Buying bitcoins with cash

Fastest Way to Get Bitcoins

The fastest and easiest way to buy Bitcoins is by looking for sellers who accept cash deposit at  Local Bitcoins .  Go to this site, create an account, log in, and go to the  Buy Bitcoins online in the United States with Cash Deposit  section (or to your relevant country's site), and find a seller who is asking for a cash deposit to a nearby bank.

Once you find a seller who has a price you like with a good trust rating at a nearby bank, and click on [Buy]. Then enter the dollar amount and click [Send Trade Request].  At this point, the bitcoins you are buying are deducted from the Seller's account on Local Bitcoins and placed into Escrow  for 4 hours.

You will see information or receive an e-mail with the sellers' name and account number at that bank. Once you have this, go to the bank with your cash.  Get a deposit slip if needed and fill it out with the account number (some banks just have the teller take your account number verbally) and bring it to the teller.  Tell the teller you want to deposit cash into the seller's account.  Hold onto the receipt for the cash deposit from the teller as proof that you made the deposit in the unlikely case of any dispute.

Go back to your computer / phone and mark the transaction on Local Bitcoins as [Deposit Completed].  This will automatically notify the seller that you've completed your deposit.  They will log onto their on-line banking website, and confirm that you made the deposit.  Because the trader may be accepting multiple trades at the same round dollar amount, it is a best practice to add a few cents to the deposit so that it is a unique dollar amount and less likely to be confused with other depositor's deposit.

I Bought a Bitcoin: How I Joined a Virtual Currency Megabubble

Yesterday, I did something entirely irrational – something both my common sense and my work as a business writer should have prevented me from even considering. I decided to buy a Bitcoin.

If you're just catching up, Bitcoins are a virtual currency that is, right now, experiencing a flash of instant celebrity. Bitcoins have been around since 2009, but recently, they've become the financial media's favorite obsession. The price of a single Bitcoin has gone on an insane tear, from $34 to $140 in the span of month. Wall Street analysts are getting questions from their clients about Bitcoins, Bitcoin ATMs are being put up around the world, and the value of all Bitcoins in circulation now stands at $1.6 billion. That's not a tremendously large number for a global currency (the value of all U.S. dollars in circulation is roughly $1.1 trillion). But for a so-called "crypto-currency," it's pretty impressive.

A Bitcoin is a unit of virtual, encrypted currency. Right now, a single Bitcoin unit (abbreviated as BTC) is worth about $140, but that value has fluctuated wildly. A Bitcoin functions like a normal currency, with a few exceptions: First, Bitcoins aren't issued by a government or a central bank. They're produced by a complex computer processing scheme called "mining." You'd need a Ph.D. in computer science to understand exactly how Bitcoin mining works, but basically, it uses distributed computing power and complex math formulas to "find" a certain number of Bitcoins every day. Once I mine a Bitcoin, or buy a Bitcoin from someone else, it's held in my virtual "wallet." When I want to use it to pay for something, I simply type in the recipient's address — a randomized string of between 27 and 34 letters and numbers — and off it goes. The entire process is anonymous and untraceable, which is part of the appeal. (There's more in this FAQ and this Businessweek story. if you're interested.)

Several friends warned me about buying a Bitcoin now, since prices are at an all-time high, and most smart people are predicting that the bubble will pop eventually. But many people expect the price of Bitcoins to go higher than $140. Henry Blodget half-jokingly suggested that Bitcoins could reach $400, and there's no logical reason why they can't keep rising beyond that. The more publicity Bitcoins get, the more demand there is. And since supply is limited by design, and no central authority can step in and "print" more Bitcoins, it's theoretically possible that the price could keep rising for a while before a bubble burst happens.

So I decided to jump on the bandwagon and buy a Bitcoin. A single Bitcoin. Partly, I wanted it for novelty value. Partly, I thought it might make me a few easy dollars. And partly, I wanted to see how easy it is for a lay person — who has no coding or hacking experience, and who has never dealt with a virtual currency in his life — to get involved.

The first thing to know about buying a Bitcoin is that you can't just whip out your credit card. Because Bitcoin transactions are completely anonymous, none of the big exchanges accept credit cards, owing to the risk of fraudulent chargebacks.

The most popular method of paying for Bitcoins is to give your bank account information to an exchange and transfer money into a Bitcoin account. I was uneasy about giving up my bank information to a sketchy currency dealer, and given that my goal was only to buy a single Bitcoin, I nixed that idea off the bat.

Option No. 2 is a bit convoluted, but allows you to pay for a Bitcoin in cash. Basically, you use a cash-payments service like Moneygram to pay an intermediary at a designated deposit spot. The intermediary then takes the cash, converts it to credit, and deposits the credit into a Bitcoin exchange account for you.

Buying bitcoins with cash

The insanely fast scaling of the Bitcoin economy has led to some technical glitches with big Bitcoin sites. The largest Bitcoin exchange, Mt. Gox. is only taking new memberships by application owing to high demand, and my application stayed un-approved for three days before I decided to go with a smaller exchange. I picked Bitstamp. which had a nice, beginner-friendly interface, and which — seemed to be able to get Bitcoin transactions processed. (Some other Bitcoin sites, weighed down by too many people trying to buy, are either shut down completely or processing only select transactions.)

To deposit money into a Bitstamp account, I had a few options: I could hand over my bank information (nope!), I could use another virtual currency system called Ripple to convert dollars into BTC (too complicated), or I could use a service called BitInstant.

BitInstant is a Brooklyn-based payments processor used specifically for Bitcoins. The way it works is: You tell BitInstant how much you want to deposit in a Bitcoin exchange account, which exchange (Bitstamp, Mt. Gox, etc.) you want it to go to, and your account number. You go to a "cash deposit location" (in my case, a CVS several miles from my house) and use Moneygram to pay a cash-payments service like ZipZap, which then pays BitInstant, which then credits your Bitcoin account. If it sounds complicated, it's because it is.