LocalBitcoins Review – A Beginner’s Guide
Last updated: 7/1/19
LocalBitcoins is a peer-to-peer (p2p) marketplace that allows buyers and sellers to directly communicate and trade Bitcoins. In this post I’ll review the service and also dispense some tips on what to look out for if you’re new to it.
LocalBitcoins Review Summary
Unlike most exchanges that match buyers and sellers manually, LocalBitcoins allows users to communicate directly. LocalBitcoins is like the Craigslist for buying and selling Bitcoin. Its sellers offer a wide variety of payment options and the built in escrow allows for greater buyer security.
Having said all that, since anyone can become a seller there is a lot more room for scammers on this platform.
Bottom line, LocalBitcoins is a good place to go to buy Bitcoins when you can’t find your requested payment methods anywhere else. However, prices are usually higher on this platform and you have to do your due diligence to avoid getting scammed.
That’s LocalBitcoins in a nutshell. If you want a more detailed review about LocalBitcoins keep on reading. Here’s what I’ll cover:
- LocalBitcoins Overview
- Currencies and Payment Methods
- LocalBitcoins Fees
- Buying Limits
- Supported Countries
- Customer Support and Reviews
- LocalBitcoins vs. Paxful
- How to Use LocalBitcoins Safely
- Frequently Asked Questions
LocalBitcoins offers a platform for sellers and buyers from around the world to meet and trade Bitcoins. It’s like the Craigslist for buying and selling Bitcoin.
LocalBitcoins allows for secure trading through the use of several measures:
- Reputation system – Each trader has a reputation rank and also public history records showing their past activities.
- Escrow – When you request a trade, the traded Bitcoins are held on LocalBitcoins’ escrow service. The Bitcoins are released only after the seller confirms the trade is completed.
- 2FA (optional) – Whenever you log into your account you will be required to enter an additional PIN code sent to your mobile phone. This prevents people from hacking into your account. This option is not enabled by default.
- Login guard – LocalBitcoins is also able to verify you are always logging in from the same browser. If a login from a different browser occurs, an email verification will be required.
- Support and conflict resolution – LocalBitcoins has a support team ready to answer user questions and also resolve conflicts between buyers and sellers in case it happens.
- Buying Bitcoin anonymously
Until recently, LocalBitcoins acted as one of the main places you can still buy Bitcoins anonymously. However, as new legislation comes into play, LocalBitcoins now verifies customer identities with traditional KYC (Know Your Customer) processes. Additionally, the option to buy Bitcoins with Cash was removed from the site.
There are no official fiat currencies that the site supports, since the site itself doesn’t hold fiat deposits.
Users on the site accept a wide array of payment options including but not limited to:
- Wire transfer
- Cash deposits
The specific available payment methods are determined by the user you will be buying from / selling too. Since you’re buying and selling to individuals, you won’t be able to use a credit card. However, the Paypal option allows you to pay with your credit card in case you don’t have a Paypal balance.
Keep in mind that different payment methods will result in different exchange rates, since some methods are riskier than others and the buyer/seller will need an “insurance” against possible fraud.
Because to this, you will usually get the best price for buying Bitcoins using an irreversible payment method such as cash deposits or wire transfers. On the other hand, these are also the most risky ones from your side.
Registering, buying and selling Bitcoins on LocalBitcoins is completely free. LocalBitcoins users who create advertisements are charged a 1% fee for every completed trade. So basically, only the people who are actively promoting their services (i.e. makers) are being taxed.
Transactions to wallets of other LocalBitcoins users are also free of charge. Each time you send Bitcoins outside of LocalBitcoins, you will only be charged the standard Bitcoin Network fee, which varies depending on how crowded the network is.
It’s highly recommended not to leave your Bitcoins lying around in LocalBitcoins’ wallet and to move it to your own secure Bitcoin wallet.
For the complete fee schedule you can visit this page.
Depending on your verification level you’ll have different buying limits:
- T0 – Requires your name, country, email address and phone number. The limit for trade is €1,000/year.
- T1 – Requires T0 + physical address, ID verification and KYC info. The limit for trade is €20,000/year.
- T2 – Requires T1 + Proof of residence. The limit for trade is €200,000/year.
- T3 – Requires T2 + extra ID verification. There is no limit for trade.
LocalBitcoins is available worldwide with seller listings from 248 countries.
