LocalBitcoins is relatively unique in its approach to exchanging cryptocurrency. This site began in Finland in 2012 and works to connect Bitcoin traders. This is a peer-to-peer marketplace, which the exchange mediates. The site is filled with users’ advertisements – where potential buyers search for sellers. All the details of the transaction are confirmed before the users organise the trade. Money is kept in escrow on the site until both parties agree that the transaction has been complete.
The site is a gateway to the world of Bitcoin – and is meant for newbies – who can get acclimatised to the trading of virtual currency. The site is growing rapidly and there are now exchangers in over 15000 cities and in 248 countries.
The ultimate positive is the ease of trading – you can even swap your Bitcoin in person by passing across the key on a piece of paper. For those who struggle with the idea of invisible money, you can get acclimatised to this whilst contacting another “real” human being.
There is flexibility in payment method – it all depends on what the buyer will accept in terms of payment. Issues of fiat currency versus altcoins versus credit cards payments doesn’t come up.
Even though there are safety measure put in place, there is the chance for criminal activity and the potential for sellers offering a scam. The reputation ratings of the sellers on the site are important. Buyers need to look for those who have made many successful trades already. There is a temptation to go outside the site and avoid transaction fees, but this puts vendors in a vulnerable situation that is best avoided.
The transactions are limited by the number of Bitcoin available in your locality – or in the area that you feel comfortable trading in. If you are looking for large trades, then this might not be the site.
Prices are higher across the site because there are risks for sellers – as individuals could initiate a charge back on PayPal, retrieving the money they have “paid” for the coins.
Payment Methods Accepted
The payment method accepted is dependent on the agreement between the buyers and sellers. You can even use cash – with cash handed over on delivery or cash via mail. There is also the option of using:
- Western Union
- Wire Exchange
It is likely that the larger the transaction the more likely the seller will want more secure methods of payment. This means cash and PayPal become increasingly unlikely payment methods the more Bitcoin you are hoping to purchase.
LocalBitcoins is currently available in 248 countries and over 15000 cities. If you are willing to travel, then the site can still be useful to you. Local is as far as you are willing to move or communicate to receive the Bitcoin from the vendor.
Privacy is a difficult concept on LocalBitcoins. The site relies on the buyer and seller profiles to connect the community of Bitcoin traders. There is also the option for direct communication via the site. Therefore, privacy is almost impossible with such a concept. It may be that the seller may demand photo ID from the buyer before agreeing a trade and the seller’s profile will need to be full, if they are to be trusted by a buyer. This is a community of people agreeing to trade – this means being known by that community.
Limits and Liquidity
There are no limits set by the site itself. The limits are set by the amount sellers are willing to sell using the site. The liquidity of the site is set in a similar way. If you want to buy a larger amount, then there is likely to be a request for ID verification.
The speed of the transaction is governed by the speed of negotiation between the seller and the buyer. It will depend on payment methods and delivery modes. There is potential for it to be almost instant – though this relies on the experience of both parties. The aim of LocalBitcoins is to introduce new members to the virtual currency community; therefore, trades are likely to be slower than other sites.
The reputation of the site is good and most in the Bitcoin community see it as a safe way to trade. However, it is a decentralised exchange and therefore it is necessary to put safety measures in place to make sure the trades are successful. To avoid “bad” traders, users of the site are encouraged to check the seller’s profile and make sure they trust they are suitable for trading with.
If you are new to trading, then look for someone who has traded for over a year and with a 98% or more rating. This way you can trust that the individual has completed many trades successfully. You should also contact the seller through the platform – making use of the escrow service and internal communication methods protects both parties.
The individuals are responsible for negotiating the details of the trade – the price, payment method and delivery method is down to the buyer and seller. If you struggle, then you can contact customer support who are always available to deal with those who run into problems.
There is a 1% transaction fee. However, depending on payment method, costs could escalate rapidly.
The support offered by the site is something that sets it apart. There are community forums, which offer first hand advice to other users. There is also email support and LocalBitcoins offer rapid response to requests for help.
Paxful is also a P2P Bitcoin exchange, which is similar to LocalBitcoins. The exchange is controlled by a number of moderators – and the payments secured via a centralised escrow mechanism.