Overview and History
LocalBitcoins is a C2C (consumer to consumer) online Bitcoin marketplace based in Helsinki, Finland. They focus mainly on over-the-counter trading of local currencies to Bitcoins. Since 2012, LocalBitcoins has been enabling its users to directly advertise their particular exchange rates and payment methods for buying or selling bitcoins online for more than 60 different payment methods. In line with the company’s mission to “Connect everybody to the Internet economy”, this peer-to-peer marketplace is its main differentiator compared to other exchanges and centralized bitcoin trading.
LocalBitcoins.com supports almost every widely used payment method its user community supports. This service made LocalBitcoins popular specifically in third world countries which don’t have a proper bitcoin exchange for buying and selling with fiat. LocalBitcoins strengthens its trading security measures as traders are supported by escrow which assures them protection against scammers in the marketplace. This escrow protects both buyers and sellers, by keeping the Bitcoins safe until the payment is done and the seller releases bitcoins to the buyer. Once an advertisement gets a reply, a trade is opened and escrow protection is automatically activated.
The company in 2017, led by Jeremias and Nikolaus (CEO) Kangas at that time, experienced a rapid growth in trade volume which brought about an increase of 300% in staff size. Throughout the years, the company constructed a platform that could cater to an expanding user base which allowed the site to reach a rate of approximately half a million users every month. Being aware of the huge growth opportunities and upcoming challenges of the company, Nikolaus decided to join the company board along with Jeremias. This led to the most recent milestone for the company as they welcomed Sebastian Sonntag as their new LocalBitcoins’ CEO in September of 2019. He is a well known tech expert in the IT industry who strives to further push LocalBitcoins as a leader in the C2C online marketplace for Bitcoins.
Supported Countries
LocalBitcoins draws a large crowd from third world countries that don’t have a proper Bitcoin exchange for buying and selling. With more than 200 countries and territories, the company makes the transaction convenient for its users by matching buyers and sellers using their geographical location. LocalBitcoins searches and matches the buyers and sellers of Bitcoins located locally, hence the name LocalBitcoins. However there are unserved countries due to international financial restrictions and regulations such as in the U.S., China, Indonesia, Syria and North Korea.
LocalBitcoins Trade Interface
Since LocalBitcoins is a localized marketplace, it uses your location and shows all of the available buyers and sellers of Bitcoin in your country and in your home currency. However, this is customizable and you can choose your prefered location, currency and payment method. They offer dozens of fiat currencies to trade with such as USD, Euro, British Pound etc. These advertisements are then simplified into a table that shows you all the initial information you will need to choose a buyer or seller. You can either buy and sell from an ad or create an ad yourself. Ads will be charged only when a transaction pushes through, otherwise, it’s free.
After clicking a party that you would like to deal with, more details about will be shown about the buyer or seller. You can assess from the data given about their previous transaction histories, their personal info and can decide if you would like to push through afterwards.
Fees
In terms of fees, trading is totally free; however for advertisers, they are charged a 1% fee for every completed trade. This means that those who post ads are the only ones being charged whether they are buy or sell orders. Transactions to other Bitcoin wallets are subject to the current Bitcoin network transaction fee which is visible on the wallet page. Take note that the transaction fee is paid from your LocalBitcoins wallet when you send a transaction. The fee varies on how congested the Bitcoin Network is.
Being a marketplace, LocalBitcoins only accepts payment methods that allow person-to-person transactions namely:
- PayPal
- Wire transfer
- Mobile money (selected countries)
- Western Union
- Webmoney
- Cash by mail
- Cash (done in person)
Tip: The best prices are obtained when using payment methods that are not easily reversed. Therefore, purchasing with a payment method such as PayPal will be more expensive than a physical cash exchange because of the added risk of chargeback with PayPal.
Wallet
After creating an account and doing the identity verifications, you will be given your own Localbitcoins wallet. LocalBitcoin users are advised to only put on the wallet what they want to sell due to the fact the LocalBitcoins lack a hard wallet system.
In order to add items to your wallet, you start by making an account and then identify your LocalBitcoins receiving address located at the top portion of the Wallet page. When transfering bitcoins to your wallet, take note that for the users’ privacy each receiving address changes after each transaction. The minimum amount you can send your LocalBitcoins wallet is the deposit fee.
A transaction sent to your LocalBitcoin wallet would take approximately 30 minutes. If it takes a longer time to complete it would mean that your transaction could possibly be because of a few that’s too low or the network might be experiencing congestion due to the high volume of exchanges. Checking the status of your transaction would take the following steps: Look for the transaction ID, amount transferred, go to tradeblock.com and input either of the two and then look for how many confirmations the transaction has. A transaction with more than 6 confirmations this means that the receiving wallet obtained the transaction.On the other hand, if there are less than 6 confirmations, the transaction has left the sending wallet but is still under way.
LocalBitcoins Mobile App and API
As of this writing, LocalBitcoins does not offer an official mobile app. Please be careful when using LocalBitcoins apps as they are from third party developers.
As for APIs, LocalBitcoins does offer it. With their APIs, you can create your custom apps or programs to use their data or execute commands remotely.
LocalBitcoins Customer Support
LocalBitcoins provides a step by step FAQ guide on how to sell, buy and advertise. If what you’re looking for is not on the FAQs, they also have a support ticketing system. However, unlike other platforms that offer a guaranteed 24 hour response rate, LocalBitcoins’ response rate is around 4-7 days due to the high volume of transactions and inquiries. They also offer support services through their social media channels.
- Twitter (www.twitter.com/LocalBitcoins)
- Instagram (www.instagram.com/LocalBitcoins)
Operation Security
Ever since LocalBitcoins started in 2012, most of the issues experienced were transactions without track records. There are several checks and balances during the user’s transaction in order to attain a safe transaction for the user. The escrow system is also another layer of security as this ensures payments are not released until all components of the trade are attained.
LocalBitcoins also laid out a guide on how to further protect your account. Starting with your login, you will need a 2FA or two-factor authentication for your account which will help you avoid getting hacked when someone figures out your password. Once this is enabled, you will have a seperate device (usually Google Authenticator on your mobile phone) which generates a code that you must enter onto the website. Second, turn on Login guard as this protects you from unknown web browsers and if there is a suspicious login, you will be notified via email.
Conclusion
LocalBitcoins has provided users without a proper bitcoin exchange the opportunity to buy, sell and advertise. It has definitely been a go to place since the early days of Bitcoin offering people a way to buy Bitcoin especially during the time when there are very few services dedicated to it. Since the site uses your location, your landing page is automatically filtered for you and there is no shortage of buyers and sellers as it connects you to everyone in your region. Fees are generally free except if you’re an advertiser and they offer a wide variety of payment channels. The rates are also at par with most exchanges. One downside that I see in this is their slow customer support which is supposedly a component that the platform should further develop given to the nature of bitcoin transactions.