LocalBitcoins Review: Buy and Sell Bitcoins With no Restrictions
Table of Contents
- Login and Signup Step-by-step
- How LocalBitcoins Works
- Supported Countries
- Supported Cryptocurrencies and Liquidity
- Deposit/Trading/Withdrawal Fees
- Transfer Limits
- Payment Methods Accepted
- Security: Is It Safe To Use?
- Company Reputation
Founded in 2012 in Finland, LocalBitcoins enables platform users to seamlessly buy and sell bitcoin with a variety of supported payment methods that include both fiat and cryptocurrency options. A wide range of local listings ensure that users across the globe can buy and sell their bitcoins with ease. Unlike other exchanges, LocalBitcoins stands out for its low overhead peer-to-peer model. A high degree of reliability combined with very few requirements for personally identifying information makes LocalBitcoins an ideal destination for security and privacy-conscious individuals seeking a venue to trade bitcoins.
|Localbitcoins Key Information|
|Transfer Limits:||No limit|
|Supported Fiat:||AUD, USD, EUR, GBP, CAD, CNY & 50+|
|Payment Methods Accepted||Credit card, bank deposit, wire transfer, prepaid cards, etc.|
|Supported Countries:||Any country except Germany & the states of Washington and NY|
|Fees:||1% listing fee, network fees, 0.5% for invoiced transactions (merchants)|
|Website (URL):||Start trading at localbitcoins.com|
Login and Signup Step-by-step
All you need to start using LocalBitcoins is an email address. After clicking “Sign up free”, users are prompted enter a user name, email address, and password before clicking on “Register”.
Step 1: Register
Eligibility is restricted to individuals aged 16 years and older, and while no personal information is initially mandatory for using the platform, LocalBitcoins may request additional details to conduct identity verification. This is designed for users that intend to create advertisements for their bitcoins or pass a certain threshold in terms of volume traded through the platform, conducting investigations into potential frauds or disputes between users, and verifying the source of funds.
Step 2: Confirm Your Email
Once registration is complete, a link is then sent via email for verification purposes. Once verified, users are directed to a page that outlines the process for buying bitcoins through the site.
Step 3: Edit Your Dashboard
By selecting “Edit Profile” in the drop-down menu from the top righthand corner next to the dashboard icon, users can update their profiles with information including time zone, which notifications they wish to receive, and a short description that is listed in a user’s public profile.
Step 4: Further Verification
For users who wish to trade larger volumes or require invoices for tax purposes, there is an area for further account verification including confirming phone numbers and identities. A color image of a valid passport, official identity card, or drivers license are usually accepted forms of identification. After selecting the appropriate form of ID, users can add the relevant identification by taking a picture on their mobile phones or by uploading an image.
Step 5: Set up Two-factor Authentication
For added security, users can enable two-factor authentication and change the settings in the login guard which is designed to ensure that only authorized browsers or computers can access the account. Users can also access a history of all logins including the date, type, and IP address of each login attempt.
Furthermore, more advanced users and merchants can take advantage of the LocalBitcoins API capabilities to accept bitcoin as a payment method.
How LocalBitcoins Works
After registering, users can search the posts advertising bitcoin for sale, either online or locally.
On the main page after login, a menu near the top of the page offers users the ability to “Quick Buy” or “Quick Sell” by inputting some basic information including the currency you prefer to transact in, the amount of said currency, and the country from which the bitcoins are being sourced. Before clicking on “Search”, users can select from the most popular payment methods in their country or pick from any of the payment methods listed in the drop-down menu if they have a specific preference.
Once the parameters are input, all the available bitcoin offers will be listed. Each listing includes the trader’s user name, the payment method, the price for one bitcoin in the selected currency, and the buying limits in the counter-currency for purchasing the bitcoins.
Once a prospective buyer selects “Buy” or “Sell”, a new window opens outlining the trade conditions. Users can click on the trader’s profile to see the number of trades they have executed and their reputation. LocalBitcoins always suggests that users review these details to lower the risk of fraud.
In certain cases, additional verification is required, especially for new users and those buyers or sellers wishing to comply with local KYC or AML requirements. This may include setting a real name for an account and confirming a phone number via SMS verification or additional identity verification.
Once a user is satisfied with the terms of a trade, they can enter the amount of bitcoin they wish to buy or sell in the blue box and write a short message to the counterparty before pressing the “Send trade request” button. The payment time frame will also appear. Trades that are not executed within the allotted time will be automatically voided. Once the seller verifies payment, the bitcoins held in escrow are released to the purchasing party. For transactions conducted locally face to face, the buyer and seller exchange cash, and once the transaction is confirmed, the funds are released.
While the list of supported countries nearly covers the entire globe, LocalBitcoins frequently reminds platform participants that it is up to the users to familiarize themselves and abide by local laws and regulations governing cryptocurrency.
Considering the relatively fluid nature of cryptocurrency regulations, other countries may be periodically added to the list of ineligible jurisdictions. Ultimately the onus is on the users to ensure full compliance with rules and laws, especially pertaining to taxes.
