Bisq is a decentralized bitcoin exchange network best understood in terms of its major components:
- Bisq is a cross-platform desktop application that allows anyone to buy and sell bitcoin in exchange for national currencies and other cryptocurrencies.
- Bisq is a trading protocol that enables individuals to exchange directly with one another over the internet, eliminating the need for trusted third party exchange services.
- Bisq is the peer-to-peer network formed by Bisq applications discovering, connecting to, and working with one another to implement the Bisq trading protocol. The Bisq network is fully peer-to-peer in that it requires no centrally-controlled servers and has no single points of failure.
Bisq is not a company—it is free/libre software released under version 3 of the GNU Affero General Public License. Bisq is built by individuals around the world who choose to work together, and Bisq is used by individuals around the world who choose to trade with Bisq over many other exchange alternatives.
The project itself is organized as a decentralized autonomous organization.
Why Bisq exists
Bisq’s mission is to provide a secure, private and censorship-resistant way of exchanging bitcoin for national currencies and other cryptocurrencies over the internet.
When we say secure, we are referring to the safety of users' funds. Centralized exchanges require users to store their bitcoins—for at least some amount of time—on exchange servers. When thousands of users do this, it creates extreme incentives for those servers to be hacked and for those users' bitcoins to be stolen. And time and time again these hacks and thefts are exactly what happen.
When we say private, we are referring to users' ability to control access to their own information. Most centralized exchanges require users to divulge personally identifying information in order to set up an account, which in turn links users' trading activity to their respective identities. This practice creates extreme risks for users: that their personal details and financial information will be stolen, leaked, or otherwise used against their own best interests.
When we say censorship-resistant, we are referring to freedom: users' ability to voluntarily trade with one another without interference from a third party. Centralized bitcoin exchanges are highly susceptible to such interference. By their nature, they must operate within one legal jurisdiction or another, putting them at risk of being fined or shut down if they do not comply with the laws and other rules of that jurisdiction, which may include restrictions on who can trade and what can be traded, and which almost always include requirements to collect personal information as described above.
Bisq was built to fulfill this mission: to provide people an exchange mechanism where users keep control of funds, that is private by default, and that defends freedom of transaction.
|If Bitcoin’s motto is "be your own bank," Bisq’s motto is "be your own exchange."|
How Bisq works
In a nutshell
Imagine you want to buy bitcoin (BTC) in exchange for US dollars (USD). In Bisq terminology, you are a buyer of BTC looking for a seller of BTC who will accept USD as payment.
To complete a trade on Bisq, you would follow a series of steps similar to these:
- You download and run the Bisq application on your laptop or desktop computer
- You configure Bisq with your USD payment method details (bank transfer, money order, etc)
- You browse Bisq’s offer book for existing offers to sell BTC for USD
- You take an existing offer, agreeing to buy the seller’s BTC for your USD
- You send USD from your bank to the seller’s bank and indicate you have done so in Bisq
- You and the seller wait for your USD payment to arrive at the seller’s bank
- The seller receives your USD and confirms payment receipt in Bisq
- You receive the seller’s bitcoin and the trade is complete
For complete instructions on each of the steps above, see Getting Started with Bisq.
These steps can vary in a number of ways depending on whether you wish to buy or sell bitcoin, whether you are the maker or taker of an offer, which payment methods you prefer to use, and so on.
Regardless, the steps above are quite different from those one would follow to complete a similar trade on a centralized exchange.
How trading with Bisq is different
Beyond the obvious difference that Bisq is a desktop application and not a browser-based web application, the first difference experienced traders will notice is that there is no automatic order matching on the Bisq exchange. Rather, Bisq users manually search for and select specific offers they wish to take. This approach enables truly peer-to-peer trade settlement, and ensures that users are in control of which counterparties they trade with.
Bisq is also unique among decentralized bitcoin exchanges in the way it coordinates out-of-band fiat payments. Bisq does not directly integrate with banks or other national currency payment systems in any way. Rather, Bisq’s trading protocol orchestrates the process of buyer and seller working together to settle fiat payments outside of the Bisq application, as demonstrated in steps 5-7 of the trading example above.
These and other differences result in a key trade-off for Bisq users: trade settlement takes longer, but trading itself is far more secure, private and censorship-resistant.
How Bisq keeps funds secure
- Bisq is entirely non-custodial; users stay in control of fiat and cryptocurrency funds
- Trades include security deposits from buyer and seller to prevent fraud
- Trading funds and security deposits are locked in a 2-of-2 multisig escrow
- Disputes are handled through a decentralized human mediation and arbitration system
How Bisq keeps data private
- Using Bisq requires no registration or centralized identity verification
- Every Bisq application is a Tor hidden service
- Bisq has no central servers or databases to record data
- Data is encrypted such that trade details are readable only by counterparties
How Bisq resists censorship
- Bisq’s network is a fully distributed P2P network, and thus difficult to shut down
- Bisq’s network is built on top of Tor, and thus inherits Tor’s own censorship resistance
- Bisq is code, not a company; it is not incorporated, and it cannot be disincorporated