Bisq was formerly known as Bitsquare and this is an updated review of our initial article on Bitsquare. Bisq has come a long way to become perhaps the only absolutely decentralized exchange in the crypto world. Now that Localbitcoins.com are banning cash purchases under heavy regulators hounding, BISQ is the only truly anonymous way to exchange fiat for bitcoins.
Bisq is a cryptocurrency exchange that is different from most others because it allows users to exchange cryptocurrencies and fiat in a decentralized environment. This means that the exchange itself does not handle funds nor can it be hacked.
Bisq is an application that can be downloaded and ran by anyone, and it has an open source P2P system that allows anyone to sell Bitcoin in exchange for international currency (FIAT) like Euros, Yen, or US Dollars, and alternative cryptocurrencies. On the 27th of April 2016 Bitsquare proudly announced its Beta release. Manfred Karrer is the founder of Bisq and developer. He is an Australian who lives in Barcelona, Spain where Fab Lab Barcelona is located.
Another interesting fact about Bisq is that it is an open-source project. This means that this is funded by personal savings and donations from the community. In fact, they are not a company at all but rather a “Decentralized Autonomous Organization” (DAO) with ownership distributed depending on the participation of the project, which means that you might be the next shareholder in Bitsquare if you are willing to contribute!
Bisq relies on a multisignature and security deposit system to ensure that both parties act honestly and that users have control of their funds. When users exchange currencies, both the seller’s funds (BTC) and pay and advanced security deposit are sent to a 2-out-of-3 multisignature address controlled by the buyer, seller, and a moderator. Once the buyer makes the payment, the BTC are released to said buyer.
If something goes wrong in the trade, the aforementioned moderator will check the facts and send the BTC to the seller or the buyer depending on which one is right, and the party that was being dishonest will lose their security deposit. The deposit will be given to the Bisq moderator.
In addition to the security deposit, which is returned if the exchange goes as planned, Bisq charges a fee to avoid spam orders and to cover the BTC network fees.
How to Access Bisq ?
You are not required to provide sensitive information over the internet in order to get verified with Bitsquare, and this is what makes Bisq unique from most trading websites out there today. The technology is built from the ground up. This means that there are only a few of these markets operating today with the same platform as Bitsquare. With anonymity a part of the platform you are not forced into submitting Passports, Identification, and even your legal name in order to start trading with them, which allows anyone in the world access to Bitcoin trading anywhere and anytime!
You have to download their app in order to use the Bisq decentralized exchange. Click here to go to the Bisq exchange. Click “Download”, choose the correct O.S and version and install the setup. Once you run Bisq, you’ll need to accept the user agreement. After that, a BTC wallet will be created for you. In order to have a copy of your Bisq seed, click the account button in the left upper corner and then go to wallet seed. Click “Backup” to backup your wallet file, and you can encrypt the wallet file in “Password”.
Now all you need to do is register a password for your wallet and you are ready to trade.
How to Deposit / Withdraw
You need to deposit funds to your account in order to use the Bisq decentralized exchange. To do so, click “Funds” in the upper menu and you’ll be shown a Bitcoin address to which you can send the funds to. Even if you want to purchase BTC, you need to deposit BTC in order to pay the fee and security deposit. One more thing worth noting is that you can also generate a new address in the bottom of the page.
You can’t deposit altcoins and other currencies, because these payment methods occur outside of Bisq. For example, if you want to purchase Bitcoin with USD, you’ll need to send USD from your account directly to the person who you’re purchasing BTC from, and the same goes for altcoins, you’ll need to transfer them from you address separately.
How to Use Bisq
Once you’re ready to purchase or sell BTC, you can check the current markets in the “Market” section. Here, the order book is available, along with the spreads and trades. If you want to exchange Bitcoin, click “Sell BTC” or “Buy BTC” according to what you want to do. Once there, you can filter by currency and/or payment method and take an order, and you can also click “Create a new offer to Buy BTC with x”.
When taking an order, you’ll need to specify the amount of BTC you’re purchasing/selling. After that, click “Next step” and the funds will then go to the multisig escrow and the trade will begin. Once it’s complete, wait for the seller to signal that he has received your fund or you can signal that you have received. The exchange will be complete once that happens.
The process is same when creating an order. However, you’ll need to set more details like the price, the maximum and minimum amount to sale and % premium or discount.
How Does the Trade Process Work with Bisq
Unlike your regular trade websites, Bisq follows a different ideology in which decentralization is king, which means that your identity is kept safe and that every transaction is unique. When a seller decides to part ways with their Bitcoin, they would need to deposit this into their Bitshares wallet. They would also need to create an offer that is broadcasted to everyone, or the buyer can easily take an order that was previously posted by a buyer. Trading will begin once that offer is seen by someone that is interested in it and accepts it.
