A guide to bitcoin reselling

Please note this isn’t about bitcoin trading or speculating. That route involves a higher level risk and betting on movements in price. I’ve personally got no idea what drives bitcoin prices and so haven’t got involved in this side as it feels high risk to me, bitcoin prices move rapidly up and down!

This is about reselling bitcoins at a small profit, typically 2%.

While this isn’t a lot, if you move bitcoins at a high enough volume this is a good secondary income, something that I’ve been doing for around 4 months and currently making at least £250 per week. In the long term this is likely to be higher as my reputation and trade volumes grow.

It’s a pretty straight forward model, buy at one rate and sell slightly higher. The buying is easy, the selling involves effort selling much smaller volumes than the bulk you can buy in.

What you’ll need –

  • ID
  • Preferably a spare/new UK bank account (not your usual/main one) that isn’t RBS/Natwest
  • Some time & patience
  • A working knowledge of bitcoins and how they work

Overall this is fairly straight forward and any one with decent computer skills can complete.

Upsides

  • A good secondary income
  • Can pick and choose when you trade, and when you are can be doing other things
  • Can choose where if trading via smart phhone
  • Introduction to new technology
  • Scalable in the long term
  • Limited risk compared to “trading”

Downsides

  • Takes patience to build a reputation and get volume going to make profitable
  • You potentially could get your bank account frozen – hence why it’s important to use a non critical one
  • You have to be careful dealing with some trades and be wary of fraud
  • A good cash investment is really required to make pay this pay efficiently

 

Buying coin

Their are a range of platforms that allow you to buy bitcoins.

Generally the legitimate sites require identity checks which is a barrier of entry for some people.

The core one I’ve used in the UK is Coinfloor.

 

Selling

The core platform for individuals to each other is Localbitcoins, which not only provides a platform for selling but has a useful FAQ and forums to discuss issues with fellow traders.

An alternative I’ve started to test in the UK is Bitbargain, I’ll update this post when I’ve had time to evaulate them.

There are a range of issues to consider when selling:

  • Price – this is vital – to sell volume you need to be competitive and on Localbitcoins (LBC from now on), it’s key to getting sales, particularly when knew, is to be in the top 6 to appear in the summary sheet on the main website
  • Method of sale – this can be bank transfers, but there alternatives around mobile payments, vouchers and even options to sell in person (rather than sell online there are options to sell locally)
  • Fraud – you are at risk if you don’t ask for identity verification from buyers, potentially you may be in contact with individuals who
  • Trade volume – this is key and volume of sales increase significantly as you hit number of trade milestones, I’ve found a shift in volume when moving past 100 and 500 trades
  • Rating – It’s key to be consider a good seller and every buyer is given the opportunity to

The process

I’ll regularly transfer money in bulk to Coinfloor, as it’s bank is currently overseas this helps to minimize the transaction fees.

Coinfloor insists on a fixed bitcoin address to send which is set up as my LBC account address. For further info on how bitcoins work try the FAQ on LBC mentioned earlier.

Once “coin” is in your wallet you are ready to trade.

Before you can sell anything you need to create an advert. This is fairly straight forward

A key element to consider here are what type of trades you will accept and your attitude to risk. You can set the ads to only deal with individuals who have verified their identity with ID. This allows you to check details against any bank transfer. This means your less likely to be dealing with a hacked account, a hacker would have less chance of having their ID and is a good safety measure. However it does mean you’ll miss a lot of trades from people that haven’t done this.

Once setup up going on to your dashboard allows you to set your price and hit active. And your advert is live!

At this stage it’s a matter of waiting, and checking your price is still competitive on a regular basis. The price formula links to a price index so can move frequently automatically, the key is to ensure you are ranked competitively against other traders.

Once a buyer starts a trade you are notified by SMS and a message on the portal.

I personally don’t have the system setup to automatically provide my bank details/mobile payment details. I spend a minute checking their trades and reviews, and if I’m unsure I typically request from the user a photo of them holding their photo ID. Generally I’ll request this if a user has less than 10 trades and the trades they have are very new.

If happy to proceed I copy and paste my bank account details.

Once the seller sends payment typically you’ll get an additional message after they “mark as paid”, however some new users forget so it’s worth checking for messages where they have said they have sent the money. You’ll only get a text if they hit mark as paid.

Then it’s a matter of checking for payment, and confirming the name of the transaction matches the one you were expecting (if you are going down the name verified route).

If you’re happy you mark as paid and can leave a review.

Typically the whole process takes minutes and buyers expect you to check for payment and release quickly.

Understanding your margin

Buying on Coinfloor typically  sees a rate slightly higher than the average.

But you must consider all aspects when setting a price and working out your profit.

On a 4.5% trade I’d typically have:

  •  1% goes to LBC as commission for their service
  • 0.4% on bank fees for an international transfer to Confloor from my bank account (this can be cheaper, HSBC offers the best fee but takes the longest)
  • 0.2% on other coinfloor buying and deposit fees

So overall this takes your margin down to 2.9%.

Whether trading bitcoins can be profitable/worthwhile is down to how much volume you can move, and the price you can achieve. Over time this has increased for me, a higher rating means more trades and you can set a higher rate. Overall after 4 months I can turn over approximately £10k per week making around £250-£300k, with 800 traders completed.

I’ve yet to to need to declare this to HMRC but believe it comes under Capital Gains Tax – 20%.

Overall I’ll be adding to and expanding this guide in the coming months to share my experience, keep checking in.

