- Pick a public place to meet, where there are lots of other people around, like malls, cafes etc.
- Check for any reputation, like being a member of bitcointalk.org or other reputable site/forum
- Keep the trading volume low. Even if something goes bad, your loss is minimal.
That first point is critical. You don't have to actually meet, either - a publicly-located physical drop box or drop point works; e.g. ask a reliable
coffee shop employee to hold the flash drive for a person buying a particular drink - not only is it a fun bit of pseudo-clandestine excitement for all involved, but it introduces another layer of protection; and be sure to leave a nice tip.
It really works only after establishing a reliable relationship, but it's worthwhile.
- State your presence in sites and services (check section Sites and Services below)
- If you are selling BTC and the client asks you to prove that you have the required amount, make a new wallet and transfer there the amount asked. Encrypt the wallet with a really strong pass-phrase and send it over via email. Finally meet in person to exchange the money with the pass-phrase. If you don't hear from the buyer within 48 hours, transfer those BTCs back to your wallet.
- Meet at an Internet cafe and bring your laptop with you (if you're selling BTC). Make the required transaction and have some (not to many ) beers while waiting for the confirmations.
- Consider using services like https://www.instawallet.org for small amounts.
- Never carry a "big" wallet on you.
- Take notes of good and bad traders
You should only send the encryption passphrase after
the exchange, not before. Maintain control at all times, especially for large amounts and/or high volume. If you've done a few small-ish transactions already, the buyer should have no problem with this.
Another technique that can be used is to create an empty or partial wallet, ship or drop it at a specified exchange location, then transfer the rest of the purchase upon receipt of payment.
HipSwap is cool, if pricey. Also, the delivery service is only available in Los Angeles for now. Other courier services would work as well, or even hiring a kid with a bike or car if the price is right. Even a UPS driver delivered a flash drive once (gave a few dollars and it was in the area), after I received payment of course.