Site icon Juraj Bednar

How to find someone to buy cryptocurrencies from and how to create your own crypto trading group

The best way to support the local crypto economy is to create a local small-world network. If you want to buy bitcoin for $100, your best bet is to get hold of someone in your area who wants to sell. Of course, other alternatives (such as a Bitcoin ATM if you don’t want KYC) are also applicable. However, if you find someone in your area who has the opposite problem, you solve two problems at once – yours and theirs.

Can you recommend me a local crypto trader or a trading group?

This, along with asking for help with crypto scams, is the most common question I get from people. Unfortunately, the answer is always the same – I don’t know. First of all, I don’t trader cryptocurrencies with strangers. And most people who trade cryptocurrencies operate on personal recommendations between good acquaintances. Similarly with groups. Even if I knew of a group in your town, I can’t get you in because I probably don’t know you well enough to recommend you. But don’t despair. You’re bound to know someone.

But I don’t know anyone!

I often encounter people saying that they “don’t know anyone” – that is anyone who uses Bitcoin. Let’s find a good systematic solution to this problem.

Let’s say you need to fix your washing machine, find a good doctor for a particular issue, or solve any problem for which you don’t directly know the solution. And at the same time, you don’t know any washing machine repairmen or doctors. This is where the small world network comes in. Even though there are a large number of people living in cities and countries who don’t know each other, human connections have an interesting feature – we are very connected along our existing social ties. You can find a washing machine repairman with references or a good doctor by asking your friends if they either know the expert you are looking for directly or if they know someone who does. Even though most people you ask won’t even think twice, you will almost certainly find a satisfactory connection, and very quickly. I got hold of a stem cell expert in Panama, and of course a crypto dealer in Asuncion, Paraguay – with very little local contacts.

An even better question than “do you know someone who can solve my problem?” is “how would you solve the problem?” The answer to that is usually “I would ask a classmate, I once heard him talk about something related”. An open-ended question is better than a specific question about a particular contant, who might not come to mind to the person we are asking.

If you expect to deal with buying or selling cryptocurrencies in the future and want to maintain your privacy and not rely solely on Bitcoin machines – which may not have enough liquidity at the time – it’s a good idea to find these contacts ahead of time.

However, if you really try to get hold of someone and fail, you can start this network yourself! It’s quite simple.

Start your own crypto trading group!

Let’s use a tool like Signal or Element and create two groups. In one group people will post their demand for buying and selling Bitcoins or other cryptocurrencies, and in the other you will discuss, post links and ask questions.

How do you get members for these groups? Add your acquaintances who are already involved with cryptocurrencies. They don’t have to buy and sell right away. Exchange links, experiences and tips in the discussion group. Group members can invite other members they personally know. In larger cities, this will create several such groups, and some members may be in more than one group. They are thus able to link supply and demand between groups using their reputation (and may even make some money by doing this). It is good if the group also meets in person from time to time. A dinner once a month or some joint crypto event. You will build mutual trust and build interpersonal relationships that will increase the willingness to trade and trust.

Example rules for the trading groups

It’s also good to have explicit rules. I recommend you think about the following topics:

And two more tips. I don’t think there will be even semi-professional vekslaks in the group to begin with. Someone will want to buy bitcoin and someone needs to pay the rent. People will help each other this way. But eventually there will be a situation where someone realises that one side of the demand prevails. If Bitcoin goes up, a lot of people want to sell and no one wants to buy “expensive” Bitcoin. If it drops, no one wants to sell the cheap Bitcoin and everyone wants to buy it. Some members of the group will realise that going against such unbalanced demand is a business opportunity. Don’t be afraid to offer a trade with a fee. If everyone wants to sell, buy bitcoins at a discount and hedge your exchange rate so you don’t buy “expensive” bitcoin. If everyone wants to buy, add a few percent to the rate. I talk about more ways to do this – safely, profitably, and so that you don’t lose money on the exchange rate – in my online course, The Ethical Vekslak (English version will be out hopefully soon, check on my page if it is the case).

The second tip is to eliminate “religious biases.” Cryptocurrencies are interchangeable on decentralized exchanges. If someone in the group is selling Ethereum and you want to buy Bitcoin, it’s just a matter of a fee. You don’t lose much privacy (there are plenty of exchanges between cryptocurrencies that don’t want to know your identity) and you balance supply and demand. Of course make it explicit on who bears the fees and who does the exchange from one crypto to the other, but don’t be a religious fundamentalist. You can turn even the most unpopular shitcoin into something you want. So the group offers a service to switch between the crypto economy and the fiat economy, not a particular coin.

Why you should not use central databases of peer-to-peer traders?

Existing services mapping supply and demand (localcryptos, localmonero, binance P2P, …) can be helpful in good times, but have fundamental problems. In some countries, agents of the tax authority or other organisations have built up a positive reputation on these services and started investigating traders. One hundred deals and five stars can be created by five cooperating agents creating fake deals that rate each other. A reputation system based on stars that maintains privacy in an open market is significantly worse than a reputation based on long-term personal acquaintance.

Attackers may not only be state actors, but also various criminals who lure you out with cash or cryptocurrencies and may rob you. Wire transfers also do not solve this problem. Even in the case of collateral in escrow (for example, bisq protocol), you are interacting with a third party and creating a permanent record of financial communication. Since you don’t know the other party, it may be someone who has done business with someone who is under investigation or sanctioned, and this can lead to your account being blocked and your funds frozen. You can often explain such a transaction, but it is still an inconvenience and you may not be able to dispose of your money for some time.

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