 

 

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2011 in pics…

My 2011 in a pictorial format (www.flickr.com/beeds82), to summarize riots/protests/road signs/Morocco. Click to enlarge/descriptions.

Desperation…

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It may be more a sign of my on lethargy that the best I can find out of many wonders of London is a load of aggressive geese, on the plus I did get to enjoy  Richmond on a Autumnal afternoon.

Fog

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Crazily foggy day in Raynes Park and on Cannon Hill Common.

Getting a bit handsie…

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I’ve been largely avoiding photoediting on the basis A) I need to figure out how to take a decent photo first and B) it’s a whole new thing to learn, and largely restricted myself to a bit of cropping/colour adjustment.

However a stinking hangover and the release of Adobe Photoshop Touch for Android is a great excuse to have a play and get a bit handsie with some pics.

It’s a lite version of the full package as you’d imagine for 7 quid on a tablet, but does bring with it some more advanced features like layers and easy synching with the desktop version via the cloud. With some pretty good tutorials and the whole intuitive nature of using a touch screen it’s pretty quick to pick up.

On the downside, browsing photos still involves a heavy lag as I’ve found with all Honeycomb apps, and it fails to recognise an SD card plugged into my Asus Transformer keyboard so requires a bit of copy and pasting. And maddingly it still restricts the resolution of all images you’re playing with (1200 x 1200) like every other photo editing program on Android, presumably a hardware restriction but if I can play HD films presumably not that big an issue to solve? Any one please?

De-Grinching

It’s official, for the first time in 10 years I’m looking forward to Christmas.

My top tips on how to stop worrying and love the season to be jolly.

 

Start Early

You’re reading this, you’ve started early.

I’m sorry but if you ease into slowly you’ll be happier. Next time you see mince pies in the shops in October, buy ’em, whack on Elf and start humming a bit of Bing, the sooner you get used to it, the happier you’ll be.

 

Focus On The Booze

You’ve got to have something to look forward to.

I like booze, this qualifies. P.A.R.T.Y. Book yourself back to back festivities.

On occasions you may be drunk enough to forget it is Christmas. When you’re not hit the mulled wine, it’s warm, winey and cheap, it’ll knock the edge off.

 

A Bigger Scrooge

Finding someone who hates Christmas more is essential.

You are no longer the Scrooge, there is a big one in town, you’re now just a normal Xmas reveler, got on with it, get involved.

 

Yipppee … Recession!

This is great for two reasons.

An extension of Scrooge, you know lots of other people are suffering. This is awful, but still makes me feel better, so I’m winning, their losing, lets make the best of it shall we?

A much better aspect is the horrible Xmas exploiting retailer are now miserable, their pain and suffering over this previous Capitalist holiday helps. And everything is cheaper. This is also good.

 

Stop Watching TV

TV is a stark representation of all things that have made Christmas shit. A year of sod all TV has prep’d me well, I don’t have this pain to worry about.

Ads trying to suck cash out of you, the false sentiment everywhere and generally the constant reminder it was better as a kid.

All you need is a boxset, and a backup copy of Home Alone for any odd Xmas pangs, and you’re winning.

 

Grub

Okay much of it you’d never consider eating during the rest of the year, but there is a lot of it, and often free.

It also provides a convenient excuse for escaping any strenuous family encounters, the classic “I need to walk this off” can always end in the pub.

 

Enjoy Giving

Despite this being fairly girly I like buying birthday gifts, it’s fun. At Christmas there are too many of the fuckers,  so despite my better judgement, plan early. And it’ll be cheaper (see recession).

 

New Years Is Always Crap

Accepting that NYE is going to be a let down is key, focusing on what turns out to be a let down is a killer.

Plan great nights around it. On NYE, plan gin.

Merry Christmas!

Autumn

Stew in the slow cooker, a wander around Wimbledon Common, decent book and a couple of over priced beers… ahhhhh…….

Bacon/Morph

Bacon/Morph

As we were head bopping to the Brian Jonestown Massacre housemate Ben noticed the “nice juxtaposition of Morph against Francis Bacon”.

Kept Off The Grass

Now the stupidity and press coverage from Keep Off The Grass has stopped, time to look at my highlights:

  • Getting that bastion of the right wing the Daily Mail website to use my quote “‘I’ve had many a great time on grass, rolling around, frolicking, admiring, and altogether enjoying its lush texture and greenness. I love the stuff.”
  • Four grown men cheering at work as it appeared on BBC London (without any sort of credit for me mind you), and the story hitting the number one most watched story on the beeb website.
  • Hitting the infamous third page of the Metro, the home for all trivial matters for London commuters.
  • Along with the Sun, the Telegraph, the Evening Standard, the Daily Star, appearing in a hell of a lot of blogs, including random  foreign ones

What did I learn? Not a lot. Apparently it had been up for years when their was more grass and the residents had just paved over it with drives.

I did find out that despite spending my most successful campaign of the year was a funny photograph, and was fundamentally pointless. Which is great!

But what I did love, in response to being accused of wasting money and erecting pointless expensive signs, the council responded by paying to have it removed.

Keep off the grass sign, we mourn you……

Sony vs Cohen?

Been hearing loads about this Sony/Leonard Cohen/CGI 3D thing, which seems to put in competition with your senses some middling 3D and some gravely Cohen poetry. Having finally watched it, and appreciating 3D/in the cinema it may some how increase the impact, but this is an ill-conceived, over worked, contrived silliness and a tremendous waste of money, right?

The same could be said for the original, but at least it ain’t an ad so is entirely forgivable: