If you need an alternative method to centralized exchanges for buying Bitcoin your answer might be LocalBitcoins. The site provides a peer-to-peer marketplace for users to get together, buying and selling Bitcoin without oversight from centralized exchanges or financial institutions.
LocalBitcoins Review: An Introduction
The site was started in Finland in 2012, and is one of the oldest exchanges, and oldest p2p cryptocurrency marketplace. It provides a platform where anyone can advertise Bitcoin for sale, connecting buyers and sellers and allowing communication so that all the details of the sale can be ironed out before a trade is finalized.
LocalBitcoins serves several key functions in the Bitcoin ecosystem, one of which is allowing new cryptocurrency enthusiasts quickly and easily purchase their first Bitcoin. Over the years of its existence the site has consistently improved its security and ease of use, and is highly regarded in the cryptocurrency space as a solid choice for those looking to buy or sell Bitcoin without the need to give up important personal details.
LocalBitcoins also covers most of the globe, with sellers currently listing exchanges in 248 countries and nearly 16,000 cities of the world. Few cryptocurrency exchanges have this type of global reach.
Signup and Login to LocalBitcoins
LocalBitcoins is a decentralized peer-to-peer marketplace for selling and buying Bitcoin, but it is still necessary for users to register an account before being able to participate in the marketplace, either as a buyer or a seller. This means the first page to visit on the site is often the signup page, where you can quickly and easily register for a new account.
After filling in the form click on the “Register” button. The “LocalBitcoins Terms of Service” will pop up and you’ll need to click the “I agree” button to agree to the Terms of Service and proceed with account creation. After clicking the button it will immediately log you into the site, where you can begin searching for a seller to buy Bitcoin from. LocalBitcoins will also send you an email which will contain a link to confirm your email address. You will need to click that link and verify your email address to complete the registration process.
Now that you’re logged in you can begin searching for Bitcoin sellers near you. The easy to use search form at the top of the page allows you to input the amount of Bitcoin you’d like to buy (in fiat). Which currency you’ll be using (most local fiat currencies are acceptable), what country you’d like the sellers to be in, and what payment method you’ll use (hundreds of payment methods are supported).
The results of your search will show up and you can dig deeper into any of the vendors who meet your search criteria. Or you can modify the search if you don’t get any acceptable results. Clicking on any vendor will give you detailed statistics regarding their time on the site, their transaction history, their trust level from other users, verifications and feedback from previous buyers. Below is an example of what I consider to be a trusted seller:
Once you’ve located a suitable seller you can contact them directly to ask any questions of get clarification on the trade terms. If you feel comfortable you can begin a trade by clicking the “Buy” button.
After clicking the “Buy” button you can finalize all the details of the purchase. You’ll need to confirm the amount you wish to purchase, how you will be paying, what wallet address you’ll use to receive the Bitcoin, and if required by the seller the form of ID being used.
It really is a very simple and straightforward process. In addition, LocalBitcoins has incorporated a number of features that makes the buying experience even more secure and straightforward. I’ll go into these in more detail below.
LocalBitcoins Security Features
As mentioned above, there are several features that have been added to the LocalBitcoins site over the years to enhance the security, both for buyers and sellers. Here are some ways that LocalBitcoins makes their trading marketplace more secure:
- Escrow Service –LocalBitcoins holds both your funds and the sellers Bitcoins in an escrow account and won’t release them until your payment is confirmed. This prevents against fraudulent sellers offering Bitcoins and not delivering, and also from fraudulent buyers offering false payment information.
- Reputation Ratings – Each seller on LocalBitcoins has a reputation rating that is calculated based on the activity on the platform. It takes into account things such as the trading history, feedback from buyers, and other factors, making it easier to see at a glance which sellers might be mist trustworthy.
- Customer Support – Like most cryptocurrency exchanges, LocalBitcoins offers customer support via email. The support team is typically quick to respond, with responses coming in several hours, although in some cases this might stretch to 24 hours depending on the time of day or week. There is also a forum on the site where users can discuss issues or problems and advise one another.
- Conflict Resolution – One of the primary functions of the customer support team is to provide resolution in the event of a discrepancy between buyers and sellers. The support team will investigate any complaints, using all the evidence at their disposal, and will attempt to positively resolve disputes.
- 2 Factor Authentication – Because LocalBitcoins also provides a free online wallet service, the 2-factor authentication provides an extra layer of protection against hackers. By enabling 2-factor authentication users can verify any sign-ins to the site by requiring a PIN to sent to their mobile phone and then entered before a sign-in is authenticated.
