LocalBitcoins is a popular peer-to-peer (P2P) Bitcoin exchange platform that connects buyers and sellers. The platform allows traders to buy/sell Bitcoin using different payment methods, including PayPal, bank transfers, and altcoins. It is an ideal platform for users that want to own cryptocurrency. This article will review what LocalBitcoins offers, how to use it, and other factors to consider.
Table of Contents
- What is LocalBitcoins?
- Accepted Currencies & Payment Methods
- Account Management
- Buying Bitcoins
- Selling Bitcoins
- Posting Advertisements
- Feedback System
- Avoiding Scams
- Mobile App
- Automation & APIs
- Customer Service & Support
- Comparison To Other Sites
- LocalBitcoins Verdict
- Accepted Countries
- Alternatives to LocalBitcoins
What is LocalBitcoins?
LocalBitcoins is a legitimate online marketplace, with its office based in Helsinki, Finland. It was founded in June of 2012 by Jeremias Kangas and has since become one of the best financially performing companies in Finland. The current CEO and owner of the company is Sebastian Sonntag. The exchange is designed to be supported for all users and all countries, so it doesn’t matter if you are from the UK, USA, Yemen, Germany, Ghana, or any other country, unless explicitly banned.
The LocalBitcoins platform has previously been featured in the news due to controversies in Russia, where, in September of 2016, access to the site was blocked by the telecommunications executive agency, Roskomnadzor, as the platform could be used for money laundering. In 2019, the revenue of LocalBitcoins rose to $29.6 million. Simply viewing the volume of trades by country made on the site is enough to solidify its position as a popular peer-to-peer platform.
It should be noted that although the official website name is LocalBitcoins.com, it can be accessed through the localbitcoins.net web address. The platform also offers onion links. The site has to date received a 4.8 rating on TrustPilot.
Accepted Currencies & Payment Methods
The LocalBitcoins platform accepts buy/sell orders for different currencies, ranging from traditional Fiat currency like GBP, USD, and EUR, to altcoins like USDT, Ethereum (ETH), Monero (XMR), XRP, and Dogecoin.
Payments can be made via bank transfers, PayPal, credit cards, and other platforms like Qiwi and Zelle. It should be noted that trading Bitcoins may be subject to your local laws and could qualify for tax (e.g. HMRC).
On LocalBitcoins, sign-up is simple and easy. To register for a basic account, you are required to supply a username, email, and password. Once your account is created, it is placed in verification tier 0. If you are only looking to purchase Bitcoins or sell Bitcoins that were purchased on LocalBitcoins, you need only submit a phone number.
To be able to make use of the rest of the LocalBitcoins website functionally, you will be required to provide more identification. To ease the amount of verification required by the platform, the progress is split into different tiers, ranging from 0 to 3.
Every registered account starts at tier 0, which classes the account as having passed onboarding checks. You will be able to withdraw Bitcoins from your LocalBitcoins wallet, though you will not be able to deposit any Bitcoins into it.
To deposit Bitcoins into your LocalBitcoins wallet, the app requires further identity verification. The minimum tier for buying and/or receiving between EUR 1,000-20,000 of currency, annually, requires tier 1 (T1) status. This requires you to fill out a short KYC questionnaire that involves informing the platform of your address and your identity. You will also be required to send in a photocopy of your ID, such as a passport. If you do not plan on buying or receiving an amount of currency within the mentioned limit, then you may not need this tier. Users in Australia, Belarus, China, Curaçao, French Guiana, French Polynesia, Indonesia, Kuwait, Lebanon, Maldives, Mexico, Oman, Russia, South Africa, Sweden, Turkey, and UAE (including Dubai) will need to be tier 1 verified to trade.
If you wish to increase your trading limit on LocalBitcoins, or if you are registering a company account, you will need to increase your status to tier 2. Verification for this tier involves sending a proof of address and answering further questionnaires. Depending on your country, you may need to send in different documents as proof of address. For example, users in South Africa will need a bank account statement, users in Kenya can send a tax return or internet provider bill, clients in Nigeria can send a DSTV invoice, in Morocco an electricity bill, and customers in Venezuela can send a tax registration card. Users in Afghanistan, Bahamas, Barbados, Botswana, Cambodia, Ghana, Iraq, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Pakistan, Panama, Trinidad and Tobago, Uganda, Vanuatu, Yemen, and Zimbabwe will need to have this level of verification to trade.
The final tier, tier 3, requires extra ID verification and clients can only be verified at this tier once they reach 100,000 euros in volume. Users applying for tier 3 LocalBitcoins verification must conduct a liveness test and fill out extra questionaries. These questionnaires are reviewed manually, and the identity verification time may be a while.
LocalBitcoins prevents users from Cuba, North Korea, Iran, and Syria from making use of its services. In addition to this, residents of the United States will not be able to use the platform’s services unless they are from Illinois, Kansas, Montana, New Hampshire, New Jersey, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin.
It is possible to get your LocalBitcoins account suspended or terminated, should it be suspected of money laundering or other illicit activity. If this happens, your account is placed on a “forced holiday”, during which it cannot conduct any trades.
