gone over the pros of Bisq in the previous posts. They all come down to privacy, security, and sovereignty. There are also very real cons, and they turn a lot of people away. I believe this happens more with newer or impatient users than experienced folks.

• Barriers to entry. There is a learning curve for people not used to Bitcoin apps, self-hosting, etc. You also literally need bitcoin in order to buy bitcoin. This is due to the security deposit made and fees paid before initiating a trade. The minimum as of this writing is ~110k sats (0.0011 BTC).
• Liquidity. There aren't millions of millionaires using Bisq. Even though the limits are 0.25 BTC, you most likely won't be doing trades of that volume.
• Lag. Each trade requires 4 on-chain transactions and the more private fiat payment methods rely on snail mail. The fastest trades are less private, have lower limits, and still take up to an hour.
• Compute resources. As mentioned above, this can be an issue for people with slower machines, or just not used to having a machine running all of the time. You might also have to change settings to prevent hibernation from disconnecting you.
• No surveillance discount. See this post. Bisq will cost you more in both time and money. Ask yourself "how much is sovereignty worth to me?" Also, smaller trades are more expensive due to minimum trade and transaction fees.
• Banks suck. Payment apps and banks in general are being more and more invasive and anti-consumer. If you use your bank to make/receive payments you are at risk of having your accounts shut down.