Bisq - A Sovereign Individual's Non-KYC Bitcoin Exchange

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@bisq_network is a non-custodial, non-KYC #Bitcoin P2P exchange that should be in every sovereign individual's toolstack. How does Bisq work and how to stack some sweet non-KYC corn using the exchange? Thread 🧵 👇

1/29 Bisq is NOT a centralized exchange. It doesn't store users' funds. It doesn't even run on a browser. There are no centrally-controlled servers. To use Bisq, you have to download the software on your computer and connect to other peers who want to trade bitcoin.

2/29 Centralized exchanges store users' bitcoin and collect their personal information. Eventually, these become immensive honeypots for hackers. CEXs also have to discriminate against certain users, and are bound to the whims of their respective jurisdictions.

3/29 You might get canceled for no fault of your own. Ask a Russian whose only fault was that he didn't vote hard enough against Putin, a Canadian trucker, or an Iranian activist. The list goes on...

4/29 Also, "Operation Choke Point 2.0" could make it difficult for US banks to serve cryptocurrency companies and could therefore throttle the fiat on-off ramps. piratewires.com/p/crypto-choke-point

5/29 Bisq fixes this. It is not a company, but a software. You download it on your desktop as a Tor hidden service, buy some bitcoin, and store it in your Bitcoin wallet locally on your computer. All this without revealing your personal information.

6/29 How to get started? There are a few things you have to go through before buying your first bitcoin on Bisq.

7/29 When downloading the software, it's a good idea to verify that the installer file hasn't been modified. After all, you're downloading the software on your computer and storing money in it. It's a bit of a technical task, but you can find instructions on Bisq's website.

8/29 When you have the application open, write down your seed phrase, set up a password and back up your account on your device. Be extra careful with your seed phrase. Do not lose it. If you forget your password and seed phrase, there is no way to recover you wallet.

9/29 You also have to select a payment method(s) you're willing to use. When you find a trade partner, the software populates your payment information to make the trade process smoother. There is no automatic order matching. Users browse offers and contact peers directly.

10/29 You can either make your own offer or take an existing one. According to Bisq's website, the fees are 0.1% for makers, 0.7% for takers. With the platform's BSQ token (colored BTC), you pay only half of that. The token is used to govern the Bisq DAO, not to raise capital.

11/29 You can trade BTC for national currencies, gift cards or altcoins. Bisq only handles the BTC tx through a multisig escrow. It's up to the trading peers to handle the fiat txs. Bisq doesn't know anything about the traders and stores no data on who trades with whom.

12/29 The seller puts the BTC being sold to a 2-of-2 multisig escrow controlled by both traders. Both traders also put up a security deposit in BTC into the escrow to disincentivize fraud. The deposits are refunded after a successful trade.

13/29 This brings up the "chicken and egg" problem: to buy BTC, you already need to own BTC. To get you off zero, you can sell your goods or services for BTC. Or you can invite a Bitcoiner for dinner and offer to pay his meal and tell him that he can pay you back in BTC.

14/29 There is an encrypted trade chat, but you don't necessarily need to use it much since the platform prompts you to do all the actions. There is also a human dispute resolution system with mediation and arbitration.

15/29 If you have published an offer, you need to be online. Deactivate your computer's standby mode if you're a maker. Monitor standby is not a problem. In any case, if you go offline, your offer will be republished in the offerbook when you get back online.

16/29 Although Bisq is not a company, as a valuable entity, it needs to organize itself. For this reason, it's formed as a DAO (decentralized autonomous organization). Trading fees go to funding the DAO and all Bisq's open-source contributors.

17/29 The BSQ token enables paying the Bisq contributors without any central wallets or points of control. BSQ is issued every time a contributor's request for compensation is approved through DAO voting. Tokens are burned every time a trader pays fees with them.

18/29 Outside Bisq, the BSQ token (as colored bitcoin) looks just like a few satoshis. But on Bisq, the sats take on the market value of BSQ tokens. Also, the owner of BSQ tokens can take part in the Bisq governance.

19/29 Before the launch of BSQ token, trading fees were collected only in BTC and went only to trade arbitrators. There was no mechanism to distribute fees to other contributors. The DAO solves this problem with BSQ. When you buy BSQ, you're helping to sustain the project.

20/29 BSQ is a tool to hold the value of a contributor's labor until a trader (a consumer of the product) comes and pays a fee to burn the BSQ. No new money is being created from thin air with BSQ. Bisq also needs a DAO to decentralize its governance for censorship-resistance.

21/29 Some things to consider using Bisq. It's generally safer to buy than sell because of the risk of chargebacks. Buying BTC with PayPal or credit cards is not possible because of a high chargeback risk.

22/29 Because Bisq is not a regulated exchange, you're less likely to know whether the fiat you receive is from criminal activities. However, Bisq limits the amount a new account can trade during a one-month grace period, in which time a possibly stolen account could be found.

23/29 Although Bisq is not a regulated exchange, using it is not by any means illegal. Everybody should have a right to financial privacy, and to find illicit financial activity, you should look no further than fiat. Trading BTC non-KYC also improves Bitcoin's fungibility.

24/29 You typically have to pay a slight premium when you buy non-KYC bitcoin. But you can also think of it this way: Buying BTC on CEXs is actually a discount because you're making your funds and personal information a target for hacks and custodial malpractice.

25/29 On Bisq, only your trading partner can potentially know information about you through the fiat payment. If you're worried that your peer will follow the coins afterwards, you can coinjoin them through wallets like @wasabiwallet or @SamouraiWallet

26/29 While most trades probably go very smoothly on Bisq because of the security deposit incentives, the arbitration process doesn't seem to be bulletproof. A malevolent trader could present a fake fiat payment receipt during the arbitration process.

27/29 Also, how can we be sure that the arbitrators themselves are not lining up with either of the traders in the dispute process? In theory, the Bisq arbitrators could bid on Bitcoin themselves on the platform and then decide in their favor in the arbitration process.

28/29 You could argue though that this would cause reputational damage to the platform, and for this reason not to be in the Bisq contributors' interests. A good rule of thumb would be that risks always exist, and for this reason it's wise to keep trade sizes reasonably small.

29/29 Another minor downside is the UX/UI which lacks behind the front-ends of major CEXs in appeal. This is not a big problem, but traders have being spoiled with slick UIs. Bisq is open-source, so it's possible to take the APIs and integrate the tech with easier interfaces.