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LocalBitcoins Exchange Review | Fees, Security, Pros and Cons in 2020
LocalBitcoins is a well-known peer-to-peer marketplace for Bitcoin trading. Today we will review the features which the exchange offers and if it’s suitable for your trading needs.
LocalBitcoins Review: Exchange Overview
LocalBitcoins was established in 2020 by Jeremiah Kangas, in Helsinki, Finland, with the current CEO being Nikolaus Kangas. The platform has quickly gained popularity, with the service being available in over 240 countries.
Recently, the company launched a sister-site called LocalEthereum, which supports Ethereum P2P exchanges. What’s interesting about this company is the fact that it has not received financial backing from venture capitalists.
The platform facilitates in-person meetings or direct negotiations for buyers and sellers, which are able to use over 40 payment methods. This aspect will be discussed later in our LocalBitcoins review.
Supported Currencies and Available Countries
As the name suggests, LocalBitcoins only supports the trading and exchange of Bitcoins.
The website allows traders to use a wide variety of fiat currencies, including USD, EUR, GBP, AUD, CAD, CNY, and 120 other currencies.
The platform is available in 248 countries and 7789 cities all over the world. The countries that cannot be accessed because of regulatory problems and international financial restrictions include the US, China, Indonesia, Syria, Iran, and, North Korea.
The LocalBitcoins interface can be used on all major web browsers, as well as PC and tablet operating systems, such as Windows and Mac. Their mobile app is only available for Android users.
User Interface and Experience
The exchange’s interface has a clean design with all its information being well-displayed, making it easy for everyone to use and find what they need without having to navigate to other parts of the site.
The Local Trader mobile app for LocalBitcoins is an open-source software for Android devices. The app has been reported to have many errors and log-in problems.
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How to get a LocalBitcoins account
- Go to the LocalBitcoins website and click on “Sign up”;
- Complete the form with your username, email, password, and pass the captcha;
- Upload an identity document, such as a passport or national ID card;
- It is recommended to complete your profile once you have opened your account. Most traders will refuse to trade with you if you have an incomplete profile.
How to Use LocalBitcoins Exchange
Buying and Selling Bitcoin
- Go to the “Quick Buy” or “Quick Sell” tabs to see the offers;
- To buy/sell BTC, go to “Quick Buy”/”Quick Sell” option and choose your country from the dropdown menu;
- Select the preferred payment method under “All Online Offers” dropdown (payment methods will be discussed later in our LocalBitcoins review);
- You will be shown a list of traders that match your filter selection;
- Select an offer from the list;
- Next to each offer, there is a “Buy” or “Sell” button. Click on the button to get to the user information page. Here you can look at the reputation of the seller/buyer of the individual, and see how many trades he has closed and honored, his overall feedback score, and status of profile verification;
- Proceed with the transaction once, you and the seller/buyer has agreed with all the terms of the transaction. You are able to directly talk to the trader to negotiate terms, such as the exchange rate, time, and place of meeting (if in person), etc;
- Leave a feedback when you have ended your transaction.
If you want to make your own trading offer, go to the “Post a trade” section.
LocalBitcoins Exchange Fees
LocalBitcoins charges a flat fee of 1% for sellers, with no fees for buyers. The merchant invoicing services offered by the platform incur a fee of 0.5% that will be taken from each invoice made.
If an external transaction is used to pay the invoice, then you will have to pay the Bitcoin network deposit fee which will be subtracted from the invoice amount.
There are no fees for account signup, the buying and selling of Bitcoins, and LocalBitcoins wallet transactions.
You will have to pay whatever transaction fee is applied by the Bitcoin network at the time.
Users have access to the widest payment method list ever offered by an exchange. Some of the included methods are:
- Bank transfer (ACH/ SEPA);
- Credit card;
- Amazon gift card;
- Google Wallet;
- Square Cash;
- Western Union;
Deposit processing times for fiat payments depend on the selected payment method. Bitcoin is released from escrow when the seller confirms that he has received the payment. This can be problematic, as you rely on when the seller chooses to confirm the payment.
