Last Updated On December 26th, 2019
LocalBitcoins is one of the oldest still operating cryptocurrency exchanges. It’s the largest peer-to-peer cryptocurrency exchange in the world and has a massive and very loyal user base. LocalBitcoins is a great way to buy some Bitcoin but doesn’t provide much in the way of trading features. In this LocalBitcoins review we’ll answer questions like:
- What is LocalBitcoins?
- How does LocalBitcoins work?
- Is LocalBitcoins safe?
- Should I use LocalBitcoins?
We’ll cover how to get started on LocalBitcoins, what fees it charges, and any identification requirements it currently has. This will also include information about its interface, payment methods it accepts, and additional services it offers to its users.
Contents
Our LocalBitcoins Review
An Overview
LocalBitcoins is a decentralized peer-to-peer Bitcoin marketplace based in Helsinki, Finland. It was founded in 2012 with the stated goal of bringing the Bitcoin economy to every city in the world. It has spread rapidly in pursuit of that goal and currently serves 248 countries and 16,390 cities. At the moment it only supports the trading of Bitcoin for other forms of fiat currency. LocalBitcoins’ mission is to help people all over the world protect their assets through access to the crypto community.
It has more than a million registered users and has seen its transaction total more than double over the last few years. It advertises that its transaction speed is far faster than more corporate exchanges because of the user to user nature of the transaction.
LocalBitcoins doesn’t buy or sell any Bitcoin itself. It operates as a marketplace where independent sellers can be paired with local buyers of Bitcoins. There are two classes of transactions available on LocalBitcoins, online and local.
Online transactions use its escrow wallet and can take place literally anywhere in the world. Users search through ad postings until they find Bitcoin at the price they want and in a payment method they can use. The requested Bitcoins are immediately transferred to an escrow wallet until the seller confirms the user’s funds have arrived. Once this is verified the Bitcoins are released to the buyer.
Local transactions allow users to pay cash for Bitcoins. If privacy is a major concern of yours a local purchase is one of the most anonymous methods to purchase Bitcoin. You set up a meeting with a seller, preferably in a public place. Then, you pay them for the Bitcoin. Last, you confirm they’ve transferred the Bitcoin to you.
Sign Up & Identification
Because LocalBitcoins operates as a pure peer-to-peer marketplace they don’t have a complicated sign-up or identity verification process. You can view posts without creating an account though you will need one to communicate with sellers. Depending on where you’re located in the world KYC and AML laws may apply.
The verification process at LocalBitcoins is much simpler than at some other cryptocurrency exchanges. It uses Netverify as its identity verification service. All you need to do is submit a clear picture of a government issued ID and you’ll show up as verified to other users.
LocalBitcoins also offers other levels of verification to help fight fraudulent activity. You can verify your email address, phone number, and real name. Some sellers have been known to ask for additional verification, including pictures of your face next to an ID, to combat fraud.
Generally, only high volume sellers will be prompted with an identity verification requirement. Some sellers refuse to sell to unverified buyers but there are many who are willing to do so. Until you’ve successfully verified your account LocalBitcoins hides sellers who require account verification for a transaction.
Deposit & Withdrawal Methods
Many potential cryptocurrency investors are very concerned about the liquidity of their crypto holdings. LocalBitcoins is well ahead of the curve for both the transparency and transaction speed of their deposit and withdrawal process.
LocalBitcoins doesn’t take any part in the fiat side of its transactions. The only deposit and withdrawal method they allow is Bitcoin from their wallet escrow system. They also operate a series of LocalBitcoins ATMs throughout the world.
Deposits
LocalBitcoins provides you with a seller’s wallet when you create an account. To deposit Bitcoins into it you send money from your personal wallet to the destination address they provide you. You’ll notice a small deduction to cover the Bitcoin network transaction fee.
Withdrawals
Withdrawals work much the same as deposits. Simply enter in the destination address of the wallet you want to send your Bitcoin to and wait for the transaction to process. There is another charge for the Bitcoin network transaction fee.
Fees
Buying and selling Bitcoin on LocalBitcoins is free. It charges a flat 1% fee per transaction to users who post an advertisement of Bitcoin for sale. LocalBitcoins provides a great way for users to buy a few Bitcoin without having to pay a substantial trading fee.
This is a major improvement over other cryptocurrency exchanges. Most charge both the buyer and the seller a fee for every transaction they are involved in. If you want to consider buying and selling Bitcoin you can try starting on LocalBitcoins.
If you choose to transfer Bitcoins between LocalBitcoins wallets, there are also no transaction fees. Though, they do levy a network transaction fee for transfers to outside wallets.
Security
Since LocalBitcoins operates as a P2P marketplace it doesn’t hold user funds the same way a centralized exchange would. While this does mean that there is little risk of LocalBitcoins being hacked, it puts the onus of securing funds directly on the user base.
In fairness, they do offer security guides to help you protect yourself from phishing and other attacks. Their login process also includes two-factor authentication capability and email confirmation of new IP logins. This prevents your account from being hacked unless the hacker also has access to your email address.