On LocalBitcoins, the question of “how to buy Bitcoins” is a simple one. Once your account has been created, head over to the “Buy Bitcoins” section of the site to see all advertisements made by other users looking to sell their bitcoins. The purchasing of Bitcoins works on a peer-to-peer basis, where you make individual, direct trades with other users.
You can utilize the search functionality to specify an amount of currency you wish to use to purchase Bitcoins, as well as the type of currency. In addition to this, you can specify the country and method of purchase. As some sellers conduct their trades via bank transfer or cash deposit, you will most likely need to use a seller that is based in your country of residence.
When you start your purchase order, you are put in contact with the seller, who provides details of how to send them the requested funds. Once you have paid them, press the button that notifies the seller that you have sent them the requested funds, allowing them to finish the transaction and send you the purchased Bitcoins.
Purchase Limits & Prices
Each seller specifies their price per Bitcoin on their advertisement, as well as limits for their trades. These limits specify the minimum and maximum value of Bitcoins that you can purchase, e.g. 150 – 2,500 GBP. This is important for you to be aware of, as attempting to purchase less than the limit will not be possible, and attempting to purchase more than the limit may mean that the seller cannot fulfill your order request.
Some payment methods may present higher prices. This usually correlates to the amount of risk that is faced by the seller. Options like credit card and PayPal purchases provide the ability to chargeback, which can be used as a way to scam sellers out of their Bitcoins after purchase. To account for the risk of using these payment methods, sellers tend to increase their prices. Safer forms of payment are met with lower purchasing prices.
To start selling Bitcoins using advertisements on the LocalBitcoins platform your account must be at least tier 1. If you do not wish to post advertisements but want to sell some excess bitcoins, the process is very similar.
Given that the transfer of Bitcoins is irreversible, you should try to avoid using high-risk payment methods when selling your tokens. Ensure that you give the buyer your correct payment details, such as your bank account deposit info (sort code and account number).
As a seller, you can view your transaction history on your profile.
If you want to use LocalBitcoins for high-volume trades, then creating advertisements on the platform is the way to go. To set up an advertisement, you will need to consider the following things:
- You will need to provide a location, currency, payment method, price, and limits, and create terms of trade.
- You can only create up to five advertisements at a time and, for each Bitcoin traded within 30 days, you can create one additional advert.
Additional options are also available for your adverts, such as opening hours, payment details, minimum volume, and more. When setting your advert prices, you can write powerful expressions that calculate the price margins for you using the latest Bitcoin prices.
Given that the LocalBitcoins exchange function on a peer-to-peer basis, it makes use of a feedback system that allows for both buyers and sellers to review each other. The feedback system shows a percentage score on your public profile to inform other users of your past trustworthiness.
Five types of feedback can be given: Trustworthy, Positive, Neutral, Block, and Block without Feedback. If certain conditions of the feedback are met, then it is displayed on the user’s public profile. Feedback is tagged as either confirmed or unconfirmed, where the former indicates the public visibility of the feedback. Unconfirmed feedback is not shown publicly and is only shown to LocalBitcoins administrators.
If you give ‘Trustworthy” feedback to a user, then the user is marked as a trusted person. Users who are marked as trusted by you can view your “Trusted Only” adverts, and you can view your list of trusted persons on your profile.
This trusted list is useful for sellers who wish to reward frequent buyers or loyal customers with lower prices, by showing alternative adverts only to them.
Given the unpredictability of a P2P environment, the LocalBitcoins developers have included safety nets for both buyers and sellers to prevent scams. Once a trade is initiated, the funds from the seller’s account are placed in escrow until the trade is completed. This ensures that the requested Bitcoins are safe and reserved for the trade, preventing the seller from backing out last minute after being paid. The escrow service allows for the platform to release the Bitcoins to you, should the seller be unresponsive once you send the payment.
If you are the seller, once you have received your payment you have the option to release the escrow and complete the trade. It is recommended that you do not release the escrow until you have received money from the buyer.
The LocalBitcoins does not offer an iOS app as an alternative to its browser site. The platform’s official website does not advertise any mobile wallet apps, though Android users can download APKs from the Google Play store that claims to support LocalBitcoins website functionality. These are likely to not be official apps and instead, be made by third (3rd) party developers, so care should be taken before downloading and using them.
Automation & APIs
On LocalBitcoins you will be faced with some common fees that are associated with Bitcoin trading. Here is a list of some that you might encounter.
LocalBitcoins, like most other Bitcoin exchanges, charge a withdrawal/sending fee when sending currency from their wallet into another wallet or app. This is more of a transaction fee that is related to the mining costs, which LocalBitcoins does not make a profit from. This cost is a small amount (relative to your wallet) and is accounted for when you attempt to withdraw or send your funds, as the maximum amount will be limited to what is in your wallet minus the transaction fee.
To receive Bitcoins on LocalBitcoins, you are provided with a wallet address that is tied to your account. You can use this receiving address to send funds, though there is a deposit fee for each transaction. This deposit fee is small, for example, 0.0005 BTC, and is subject to change. This fee can also be considered a minimum deposit amount as if fewer Bitcoins are sent than the deposit fee, then they will not be delivered to your wallet.