LocalBitcoins users have no limits on their accounts. Members can set their own selling or buying limits and prices.
The exchange platform includes security features, such as two-factor authentication, HTTPS web encryption, SMS and email alerts, Login Guard, PGP encryption for email communication, and escrow service.
The escrow holds the money sent by the buyer, and the funds are released when the seller confirms the trade was successful.
The trading platform was hacked in 2020 through its LiveChat account, losing approximately 17 BTC from customer wallets. A year prior, a hacker broke into its servers, but LocalBitcoins alleged that no customer data was stolen. In January this year, the exchange suffered a security breach that lasted around 5 hours, with the hackers breaking into six user accounts and stealing more than BTC 7.9.
Although, unlike other exchanges, LocalBitcoins does not have to keep cryptocurrency on the platform for buyers, sellers have to use their internal wallet system for the platform’s escrow services.
LocalBitcoins’ support team can be reached on a 24/7 basis via an email ticketing system, but it has been rated to not be responsive, with users complaining that they received no reply to their emails.
In an exchange review, support is a very important aspect, as many platforms have trouble in this area.
LocalBitcoins Exchange Reputation
Many customers have reported to come into contact with fraudulent users or getting scammed on the platform.
There are many online reviews that describe how users got scammed, which has affected in time the reputation of the exchange. It is not actually LocalBitcoins’ fault if fraudsters are using the platform to rip off people. The problem is that peer-to-peer trading comes with a lot of risks, and traders should take all security precautions.
The platform also has a section where users can post fraud and scam warnings, to alert other traders of their experience and to avoid trading with those users.
LocalBitcoins.com faced a huge backlash from the community when it started enforcing stricter Know-Your-Customer (KYC) protocols in early 2020. As one of its selling points was user-anonymity, as you would only need an email to register, many users were upset that the P2P platform was imposing these rules.
Section 2.4 states that “verifying account with an ID is currently mandatory to all advertisers and users whose trading volume exceeds [a] certain limit.” The company reasons that the move was made to protect users from fraud, money laundering, criminal activities, and other illicit activities.
LocalBitcoins Review: Verdict
LocalBitcoins is an exchange platform that facilitates peer-to-peer Bitcoin trading. The fee structure is advantageous for buyers, but the downside is that there are many fraudulent traders abusing the platform and looking to scam people of their money.
Features image: wethecryptos.net
LocalBitcoins Exchange Review
LocalBitcoins is a good method to exchange Bitcoins, and it has many advantages for traders. If you are looking for speed of transactions and availability in a long list of countries, then this platform would be a good choice. However, the downside is that you will have to depend on the seller to confirm the payment.
LocalBitcoins peer-to-peer cryptocurrency exchange – 2020 review
Find Bitcoin buyers and sellers near you on LocalBitcoins.
- Good for peer-to-peer Bitcoin trading with escrow and >Check out our full list of pros and cons or read on.
|Product Name||LocalBitcoins P2P Exchange|
|Fiat Currencies||AUD, USD, EUR, GBP, CAD, CNY & 120+ more|
|Deposit Methods||Bank transfer (ACH)
|Deposit Fees||Fees vary|
- Available in more than 200 countries.
- Can be cheaper than other bitcoin and money transfer providers.
- No minimum or maximum transfers.
- Many methods for fiat currency delivery.
- May not be many sellers in some countries.
- You’ll need to handle transfer details yourself.
- Buyers and sellers may set transfer limits.
- Some methods are considered high risk.
Learn more about LocalBitcoins:
What’s in this gu >
What fiat and cryptocurrencies are supported?
- Supported fiat currencies: AUD, USD, EUR, GBP, CAD, CNY & 120+ more
- Supported cryptocurrencies: 1 cryptocurrencies
Which payments methods are accepted?