The biggest security advantage they offer for sellers is their escrow system. If you receive a buy request from a user, the requested amount of Bitcoin will automatically load into a LocalBitcoins wallet where it is held in escrow. Once you have confirmed that you have received payment from the buyer the Bitcoins are released.
Is LocalBitcoins Legit?
LocalBitcoins itself is 100% legit. Some of the independent sellers, not so much. Because the system is set up to allow users to negotiate whatever form of payment they wish there are vulnerabilities.
There have been reports of users running scams and convincing unsuspecting buyers or sellers to send money via unsafe or unverified ways. Because LocalBitcoins isn’t directly involved in the payment process there is very little recourse once Bitcoins have been transferred. As a reminder, never agree to a Bitcoin transaction unless you’re absolutely certain it’s legitimate. Bitcoin transactions are by their very nature irreversible.
To combat this LocalBitcoins.com scam, they have instituted a user verification system using both identity verification and user reviews. Always make sure you’re on the legitimate version of any financial website you use. Click here to be sure you’re visiting the real LocalBitcoins homepage.
Features
LocalBitcoins has an easy to follow interface for the casual buyer and includes plenty of features for serious sellers. Once you post an ad there are tons of options available that guides you find exactly the kind of buyer you’re looking for. These options also make it easy for buyers to search for trustworthy sellers.
Its interface looks a lot like an online classifieds page. There’s a scrolling list of ads for different sellers detailing their price and the payment methods they accept. Basic information on each posting includes the sellers’ username, the payment methods they accept, the price they’re offering, and the max/min trade they’ll accept. You can also switch to a map view to find sellers who are as close to you as possible.
Advanced investors can take advantage of LocalBitcoins API to automate a large portion of their activities. Sellers especially can benefit from this automation. It’s possible to set up an instantaneous reply to user queries and an auto confirm of fund transfers.
Every seller has a feedback score next to their name. This allows you to see how many trades they’ve participated in, their transaction success rate, and any reviews they’ve been given by users they traded with. It also lists their identity verification status.
Supported Currencies
LocalBitcoins is hyper-focused on the Bitcoin market. It’s currently the only cryptocurrency they facilitate trade in. This isn’t surprising given their name and mission statement of spreading the Bitcoin economy as widely as possible.
They do make up for this a bit by allowing virtually any form of fiat payment to purchase Bitcoin.
Customer Support
Cryptocurrency exchanges as a whole struggle with customer service and support. This isn’t helped by the global distribution of the market. It can be really difficult for an American or South African to get in touch with the support department of a Singapore or China based exchange.
LocalBitcoins support system is about middle of the road for the cryptocurrency market. They have a fairly comprehensive library of help articles or guides. And they also provide a ticket system for submitting requests. Users have reported that the response times leave something to be desired. Most rarely receive a response before two or three days have passed.
Ease of Use
LocalBitcoins isn’t quite as user-friendly as other exchanges. The interface itself is simple and straightforward but the human element can slow things down a good bit. Because you’re interacting directly with another user, you’ve got to wait for them to respond to your request to buy or sell Bitcoins.
Response times can vary wildly depending on the seller you contact. Some respond immediately and have a well-oiled system in place to get you Bitcoin fast. Others are just looking to sell a few Bitcoin and aren’t really sure how they want to do it.
LocalBitcoins provides several tools to help you decide whom to buy Bitcoins from. The most important of which is the aforementioned seller’s feedback and rating score.
Trading
LocalBitcoins isn’t really designed for trading Bitcoin like you might a stock. It was built from the ground up to make it as easy as possible to get your hands on Bitcoin. That being said, you can choose the buyers and sellers you want to work with from a huge list of options. It’s even possible to find sellers in your local area who will meet you for an in-person cash sale.
Because of this freedom, users tend to be creative with their payment methods. LocalBitcoins doesn’t ever touch the fiat currency side of things so you can literally use any method to send any form of currency. Some of the most common are:
- Bank transfer
- Local cash payments
- Venmo
- Square
- Paypal
- Zelle
- Western Union & Moneygram
- Gift cards
- Google Wallet
- AliPay
- WeChat Pay
Account Registration
The first step to buying Bitcoin using LocalBitcoins is to create an account. It takes just a few seconds and only requires an email address. You’ll receive a verification email within a few seconds and then you’re ready to get started.
If you just plan on buying Bitcoin you probably won’t be required to verify your identity. Once your account is up and running you can begin searching through listings of Bitcoin for sale.
Final Thoughts
LocalBitcoins isn’t a trading platform and probably won’t ever become one. That being said, all any LocalBitcoins review will agree on is that it’s one of the best and most flexible ways to purchase Bitcoin. You can pay just about any way that is convenient for you and the lack of a universal requirement for identity verification makes it a great choice for privacy-minded individuals. If you live somewhere other than the U.S., Western Europe or East Asia LocalBitcoins is an amazing option that allows you to buy Bitcoin in your local currency.
All in all, LocalBitcoins lives up to its name and is the best local Bitcoin exchange around. If you like the idea of buying Bitcoin from someone local rather than from an international company, click here to securely visit their homepage and buy Bitcoin.
