BitQuick, a peer-to-peer cash-for-bitcoin startup, however, is looking to reinvigorate this dormant sector. By offering some basic bitcoin protections, BitQuick aims to serve the underbanked market while positioning itself as more secure and convenient than competitors.
The idea is to eschew the hassles of in-person cash-for-bitcoin transactions, which on other services could entail the inherent risk of meeting an unknown person for monetary exchange.
BitQuick CEO Jad Mubaslat believes BitQuick can position itself to capture a segment of the market that is largely ignored by industry heavyweights, telling CoinDesk:
"For the buyer, you don't have to be banked. If you don't have a bank account, you can't do the things Circle and Coinbase require."
How it works
Using BitQuick is relatively simple: sellers list their prices on the marketplace, where the company says bitcoin sales go for a 5% premium, and wait for a matching buyer.
Once a match is made, the seller places the buyer's bitcoin into a multi-signature escrow wallet.
The buyer then must go deposit cash using a provided account number into a local bank location such as a Bank of America branch.
Within three hours, the buyer's bitcoin is released from the seller's escrow account, and the transaction is complete.
In the past, this type of process usually meant trading on sites like the LocalBitcoins marketplace, which has sometimes been criticized for its lack of consumer protections.
Using Localbitcoins also relies on buyers and sellers communicating, working out terms and managing payment all on their own, another weakness BitQuick aims to address.
Mubaslat said BitQuick customers are simply looking for a quick buying or selling process, noting: "Mainly [BitQuick users are] people speculating. People who don't want to wait to get bitcoin in 3 – 5 days."
BitQuick has a number of measures in place that bitcoin marketplace competitors like LocalBitcoins don't possess.
For example, in order to ensure both sides of the transaction are protected, BitQuick utilizes BitGo's multi-sig wallet technology, which is insured up to $250,000.
Those companies require users to link a bank account or credit card online in order to purchase bitcoin whereas with BitQuick, a buyer only needs cash. In addition, BitQuick asks for information at predefined limits – the platform currently requires users who make a transactions larger than $400 to scan US-issued identification.
Mubaslat says LocalBitcoins does almost 2,500 in BTC ($630,000 at press time) in volume every 24 hours on the US market.
Since BitQuick started in Boost VC's bitcoin accelerator earlier this year, the company has seen promising transaction volume growth.
At the beginning of its time at Boost, the company was conducting $22,000 in transactions per week. Now, BitQuick is up to $85,000 in seven-day volume, with over $3m in total bitcoin transactions processed.
In addition to looking at other payment options for customers, BitQuick also plans to expand into new markets.
Mubaslat said in the interview:
"We want to gain a stronghold in the US, then transfer that perfected model we get over to India, Taiwan. Whichever market looks best to expand to first."
BitQuick is available to US-only bitcoin buyers and sellers at this time.
Images via Daniel Cawrey for CoinDesk