- Bank transfer (ACH)
- Credit card
Go to LocalBitcoins’s website
What’s it like to use LocalBitcoins?
1. Buying and selling Bitcoin
Browse the listings available in your region to find reliable sellers and buyers.
2. Browse sellers
Search buyer and seller profiles to find reputable counterparties.
3. Post advertisements
You can post your own trade advertisements for others to view.
4. Help section
For assistance, you can browse the FAQ or submit a ticket.
Fees and limits
The fees below are accurate as of 11 October 2020.
|Buying and selling||Free|
|Posting a successful advertisement||1% on completion of the trade|
|Transactions between LocalBitcoins wallets||Free|
|Merchant invoicing service||0.5%|
|Custom work (e.g. research of external issues)||EUR€200 per hour. Minimum billable amount is EUR€200.|
How fast will my funds be available?
Fiat payments. How long a payment takes depends on the payment method you and the other trader use.
Upon received payment
Bitcoin release from escrow. Bitcoin sellers will typically release BTC from escrow as soon as they receive your payment.
Is LocalBitcoins safe to use?
- Regulation. LocalBitcoins operates around the world in compliance with local laws. Traders are required to provide identification for most transactions, and reputable traders on LocalBitcoins will typically require identification from their counterparts.
- Verification process. LocalBitcoins has different verification tiers, with all except the lowest requiring users to provide ID documents.
- Security features. LocalBitcoins has ongoing bug bounties and only gets involved in trades between users as the escrow provider. However, scams from other LocalBitcoins users are a constant problem.
How to avoid scams on LocalBitcoins
LocalBitcoins requires buyers and sellers to verify their identity for most transactions, and it has an escrow service to help prevent scams. But even with these precautions, there are still two common scams to watch out for when using LocalBitcoins.
1. Chargeback fraud
This scam targets Bitcoin sellers.
How it works
A scammer buys Bitcoin with credit card, bank transfer, PayPal or another service with reversible payments.
After the payment is made, they claim a chargeback through the payment service.
Now the scammer has the Bitcoin and the money, while the seller has no Bitcoin and no money.
How to avoid chargeback fraud
- Deal only with well-known buyers with a high reputation score on the platform.
- Check the buyer’s platform trading history for any gaps. These could mean the scammer purchased or otherwise acquired a high-reputation account to perpetrate the scam.
- Only deal with verified, identified buyers.
- Only make small transactions to reduce the amount lost if you become a scam victim.
- Be wary of offers that are too good to be true or even slightly too good.
Outside of cash payments, which are not allowed on LocalBitcoins listings, there are no guaranteed ways of avoiding chargeback fraud.
2. Man in the middle scams
This scam targets Bitcoin sellers.
How it works
The scammer tricks someone into unknowingly purchasing Bitcoin, which is sent to the scammer’s wallet. This type of scam has two victims. Victim A (VA) is someone who wants to buy something online. Victim B (VB) is someone who wants to sell Bitcoin on LocalBitcoins.
The scammer offers to sell something to VA. This can be anything sold online, such as a car, clothing or anything you’ll find on eBay or Amazon.
Once a price is agreed, the scammer offers to buy exactly that amount of Bitcoin from VB and presents VB’s payment details to VA.
Now VA ends up paying VB, who releases the Bitcoin to the scammer after receiving payment. Naturally, VA will typically not receive the goods they thought they were buying and will typically initiate chargeback procedures.
Consequently, this scam can lead to innocent Bitcoin sellers losing money and being labelled as fraudsters and even having their bank accounts cancelled.
How to avoid man in the middle scams
All the same rules as avoiding chargeback fraud apply – only deal in small amounts and only with reputable and identifiable buyers. In addition, you can do the following:
- Where possible, ensure that the payment method incorporates ID, such as a bank account name, and that this matches the buyer’s ID.
- Ask for photographic confirmation of the payment, such as requiring the buyer to take a photo of themselves physically making the payment.
