Aug 012013

Bitcoin-Brokers Review

Here’s my Bitcoin-Brokers review as a seller of Bitcoin. Bitcoin-brokers is a service that allows you to buy Bitcoin anonymously for buyers, and sell Bitcoin at a premium to MtGox price for sellers. See the official BitcoinTalk thread for more details and latest updates.

I haven’t yet used their service for buying Bitcoin (by the way, if you’re interested in buying Bitcoin anonymously, check out Local Bitcoins, which tries to get buyers and sellers together in a given geography).

So how does Bitcoin-Brokers really work? It works differently for buyers and sellers:

For Buyers of Bitcoin: You will be given a bank account with name, account number and routing information. You walk into a bank with cash and deposit this money into this account. You then show a proof of the deposit to Bitcoin-Brokers and your Bitcoins will be sent to your wallet. Buyers pay a 2% fees.

For Sellers of Bitcoin: You will need to share your full name, bank account number and routing number which will be given to a potential buyer. You then transfer as many Bitcoins as you want to sell to a unique address given to you. Someone who wants to buy your Bitcoins is given your bank account information. When a buyer makes a payment into your bank account, you can release the Bitcoin to the buyer (you have until 8pm next day PST to confirm the same). Just in case you’re wondering, the information is “safe” and present on any bank check that you use, so there’s no real scope for misusing this information.

If this process sounds like you need a lot of trust in Bitcoin-Brokers, then you’re right. Remember that Bitcoin-Brokers never sees your money, which means they are not a financial exchange and thus not governed by the same laws that exchanges have to follow. This is another reason I think it’s important to put a Bitcoin-Brokers review out there, so anyone can share their experience.

Personal Experience

Here’s my personal experience with this service.

Firstly, I submitted a request to try the service out. The minimum currently is $400, so I decided to try the service out with 5 BTC.The first step is applying to the site as a seller, which means creating a support ticket. All communication is through this ticket, so it is a very manual process on both ends. You talk to the person in charge, who goes by Daniel Brown (Dan) through the ticket.

I’ve found Dan to be very responsive at least during the morning hours of EST. Once the process was confirmed, he gave me a personal wallet id to which I would send my Bitcoins that I wanted sold. Once again, I had to trust that he wouldn’t run away with my Bitcoins.

I bought 5 BTC on Coinbase. I am a level-2 verified member at Coinbase, so I when I want to buy Bitcoin, I get them instantaneously to my wallet (they don’t need to wait for confirmations). I immediately sent the 5 Bitcoins to the wallet id that Dan provided me with.

The 5 BTC were sold in 2 batches over a period of 3 days. This means there is a good amount of risk that you, as a seller, take on, because prices can fluctuate a lot during this time. Here are the financial details of how this went along:

Bought 5 Bitcoin from Coinbase (including fees): -$463.59
First batch of Bitcoin sold:                                      $375.00
Second batch of Bitcoin sold:                                 $132.90
Total:                                                                      $ 44.31

This was not too shabby. However, several things to note with my experience:

  • As a seller, you’re taking on a lot of risk especially when BTC/USD can fluctuates. In my case, it happened to favor me as the price of BTC was rising after I bought them and at the time of selling, it was higher. However, realize that there’s a good deal of risk in this because of the long time-frames involved.
  • You need to trust the person on the other end. There is no identity checks, business accreditation, etc. You are only hoping this works out for the good.

If you have experience with Bitcoin-Brokers, I’d like to hear from you and your thoughts on this. I was using it more as a Bitcoin arbitrage trade but perhaps there are others who are using this differently.

Photo Credit: Bitstamp Twitter

  2 Responses to “Bitcoin-Brokers Review: Buying Bitcoin Anonymously, Selling Bitcoin at a Premium”

  1. Will this come to stay?

    • Impossible to know for sure, but the business model seems sound enough for this to stay for a while at least. My personal experience has been wonderful too.

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