LocalBitcoins Payment Methods
LocalBitcoins has a huge number of payment methods available to buyers, adding to the ease of use of the site. These payment methods include:
- Credit and debit cards
- Bank transfers
- Western Union
- Gift cards
- Cash deposits
- Many altcoins are also accepted as payment (Ethereum, Litecoin, Monero, Ripple and others)
There are fees associated with using the LocalBitcoins marketplace, but they are small compared to some other peer-to-peer Bitcoin marketplaces. Buyers have no fees for purchases, while sellers are responsible for a 1% fee for each transaction.
Buyers do need to be aware that prices on LocalBitcoins are typically higher than they will find on centralized exchanges. This is because the sellers mark-up prices to generate profits. They will also increase prices (in some cases substantially) for certain payment methods. This is done as an insurance against fraud. For example, Bitcoin prices for Paypal transfers are often significantly higher because of the possibility for a buyer to dispute the Paypal charge after receiving their Bitcoin. The same is true for bank transfers. Gift cards present the possibility of the card being drained by the buyer, and so prices when using this payment method could be higher as well.
Is LocalBitcoins Safe?
LocalBitcoins is a decentralized peer-to-peer marketplace and the exchange itself is as safe and secure as possible using currently available technology. There is always counter-party risk when dealing directly with sellers, and while LocalBitcoins has developed a reputation as a safe and secure place to buy Bitcoin, this counterparty risk should be kept in mind when using the LocalBitcoins marketplace.
As with any service where money is involved, there is a possibility of bad actors and scammers attempting to take advantage of the system, and while the LocalBitcoins staff is always vigilant for scams and scammers on the site, it is best to practice certain due diligence to avoid potential scams or unscrupulous sellers. Below are some steps buyers should take before conducting a trade:
- Always look at a sellers profile before conducting a trade. LocalBitcoins has developed several measures that are publicly available and help to verify the trustworthiness of sellers on their platform. Try to find sellers who have accounts that are at least 1 year old and with a minimum trust rating of 98%. Also look at the number of trades made by the seller. A seller should have at least 100 BTC trades. Finally, look to see if the seller has verified their email, phone number and ID. This may not bee 100% foolproof, but it will minimize greatly the chances of transacting with a scammer.
- Always contact the seller to get a feel for their trustworthiness. When communicating with the seller verify that the transaction will take place exclusively on the platform. There are several features included in the LocalBitcoins platform that have been developed to keep trades as safe and secure as possible. If you trade offsite with sellers you give up these protections. It’s also best if you confine all your communications with the seller to the internal LocalBitcoins messaging system and avoid using external messaging or SMS.
- Make sure that the seller clearly understands your requirements, and that you clearly understand all their terms and conditions. It is possible to negotiate prices, payment methods and Bitcoin delivery method when using the LocalBitcoins marketplace, and this makes it critically important that both parties clearly understand all aspects of the trade.
- Any time you experience a problem, issue or concern you should be using the forums or the LocalBitcoins support staff. While the site is presented in a simple and straightforward manner, there is always the chance of a problem or miscommunication. Use your available help channels whenever necessary to keep the trade experience positive.
Those looking for an easy way to buy Bitcoin will find LocalBitcoins to be both simple and easy. Additionally, it can be an excellent way to maintain privacy and anonymity when purchasing Bitcoin. Plus it is available in nearly every country in the world, allows for multiple payment methods, and has no limits on how much you can buy or sell (other than the seller imposed limits).
There are still some concerns to keep in mind when using the site. Buyers need to be mindful that there are some untrustworthy sellers on the site, and that scams are a possibility. The LocalBitcoins staff keeps an eye out for new scams, but some will find their way into the platform regardless. Also bear in mind that some reputable sellers may have requirements (such as ID verification) that aren’t acceptable to you as a buyer. These sellers typically require ID verification for large purchases, or to avoid potential chargebacks and reversals when using payment methods such as Paypal. And prices will almost certainly be higher than those found on the more traditional centralized exchanges.
If you can accept the potential downsides, and take steps to protect yourself from scams, you’ll find your experience on LocalBitcoins to almost certainly be a positive one. The team running LocalBitcoins has a real passion for providing a service that benefits the cryptocurrency space in general, and their individual users specifically. The LocalBitcoins Mission Statement supports this ideal:
“In LocalBitcoins.com, the focus is on the users and the community. We are ever expanding and want to bring Bitcoin exchange and economy to every city in the world. We believe Bitcoin to be a black swan event, something that fundamentally changes how financial world works. This will be an enabler for more prosperity, especially in developing countries.”
With nearly 6 years of history under its belt, LocalBitcoins has become a tried and tested method for individuals to buy and sell Bitcoin without getting caught up in the traditional centralized financial systems. It enjoys a good reputation in the cryptocurrency community, and has tried to stay true to the decentralized philosophy embraced by the creator of Bitcoin and other decentralized cryptocurrencies. The site provides an excellent starting point for those new to Bitcoin, and is a good choice for more experienced cryptocurrency enthusiasts who prefer privacy and anonymity in their Bitcoin trades.