- Have smaller payment windows (e.g. require payment to be made within half an hour of a purchase being requested).
- Require a detailed description, including the purpose of the payment, on the buyer’s bank transfer.
Scams are a risk on any peer-to-peer cryptocurrency trading platform, and LocalBitcoins is not any better or worse than the others in this regard.
You can reduce your chances of being scammed by being careful, but there are no guarantees and even experienced traders sometimes fall victim.
If you don’t want to worry about the risk of scams, you should look for large, reputable cryptocurrency exchanges instead.
LocalBitcoins Review: What You Need to Know
Local Bitcoins is a place where you can meet other people interested in buying and selling Bitcoins. As such, you should use caution when selecting traders to conduct a transaction with. While Local Bitcoins has measures in place to make sure you’re not ripped off, filing a complaint can be frustrating and time-consuming.
Local Bitcoins is like the Craigslist of buying Bitcoins, as you’re in charge of facilitating payment with the person you choose to buy from, whether that be through ACH deposit, PayPal, or direct payment in cash. This differs from traditional exchanges, where all values are swapped on the exchange and the exchange oversees the transaction.
Sellers pay a fee of 1% while buyers garner no fee.
LocalBitcoins has been around since 2020, connecting Bitcoin buyers and sellers on an open, peer-to-peer marketplace. There are plenty of reasons to recommend Local Bitcoins as a secure and easy-to-use trading platform. In this Local Bitcoins Review, I’ll explain what I like about Local Bitcoins and how you can benefit from using the platform.
Local Bitcoins Key Information
|Site Type||Peer-to-peer Bitcoin exchange|
|Company Location||Helsinki, Finland|
|Company Launch||June 2020|
|Deposit Methods||Cash, wire transfer, PayPal or 50+ other methods|
|Withdrawal Methods||Cash, wire transfer, PayPal or 50+ other methods|
|Fees||None to buy, Low fees to sell|
Before we dive into the review, the most important point about using Local Bitcoins is to use good judgment. Local Bitcoins is not an exchange in the traditional sense. You don’t enter your bank account information and buy Bitcoin. Instead, Local Bitcoins is a place where you can meet other people interested in buying and selling Bitcoins. As such, you should use caution when selecting traders to conduct a transaction with. While Local Bitcoins has measures in place to make sure you’re not ripped off, filing a complaint can be frustrating and time-consuming.
What Makes Local Bitcoins Different from Other Exchanges
As I hinted above, Local Bitcoins is different from other exchanges because it’s not a trading exchange. When you set up an account at the major exchanges like Coinbase , Kraken , or Bitstamp , you link your bank account directly to their trading platform to fund your buy and sell commands. In exchange for facilitating your trades, these exchanges charge transaction fees.
Local Bitcoins is different. Let’s say you want to buy some Bitcoins on Local Bitcoins. First, you create an account and a wallet on Local Bitcoins, but you don’t connect your bank account information to Local Bitcoins directly. Instead, you search for other users who have Bitcoins and want to sell them to you.
When you find a user offering to sell Bitcoins at an exchange rate and terms that you like, you message them to negotiate the transaction. Then, you find a way to pay the person. For online trades, you can use a cash deposit via a bank, PayPal (fees apply), or other means of cash transfer. Or in some cases, you can meet up in-person and give the person cash in exchange for Bitcoin, hence the name Local Bitcoins.
After you’ve paid, the Bitcoins are released to your Local Bitcoins wallet, and from there you can move them to your own personal wallet.
How to Avoid Scams on Local Bitcoins
Since Local Bitcoins is a peer-to-peer exchange, your transactions are only as trustworthy as the person on the other side of the deal. Local Bitcoins does hold all Bitcoins in escrow when you pay online, so if you can prove that you paid for them the Bitcoins will get released to you. However, it’s fairly easy to avoid having to file a complaint if you follow a few simple precautions when vetting the traders you do deals with.
