One of the most commonly asked questions I get about Bitcoin is; ‘How can I buy it? It’s not on stock exchanges or the banks don’t offer it.‘ and each time I explain that it is a digital currency, that no one controls. This means that you can buy and sell Bitcoin with another individual without having to get banks or brokers involved and the most common way to do this is through something called ‘Bitcoin Escrow‘.
Bitcoin Escrow is the act of using a trusted third party to complete a Bitcoin transaction, usually for local currency or something else. In this transaction, the person buying the Bitcoin sends the money through the escrow service, and once the third party confirms that the money is there, the person sends the Bitcoin (or vice versa).
If you’d like to read more about what Bitcoin Escrow is and if you should do it, carry on reading.
Can you trust it?
The answer to this question is; yes & no – it all depends on the escrow service you are using. You need to make sure that it is a well-known escrow service with a real office in a regulated country. This way you can know that you are more likely to have a successful Bitcoin transaction with the escrow service.
The beauty of using an escrow service is that you don’t have to trust the person you are buying from/selling to – they have to send either the Bitcoin or money (depending on which side of the transaction you are) in order to complete the transaction. If the escrow service doesn’t receive the goods, you won’t have to keep your side of the deal, you can just walk away (not literally).
What payment methods can you use with Escrow?
Usually, when you’re buying Bitcoin with an escrow service, it is common to use a regular bank transfer or card, although, you can use cash with some escrow services but this isn’t extremely common. Here are the main payment methods you use with Bitcoin Escrow:
- Bank transfer
- PayPal
- Credit/Debit Cards
- Cash
Wait, that’s not it. It may come as a surprise to you, but some escrow services let you exchange goods and services for Bitcoin, it all depends on who you are transacting with. I’ve heard that it’s common to sell domain names and websites for Bitcoin using an escrow service, as usually the buyer & seller are in different locations with different currencies etc. This makes for a great use case in regards to Bitcoin (BTC).
Pros & Cons of Bitcoin Escrow
When dealing with any financial transactions, it’s important to look at both the positives and negatives of the mechanism in order to asses whether or not it is the right thing to do. With this in mind, let’s take a look at the pros and cons of Bitcoin Escrow:
Pros
Many of the pros of Bitcoin Escrow services derive from the nature of Bitcoin itself. Mainly, people enjoy the anonymity of Bitcoin Escrow services as well as the Peer – Peer aspect which allows financial transactions without the interference of a bank or other regulated body.
Cons
When it comes to Bitcoin Escrow, there aren’t many negatives aside from the difficulty of finding a service which you trust – it’s almost as hard as finding someone to trust without the escrow service if you catch my drift. On the other hand, there are some other negatives to using a Bitcoin escrow service, one of which being the lack of regulation, this can work as both a pro and a con since it means that you aren’t as protected as with regular financial transactions on places like eBay where chargebacks can be done. With Bitcoin, it’s final. For this reason, you need to use an escrow service you trust, and then you shouldn’t have any issues at all.
3 Best Bitcoin Escrow Websites
So now that you know a little more about how Bitcoin Escrow works, you’re probably on the lookout for somewhere to do it. In order to do this, you’ll need to use a Bitcoin Escrow website, here are my favourite and most trusted:
LocalBitcoins
Based in Finland, this Bitcoin escrow service is one of the most well-known and trusted, having been around since the early days of Bitcoin. This escrow is available worldwide although does require ID verification. This makes it a safe escrow service since the company has access to the information of everyone who does transactions. This one isn’t good for those looking to stay anonymous, but it is one of the safest and most popular.
Bitrated
Bitrated is a trusted Bitcoin marketplace with high security and a highly-regarded escrow service. Launched in 2013 in Israel, this Bitcoin Escrow is widely accepted as a trusted place for buying/selling Bitcoin through escrow, as well as exchange various online goods and services. Bitrated also uses multi-signature wallets, adding yet another layer of security to the platform.
BTC Asia
Even though the name suggests an Asian exclusivity, this Bitcoin escrow service is available worldwide and is definitely up there with the most trusted platforms when it comes to doing escrow with Bitcoin. Similarly to Bitrate, BTC Asia was also founded in 2013 and serves as an escrow service with a high-reputation. They also guarantee to cover up to the first $500 USD with your transaction which is a great feature in my opinion.
