A Beginner's Guide: Investing In Bitcoin In Hawaii

Bitcoin is not illegal in Hawaii, but strict local regulations have made it difficult for Bitcoin businesses to operate there. However, in 2024, Hawaii dropped its stringent crypto rules, allowing exchanges such as Uphold, Unchained, and Gemini to operate in the state. While exchanges like Coinbase and Binance are still unable to operate in Hawaii, there are several other options for residents to buy Bitcoin, including through online exchanges, Bitcoin ATMs, and cash-to-crypto services like CDReload.

How to buy bitcoin anonymously

Purchasing bitcoin anonymously is difficult in any jurisdiction, including Hawaii. While there are bitcoin ATMs that operate in the state, these systems are not as anonymous as they once were in the early days of cryptocurrency. If you use a bitcoin ATM, you will likely be paying fees higher than 15%.

Exchanges that are allowed to operate in Hawaii will also not be a good option if you’re interested in protecting your privacy, as users must hand over a large amount of personally-identifying information when they sign up for an account.

If you want to purchase bitcoin anonymously in Hawaii, you will need to look at peer-to-peer options such as trading cash for bitcoin with a friend or using a decentralised exchange like Bisq. However, it’s important to remember that you are usually also leaking your identity to the person you are trading with when using these methods.

Another option is to use an international exchange such as CEX or Bitstamp, which are based in London and Luxembourg, respectively. These exchanges allow users to buy Bitcoin with a credit or debit card, although there is a 5% fee attached to this payment method.

LocalBitcoins is another peer-to-peer marketplace option, based in Finland. It directly connects buyers and sellers and is available in many countries, including the USA. There are a wide range of possible payment methods in Hawaii, including cash, PayPal, and Western Union. However, a 1% fee is charged by the platform on top of the seller’s exchange rate.

Crypto exchanges in Hawaii

Hawaii has recently dropped its strict crypto laws, but it is still a bit of a complicated process to buy and sell Bitcoin and other cryptocurrencies in the state. The regulatory framework in Hawaii has heavily restricted this kind of activity, with many major exchanges like Coinbase, Binance, and Strike Global not operating in the state. This is due to a regulation that requires exchanges to hold the US dollar-equivalent value of all the crypto held by their users.

However, there are still some options for crypto exchanges in Hawaii. Here are some of the major ones:

Gemini

Gemini is one of the most trusted crypto exchanges in the USA and has been operating in Hawaii since August 2020. It is a New York trust company regulated by the New York State Department of Financial Services (NYSDFS). It offers instant buying and selling of cryptocurrencies, a simple interface, and some of the lowest fees in the US. It also provides a secure storage system for your crypto assets. Gemini is also part of the Digital Currency Innovation Lab (DCIL) in Hawaii, which allows companies to operate in the state without a money transmitter license.

Uphold

Uphold is a crypto exchange established in 2015 that allows Hawaii residents to buy Bitcoin and other cryptocurrencies via wire transfer, credit card, debit card, and ACH transfer. It also offers the ability to buy gold and silver. Uphold is also part of the DCIL in Hawaii.

Unchained

Unchained offers a secure platform to buy Bitcoins and provides human help for its users. It also offers Bitcoin IRAs and inheritance planning.

Kraken

Kraken has some of the lowest trading fees in the United States and offers dozens of coins for trading, including Bitcoin, Litecoin, Ethereum, and Bitcoin Cash. It is highly rated for security and data protection.

River

River is a crypto exchange with a clean interface, low fees, and automatic purchases. It is available in all US states besides New York and Nevada.

It is important to note that the regulatory landscape in Hawaii is evolving, and there might be more options available in the future. Additionally, there are also Bitcoin ATMs in Hawaii that allow users to purchase cryptocurrencies instantly with cash.

Bitcoin wallets

A Bitcoin wallet is a device or program that stores your cryptocurrency keys and allows you to access your coins. It is called a wallet because it is used similarly to a wallet you put cash and cards in. Instead of holding these physical items, it stores the passkeys you use to sign for your cryptocurrency transactions and provides the interface that lets you access your crypto.

There are several different types of wallets, each with its own features and levels of security. Many cryptocurrency wallets can be used to store keys for different cryptocurrencies.

Cryptocurrency wallets are software applications on computers or mobile devices such as phones or tablets. They use an internet connection to access the blockchain network for the cryptocurrency you are using. Cryptocurrencies are not "stored" anywhere—they are bits of data in a database, scattered all over it; the wallet finds all of the bits associated with your public address and sums up the amount for you in the app's interface.

There are two main types of wallets: custodial and non-custodial. Custodial wallets (also called online wallets) are hosted by a third party that stores your keys for you. This could be a company that provides enterprise-level data security systems that businesses use to preserve and secure data. Some cryptocurrency exchanges offer custodial wallets for their customers. Non-custodial wallets are wallets in which you take responsibility for securing your keys. This is the type that most cryptocurrency wallets on devices are.

There are two subcategories of wallets: hot and cold. A hot wallet has a connection to the internet or to a device that has a connection, and a cold wallet has no connection. Lastly, there are three subcategories of wallets—software, hardware, and paper. Each of these types is considered either a hot or cold wallet.

So, you can have a non-custodial software hot wallet, a non-custodial hardware cold or hot wallet, or a custodial hardware cold wallet. These are the most common types, but you may also encounter other combinations.

Software wallets include applications for desktops and mobile devices. These wallets are installed on a desktop or laptop computer and can access your cryptocurrency, make transactions, display your balance, and much more. Some software wallets also include additional functionality, such as exchange integration if you're using a wallet designed by a cryptocurrency exchange.