When you’re thinking about conducting a trade, click on the trader’s username to see more information about their trading history…
I like to look for the following criteria when I evaluate a trader:
- Have they traded more than 50 BTC?
- Have they completed more than 100 trades?
- Do they have a feedback score of 97% or higher?
- Have they been on Local Bitcoins for more than a year?
- Have they verified their information with Local Bitcoins?
- Do 20 or more users “trust” this trader?
If the answers to those six questions are “yes,” then you’ve probably got a good trade. As you can see in the example screenshot above, user CeruleanShine meets all my criteria for a trustworthy trader. I would feel comfortable conducting a transaction with this person.
Of course, as a new user on Local Bitcoins, you also have to build your reputation. Sometimes, this might mean doing smaller transactions with less reputable traders to build up your trade count and feedback scores. I recommend keeping these first trades below $200, so if something goes wrong you’re not on the hook for too much money.
For all online trades, Local Bitcoins provides escrow protection. The seller places the Bitcoins into a Local Bitcoins escrow account (plus the seller has to add 1% as a Local Bitcoins transaction fee). You’ll then send the payment to the seller and mark the transaction as “paid.” Once the seller receives the payment, they’ll release the escrow amount. If the seller tries to run away with your money, you can submit a complaint to Local Bitcoins, along with proof of payment, and they’ll release the escrow to you.
Where Can You Use Local Bitcoins?
As a peer-to-peer exchange, Local Bitcoins is designed to be decentralized and usable from anywhere. Since you can pay in cash and don’t need to use banks, as long as there are other users in your area, you can buy and sell using Local Bitcoins almost anywhere in the world. There are two major exceptions; Local Bitcoins is not available in Germany or the state of New York due to regulations.
How Much Can You Buy and How Do You Pay?
Local Bitcoin doesn’t impose limits on transactions. You’re free to decide how much you’re willing to trade. If you’re selling, you can also set your own prices. Generally, reputable sellers will be able to command a few more dollars in the exchange rate than less experienced ones.
Local Bitcoins offers 50+ methods of possible payment for its traders. Users can agree to buy Bitcoin using anything from iTunes gift cards to cash sent via mail. As long as you and the trader agree on the cash transfer method, you can pay however you like.
If you’re selling Bitcoins for cash on Local Bitcoins, it makes sense to require a type of transaction that’s difficult to reverse. Cash deposits, money orders, and wire transfers are popular for this reason. If you allow someone to pay using a credit card via Paypal, that person can buy Bitcoin from you and then dispute the transaction with their credit card company, leaving you with no money. Since many Local Bitcoins users are anonymous, it can be difficult or even impossible to track down someone who pulls such a scheme.
Fees for Trading on Local Bitcoins
Local Bitcoins doesn’t charge any fees to buyers on the platform. In fact, Local Bitcoins doesn’t handle any of the cash transactions, as all deals are routed directly peer to peer. For sellers, Local Bitcoins takes a 1% fee for every transaction. This fee is added to the amount the seller places in escrow with Local Bitcoins as part of the deal-making process. Some sellers will pass this 1% fee on the buyer in the form of a markup on the Bitcoin exchange rate.
Local Bitcoins Security and Privacy
Many traders in the United States and other countries with anti-money laundering laws will require you to send them proof of identity before they’ll agree to a deal. This is part of a practice called Know Your Customer (KYC), and it’s required by law in the United States for traders selling securities. If you want to maintain your anonymity, you can usually find other traders who are willing to execute trades without the identity verification.
Overall Review of Local Bitcoins Trading Platform
I hope you enjoyed this Local Bitcoins review and found it helpful. Overall, Local Bitcoins is an established platform, and for the most part, it’s a safe and low-fee way to trade Bitcoin. As long as you exercise good judgment when selecting who to do deals with, Local Bitcoins can be a great platform for all your trading needs. I recommend it as an easy way to get started in Bitcoin investing.
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