Bitcoin, despite being decentralized in nature, relies on certain gatekeepers that allow people to enter and exit Bitcoin. We are talking about centralized exchanges which are the most popular way of acquiring Bitcoin. These, however, have proved to be unreliable time and time again. From the infamous Mt. Gox to the most recent Bitfinex hack, users have many reasons to seek alternative methods of buying and selling Bitcoin.
We have already talked about decentralized exchanges like Bitsquare and p2p exchanges like LocalBitcoins. Most people also know about Bitcoin ATMs or BTMs. These are all good alternatives, but all have their disadvantages. Decentralized exchanges are often not very user-friendly, p2p exchanges require users to set out-of-band payments which may incur in additional costs and ATMs can sometimes be too far or hard to find. There is, however, a less known alternative.
Apps like Abra, Spare and LibertyX, which we will talk about today, present themselves as another alternative to buy and sell Bitcoin. These, of course, also come with their disadvantages but the more options you have, the less dependant on centralized exchanges you will be.
So how do these apps work? They all have the same sort of system. These work through a network of partnered tellers that provide exchange/deposit/withdrawal services for the app.
Spare, for example, is a mobile ATM network that allows people to cash out on the go by selecting a merchant on the app’s map, providing him a QR-Code and getting the cash from him. This app also allows Bitcoin deposits, which means that you can effectively deposit Bitcoin and withdrawal fiat on the go. Spare is available for iOS mobile phones and can be downloaded on the AppStore.
LibertyX, on the other hand, focuses solely on the purchase of Bitcoin. You can select a merchant nearby on the LibertyX website, approach said merchant, buy a LibertyX card and redeem Bitcoin on the website or use the card as a gift or payment. LibertyX can be used through the website or through the app, which is available on the Apple AppStore and on Google Play.
The Abra app, takes the whole concept further and acts as multi-purpose app. It allows you to fund the account with Bitcoin, through a bank transfer or through a nearby Abra Teller. The app also allows users to send funds anywhere with any currency and to make purchases on online retailers that accept Bitcoin. Lastly, users can withdraw funds to the bank account withdraw as Bitcoin or find an Abra teller to cash out in fiat. The Abra app is available on the Apple AppStore and on Google play.
These apps which all employ the same style of mobile ATM networks provide a more familiar method of buying and selling Bitcoin and the flexibility of a software-based solution over a physical BTM machine that can be out of order or out of cash. Fees are also considerably lower than that of the average BTM.
Of Course, they also have some disadvantages when compared to other solutions. They are not anonymous in any way and they will require you to provide identification that can later be connected to your purchases. LibertyX,however, allows users to purchase up to $200 by verifying their phone number only.
Depending on the type of user you are, centralized exchanges may still be your favorite solution. However, alternatives like the ones we just talked about help keep the Bitcoin network safe by keeping services decentralized. It’s basically the “don’t keep all your eggs in the same basket” story, which became an iconic lesson taught by the infamous Mt. Gox drama.