Problem: The large, centralized bitcoin exchange services are not private (most are now requesting detailed personal information to satisfy Anti-Money Laundering regulations). It also can take time to open and fund an account and the transaction fees can add up. Not to mention, these centralized exchanges are vulnerable to targeted attack by cyber-criminals and governments.
Solution: Set up your own bitcoin trading network
Here’s how you do it:
Essentially you want to cultivate your own personal network of trusted trading partners. Make a market in bitcoin among your social network. Put the word out that you are the “go to guy” to buy or sell bitcoin. Build your “little black book” of trading partners that you can contact whenever you need to increase or decrease your bitcoin holdings. Join or organize local Bitcoin Meetup groups to expand your network.
Build your reputation as a trusted trader (Mycelium Local Trader, LocalBitcoins.com, Bitcoin-OTC, Forum Reputations). Ask every trading partner to think of you first when they need to buy or sell. Point out the privacy and money-saving advantages of staying “off exchange”.
The goals are to:
1. Help others in your personal community easily move in and out of bitcoin
2. Ensure yourself a reliable source of buyers and sellers
3. Facilitate the easy exchange between currencies which helps remove friction in the bitcoin economy
4. Reduce exchange fees
5. Preserve privacy
6. Reduce risk of attack from predators
Ideally we may someday arrive at the point where everyone is an exchanger and the process of exchanging bitcoin will be as easy as asking someone to “break a twenty”.