LocalBitcoins contains transaction fees that are attached to any advertisements you make and any trades that come from them. This fee is roughly 1% of your transaction.
The LocalBitcoins exchange provides standard methods of authentication to increase the security of its users’ accounts. In particular, the platform encourages the use of two-factor authentication (2FA) to ensure that no unauthorized parties can log in. This is suggested to be done using Google Authenticator, using the QR code that is provided for your account. No matter if you are a resident of Kenya, the US, the UK, or another country, the 2FA will be available for you to use to secure your login.
It should be noted that the platform has had issues with security in the past, for example, in January of 2019, it was hacked and over $28,000 worth of Bitcoin was stolen from users’ wallets. However, the security of the platform has since been improved.
The LocalBitcoins platform works in line with GDPR. It does share user data with some select third parties, where necessary to provide services. The list of these companies can be found within their FAQs, under the “Personal Data” section.
Customer Service & Support
LocalBitcoins provides a handy set of guides as a means of getting support for using its platform. In addition, it has several social media accounts on sites like LinkedIn, Facebook, Twitter, and YouTube, where you can get the latest news and information like checking if the website is down for maintenance or not working. The platform also has its own blog on Medium, which some traders may find useful. Traders can discuss different topics with each other on the website’s forum as well.
The LocalBitcoins platform does not offer a live chat service, instead, if you wish to get in contact with the team, you must submit a support ticket.
LocalBitcoins can handle disputes for trades, which are handled based on evidence supplied by trade participants and their reputation.
Comparison To Other Sites
LocalBitcoins is not the only platform that offers simple buying and selling of Bitcoins, and alternatives do exist. Comparing them vs LocalBitcoins does draw some similarities and differences. For example, Paxful offers more payment methods and requires full KYC verification before trading. Binance does not charge any transaction fees, which is different from LocalBitcoin’s 1% charge. When comparing Coinbase, you will find that it offers more supported cryptocurrencies, rather than just BTC, which some may find more useful.
If you are a trader looking to purchase or sell some Bitcoins to get on the hype, then LocalBitcoins could be the perfect exchange platform for you. The ease of signup and flexibility in pricing and payment methods makes it attractive to a variety of users, however, the focus on Bitcoin may put those who are more interested in other cryptocurrencies off. It is also worth considering the advantages and disadvantages of P2P platforms like LocalBitcoins compared to centralized and decentralized alternatives.
Is LocalBitcoins A Wallet?
Yes and no. Although you can store Bitcoins in your account wallet, it is recommended that you do not do this for long-term storage, and instead use a dedicated wallet.
Does LocalBitcoins Sell Other Cryptocurrencies?
No. LocalBitcoins only deals with the selling and buying of Bitcoins, however, you can use other tokens to fund your account.
Do I Make Transactions With The LocalBitcoins Exchange?
No. The transactions you carry out on LocalBitcoins are done directly with the traders and not with the broker itself. It is a peer-to-peer (P2P) marketplace.
Can I Do Margin Trading On LocalBitcoins?
No. LocalBitcoins is a platform that only offers trading of Bitcoins and not any form of leveraged trading.
Can I Use A Gift Card As A Form Of Payment On LocalBitcoins?
No. On LocalBitcoins you cannot use gift cards or in-person cash payments as methods of payment.
Is LocalBitcoins Available Anywhere In The US?
Yes, 10 American states allow residents to trade on LocalBitcoins: Illinois, Kansas, Montana, New Hampshire, New Jersey, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin.
LocalBitcoins accepts traders from Australia, Thailand, Canada, United States, United Kingdom, South Africa, Singapore, Hong Kong, India, France, Germany, Norway, Sweden, Italy, Denmark, United Arab Emirates, Saudi Arabia, Kuwait, Luxembourg, Qatar, and most other countries.
Traders can not use LocalBitcoins from Cuba, Iran, and Syria.
Alternatives to LocalBitcoins
If you are looking for alternatives to LocalBitcoins we have compiled a list of the top 5 brokers that are similar to LocalBitcoins below. This list of brokers like LocalBitcoins is in order of similarity and only includes companies that accept traders from your location.
- Coinbase – Coinbase is the easiest place to buy, sell, and manage your cryptocurrency portfolio.
- BitMex – Bit Mex Offer the largest market liquidity of any Crypto exchange. Ultra-low trading costs and minimum deposit requirements. Join in 30 seconds.
- Binance – Binance is one of the leading online crypto exchanges offering Bitcoin.
- Paxful – Paxful is a crypto trading exchange and digital wallet offering low fees and easy sign-up.
- CoinMama – Coinmama aims to make entering the crypto market as easy as possible, offering BTC, ETH, LTC, ADA, BCH and XTZ
|LocalBitcoins is a P2P Bitcoin trading platform with a range of KYC verification tiers and several client safety features in place|
Vincent Nyagaka is a Professional Trader, Investor, and Author who is considered ‘The Authority” on Price Action Trading. His blog is read by over 300,000 every month and he has taught over 5,000 students from all over the world since 2016. Check out Vincent’s Professional Trading Course here.