In order for both parties to start trading, they (buyer and seller) are required to make a security deposit of 0.1 BTC (holding fee). This deposit is used as collateral in case the deal would go south. Of course, regardless of how the transaction goes, the seller and buyer will also be required to pay arbitrator fees and transaction fees.
Once the transaction has started, the Bitcoins that are going to be sold and both of the holding fees (0.1 BTC) would be placed into a 2-out-of-3 Multisig wallet. The three signature holders are the buyer, seller, and the randomly selected arbitrator. It’s important to note that the BTC are locked up in the 2-out-of-3 Multisig and the FIAT currency is directly transferred from one trader to another.
Since this setup is quite different from regular trading websites, a third party person needs to step in and make sure that the deal would go properly. It’s important to note that these arbitrators are not employed by Bisq. Instead, they are regular users of the software that can participate in the process by making a huge amount of security deposit, which ensures that everything on their end has to be done with all their honesty towards the transaction that they will be participating in aside from the fees that they would be receiving from both parties. You should think of this as a contingency plan in case an arbitrator decides to run away and keep the money. However, if this happens, the arbitrator’s security deposit would be used to pay for the damages of the transaction.
When selecting an arbitrator for the transaction, it’s also very important that you choose your language. If you do that, there wouldn’t be any language barriers for both parties, which would maximize the success of your trade. When an offer is created, the person who created the offer will need to pay the trading fee or create-offer-fee to the selected arbitrator . The selection process is automated. The taker fee would then need to pay the fees to the selected arbitrator and the public key would then be used to verify by each trader’s software. One more thing worth noting is that with this system, the arbitrator cannot be selected for his own trades.
Fees and Security Deposits
Trading fees that are charged to the seller and buyer are for the arbitrators, and the fees are always fixed at 0.001 BTC (0.1% of the max trading volume which is 1 BTC). This would serve as passive income for them. Even if there are no disputes, the Arbitrator would still want to be available 24/7 because they would have enough motivation to stay online.
- Arbitrators Security Deposit – Interested candidates need to pay a fee of 2 BTC, and this amount is given back to the arbitrators on the day they would step down as an arbitrator.
- Bitcoin mining fee – 0.003 Bitcoin is included in transactions three times: a deposit from an external wallet, trade and the withdrawal to an external wallet. The sum would be 0.009. This is three times that of the original fee mentioned above.
Check their white paper to read more about the fees.
Coins / Listings
The Bisq exchange allows you to sell or purchase Bitcoin for multiple currencies, crypto and FIAT currency. However, it’s not possible to sell or purchase FIAT currency or an altcoin without going through Bitcoin.
When it comes to FIAT currencies, you would have a wide variety of currencies that you can choose from, including the usual trade giants like USD, EUR, BHD, YEN, and many others.
There are also many altcoins like:
- BTC – Bitcoin
- ZEC – Zcash
- ETC – Ether Classic
- ETH – Ether
- DNET – DarkNet
- LTC – Litecoin
- DOGE – Dogecoin
- XZC – Zcoin
- GBYTE – Byteball
If you have questions about Bisq, you can check out their FAQ section on the website and their blog, and with the FAQ’s in check, about 99% of the questions can be answered on that tab alone. If you have unique questions or issues in hand, you can always post in their forums and get suggestions from the community or get direct answers from the developer himself.
Everyone loves Bisq exchange. No hacks has been reported due to the way the system is designed. Most of the complaints would just come from people that are not familiar with the decentralized platform. They mostly complain about not knowing how the new system works.
I have recently found this forum where you can follow a good conversation regarding user experience.
Bisq is a P2P exchange that breaks the mold of conventional exchanges and makes it easier (and more private) than ever to manage Bitcoins, cryptocurrencies, and FIAT currencies.
It doesn’t require you to be verified by a central authority, it doesn’t hold your funds in a centralized location, and it doesn’t even hold onto any of your information. All of your funds, transaction information, and private data are held on your local system.
Ultimately, Bisq is literally something different from most trade platforms that exist out there today, and it is for those who like the anonymity of cryptocurrencies and feel uncomfortable working with conventional cryptocurrency exchanges.
Bisq Pros and Cons
- Trading is safe and decentralized
- Possibility to make an income as an arbitrator
- Wide selection of Crypto and FIAT Currencies
- Safe from thefts and hacks
- 2-out-of-3 multi-sig security
- Difficult to use
- Relatively high fees
- Teaming up with other companies