Supported Cryptocurrencies and Liquidity
LocalBitcoins is a destination for platform users to buy and sell bitcoins with other platform participants. Unlike exchanges which may provide their own liquidity through various means, LocalBitcoins’ liquidity is entirely sourced from users. All offers are posted or advertised by users themselves, each with their own respective quotes. Therefore, there may be offers to buy or sell at a premium or discount to the spot rates listed by other exchanges.
Because all bids and offers are posted by users, the listed rates may vary widely depending on payment method, amount to be purchased, or reputation of the user. Liquidity may also differ depending on jurisdiction, currency, or payment method depending on the bids and offers posted by users.
LocalBitcoins’ low overhead model ensures that the platform itself only takes a modest 1.00% fee when users post advertisements to buy or sell bitcoin. Apart from the 1% listing fee, the only other fees associated with a trade are the network fees taken by the bitcoin network to process and confirm the transaction between the two parties engaged in a trade. The one exception is transactions conducted between LocalBitcoin wallets, which are free.
The current network fee for sending bitcoins is 0.00005 BTC whereas receiving bitcoins encounters a network fee of 0.00015 BTC. According to LocalBitcoins, all incoming transactions to the user’s wallet require three confirmations, which means that processing the transaction and receiving bitcoin can take 30 minutes or longer. Moreover, the associated wallet address receiving a bitcoin changes with each transaction to ensure that user privacy is protected. These fees are subject to change over time depending on network congestion.To see the fees, users can click on the Wallet menu option near the top righthand corner to see how many bitcoins are contained within the wallet, and the accompanying transaction fees for sending or receiving bitcoins.
Finally, individuals or merchants using the LocalBitcoins API and merchant invoicing services to add bitcoin as an accepted payment method automatically see 0.50% of each invoiced amount deducted from the paid amount. The incoming transfer is also reduced by the accompanying network fees for receiving bitcoin outside of LocalBitcoin’s platform.
Whereas many exchanges place limits on daily withdrawals and deposit amounts, LocalBitcoins stands out for imposing absolutely no limits on its users in terms of the maximum amount of cryptocurrency that can change hands.
The minimum purchases are limited by the fractionalization of bitcoin, or 1 Satoshi. However, depending on the payment method the entity approving the transaction like a bank or credit card issuer may impose a limit on the amount of fiat currency that can be transferred at one single time.
Payment Methods Accepted
While many decentralized exchanges limit payment methods to crypto and centralized exchanges support a modest amount of fiat deposit and withdrawal options, Localbitcoins stands out for the vast amount of currencies supported.
Whether fiat or crypto, users are readily able to buy and sell bitcoins in their local currency, digital payment alternatives, or other cryptocurrencies. All told, LocalBitcoins supports over 60 payment methods including cryptocurrencies, fiat currencies via bank wire or credit card, popular digital payment services including PayPal, WeChat, Payoneer, and more.
Security: Is It Safe To Use?
While the service itself is safe and secure, buyers and sellers do need to be aware of counterparty risks and reputation. Before entering into a trade, a user must conduct their due diligence on the counterparty’s profile which includes the number of trades executed, and the trust rating assigned by other users that have already traded with this user. Oftentimes, certain users will only buy and sell from other trusted users. After each trade, users can give trusted feedback, helping the community determine whether traders are honest or dishonest.
Certain payment methods also carry higher risks. In the event of a dispute, because bitcoins sold online are held in escrow, buyers have an extra degree of protection to ensure payment is delivered. There is a dispute process in the event of any malfeasance or fraud. However, for bitcoins transferred in-person, sellers should always take extra measures to protect themselves and ensure that the buyer’s funds are not counterfeit.
More importantly, users should always remember that keeping funds in an exchange wallet just like the one offered by LocalBitcoins is riskier than maintaining a personal wallet outside the exchange. Should the exchange be hacked or compromised, user funds may also be compromised.
As one of the earliest platforms to exchange bitcoin, LocalBitcoins has earned a strong reputation amongst both users and the industry. Although it is up to users themselves to verify that other platform users are reliable and honest, LocalBitcoins has built a robust platform that is designed to deliver the anonymity and privacy that many users crave along with added protections like the escrow account feature. While there is some concern that the platform may be used to facilitate payments for illegal activities and crime, these claims are mostly borne out of claims that cryptocurrency is by nature a promising tool to accomplish these objectives.
LocalBitcoins stands out as an exchange that is committed to upholding the ideals of bitcoin and the decentralization it intends to promote. Although the ecosystem is not entirely free, it simplifies the exchange and trading process with a straightforward peer-to-peer format that can be characterized by no frills and low fees. Users can easily vet other users to ensure they are working with trusted partners and the wide range of supported payment methods ensures that users from across the planet can trade bitcoin seamlessly with very few barriers. Moreover, merchants have an easy way to process bitcoin payments within their ecommerce stores thanks to the LocalBitcoins API, making it uncomplicated to accept bitcoin payments. With a commitment to privacy and accessibility, LocalBitcoins stands out as one of the easiest ways to trade bitcoin.