Many mobile wallets can facilitate quick payments in physical stores through near-field communication (NFC) or by scanning a QR code. Mobile wallets tend to be compatible with iOS or Android devices. Trezor, Electrum, and Mycelium are examples of wallets that you can use. Software wallets are generally hot wallets.

You use private keys to access your cryptocurrency. It's important to control access to your private keys because anyone who has them can access your coins.

Hardware wallets are the most popular type of wallet because you can store your private keys and remove them from your device. These devices might resemble a USB drive, and modern hardware wallets have several features.

You can make a cryptocurrency transaction on your computer or device by plugging in the hardware wallet. Most of them can sign cryptocurrency transactions automatically without requiring you to enter the key, circumventing a hacker's ability to log your keypresses or record your screen.

These devices often cost between $100 to $200. Ledger and Trezor are both well-known hardware wallets. Hardware wallets are generally considered cold wallets because they don't have an active connection until they are plugged in.

Some new hardware wallets come with the ability to connect to your device through Bluetooth. Use these with caution because Bluetooth is a wireless signal that can be accessed by unwanted parties when it is turned on.

Early crypto users would write or type their keys on paper, which they called paper wallets. These evolved to include the keys and QR codes so wallets on mobile devices could scan them. However, paper wallets are easily damaged or lost, so many crypto owners do not use them anymore.

However, there is nothing wrong with using a paper wallet if you take measures to store it properly in a safe or deposit box and check on it once in a while to ensure it hasn't deteriorated.

Some wallets may be best for storing and managing your cryptocurrency, such as one of Investopedia's best Bitcoin wallets. Research all crypto wallet options before deciding which is best for you.

Bitcoin ATMs in Hawaii

Bitcoin ATMs are a good option for buying Bitcoin in Hawaii, especially if you want to protect your privacy. However, it is worth noting that the fees for using these ATMs can be quite high, often exceeding 15%.

There are currently 58 Bitcoin ATMs in Hawaii, with the majority located in Honolulu. Here is a list of some of the Bitcoin ATM locations in Hawaii:

• Iolani Mini Mart, 2499 Kapiolani Blvd STE 101, Honolulu, HI 96826
• Mako's Gas Station, 882 S Beretania St, Honolulu, HI 96813
• Circle K Waipahu, 94-673 Kupuohi St, Waipahu, HI 96797
• 76 Waipahu, 94-1082 Ka Uka Blvd, Waipahu, HI 96797
• Texaco, 866 Kamehameha Hwy, Pearl City, HI 96782
• Texaco, 407 Kapahulu Ave, Honolulu, HI 96815
• Palama Supermarket, 1070 N King St, Honolulu, HI 96817
• Palama Express, 1 Aloha Tower Dr, Honolulu, HI 96813
• Hawaiian Island Stamp & Coin, 1111 Bishop St, Honolulu, HI 96813
• Hawaiian Monarch Hotel, 444 Niu St, Honolulu, HI 96815
• Green Papaya Pot Pot Shabu, 1108 Ke’eaumoku St, Honolulu, HI 96814
• Shirokiya Japan Village Walk, 1450 Ala Moana Blvd, Honolulu, HI 96814
• Vape Kings, 1915 S King St, Honolulu, HI 96826
• Texaco, Kauai, Lihue
• 1249 Wilder Ave B1, Honolulu, HI 96822
• Kokua Market Natural Foods, 2643 S King St, Honolulu, HI 96826
• 1101 N King St, Honolulu, HI 96817
• 465 Kapahulu Ave, Unit 106, Honolulu, HI 96815
• Auto Biz Repair Service Center, 709 Ahua St, Honolulu, HI 96819
• 945 Kamehameha Hwy No.6, Pearl City, HI 96782
• Waikele Premium Outlets, 94-790 Lumiaina St, Waipahu, HI 96797
• Payday Loans and Check Cashing Store, 87-1926 Farrington Hwy, Waianae, HI 96792
• Payday Loans and Check Cashing Store, 87-1926 Farrington Hwy, Kailua, HI 96734

It is important to note that the availability and locations of Bitcoin ATMs in Hawaii may change over time, so it is always a good idea to check for the most up-to-date information before planning your visit.

The history of bitcoin in Hawaii

Hawaii's history with Bitcoin goes back to 2014, but the state government's early statements about the cryptocurrency were far from positive. On February 26, 2014, the governor of Hawaii issued a warning to the people of Hawaii about Bitcoin. This warning was in response to the recent collapse of the Mt. Gox bitcoin exchange. The message indicated that no cryptocurrency companies had been licensed as money transmitters in the state, implying that any exchange operating in Hawaii would be breaking the law.

In September 2016, Hawaii lawmakers created a law mandating that exchanges hold cash reserves for collateral. For example, if a Hawaii resident owned $10,000 worth of Bitcoin, the exchange would need to hold $10,000 in cash as well. This law made it very difficult for exchanges to operate in the state and discouraged many companies from doing so. Coinbase, one of the biggest exchanges, called the regulation "untenable."

In August 2020, the Hawaii Division of Financial Institutions granted a special license-free status to 12 firms through a pilot program called the Digital Currency Innovation Lab (DCIL). The program was designed to show that strict regulations were not needed to stifle the growth of these companies in the state. In June 2021, four more companies were added to the program, bringing the total to 15. As of February 2022, approximately 61,000 local investors with $1 billion in transactions were active during this pilot program. The program was extended for two years in June 2022, allowing the companies to continue operating in the state until at least June 30, 2024.

As of February 2024, Hawaii has dropped its strict crypto laws, and residents now have more options for buying and selling Bitcoin. While it is still complex, purchasing Bitcoin in Hawaii is legal, and there are several exchanges offering Bitcoin, such as Uphold, Unchained, and Gemini.

Frequently asked questions