As with any platform, LocalBitcoins has its fair share of negative reviews. However, you’ll find that most reviews relate to people getting scammed by sellers and not about the platform itself.
LocalBitcoins is only a platform, it does not screen out buyers and sellers. This is something you should do yourself (and I will show you how in a minute).
Reviews that are related to the platform itself state that the site is fairly buggy with support taking a long time to respond.
From additional online reviews on Reddit, the general vibe was that the platform is good, it’s the people you need to be suspicious of. Or, like one Redditor put it: “Trades are as trustful as the people you’re making the transaction with”.
LocalBitcoins also has an extensive FAQ page where answers to most questions can be found.
Aside from LocalBitcoins there is one more popular website that acts as a p2p marketplace called Paxful. Both sites basically offer the same services with similar fees however LocalBitcoins has been around longer and is generally considered as more reliable.
Also LocalBitcoins has a wider variety of sellers and buyers. You can read my complete Paxful review here.
Before I explain how to avoid fraud, here’s a short video about how to buy and sell on LocalBitcoins:
LocalBitcoins is a great platform, however sometimes the traders on it are not so great. At the end of the day, you’re trading with strangers so you have to make sure you’re taking precautions.
Finding a reliable seller
After filtering out your sellers by the preferred location and payment method, you need to choose who you are going to deal with. As a rule of thumb, DO NOT CHOOSE A SELLER BASED ON PRICE.
Sometimes it’s worth paying 5% more in order to conduct a transaction with a more reputable seller. Look at the seller’s transaction history and see how he was rated in past transactions.
Also, don’t post a request to buy Bitcoins, that will just attract a lot of scammers. Instead, look for people who are actively selling Bitcoins as they are probably more legit.
Go over the seller’s profile and make sure that he or she qualifies as follows:
- They have traded over 100BTC in total with a minimum of 100 trades
- The seller has a feedback score of at least 98%
- The seller’s account is more than 1 year old
- The seller is verified (phone number, email, company account)
- The seller is trusted by at least 10 people
If you follow these strict rules then you’ll probably be fine. If you can’t find a seller that matches all of the above, try to find the next best thing. The idea is to do your homework and see that the seller has actually completed large successful trades in the past.
Afterwards, search the LocalBitcoins’ forum for that seller’s username. If any complaint comes up, you’ll probably find it there. If all goes well you should now have your chosen seller.
Communication with sellers
Send a message to the seller requesting a trade and wait for their response.
- Send additional information before receiving a response from the seller.
- Agree to trade with the seller outside of LocalBitcoins since you will not be protected by LocalBitcoins’ escrow service.
- Send your payment information in any other way other than the LocalBitcoins message box. No emails, text messages or phone calls. Use the LocalBitcoins interface only.
Once everything seems in order, you can start the trade and send the payment.
Make sure to mark the payment as made only after you send payment, or else you will probably be denied from the trade.
If any issue arises, try solving it with the seller first. Don’t worry about losing money, since you are protected by LocalBitcoins’ escrow service.
Keep in mind that if you’re totally new to LocalBitcoins, “power sellers” may not want to trade with you because you do not have enough feedback yet. This means you may have to make a few small trades with less trustworthy sellers in order to bump up your feedback so you can deal with the more respected sellers.
Is LocalBitcoins Safe?
Yes, LocalBitcoins as a platform is completely safe. What you need to look out for are the risky sellers. Use the safety tips I’ve described above to avoid them.
How do I Sell Bitcoins on LocalBitcoins?
- Sign up to LocalBitcoins
- Complete the verification process
- Click on “Sell Bitcoins”
- Inset search parameter and click on “Search”
- Choose a seller and enter trade details
- Click on “Send trade request”
Why do People Use LocalBitcoins?
Up until recently many people used LocalBitcoins to buy Bitcoin anonymously mainly via cash trades. Today, since this option has been removed, LocalBitcoins is used mainly by people who don’t have any other option for buying Bitcoin in their country.
Due to heavy regulations on cryptocurrencies, some countries are excluded from using Bitcoin exchanges. This leaves LocalBitcoins as a final resort for buying Bitcoin.
LocalBitcoins supplies a variety of payment methods for buying Bitcoin. However, this flexibility usually comes with a higher price tag and is also a magnet for scammers, so you’ll need to do extra background checks before getting into a trade.
If you can’t find a regulated exchange that supports your country or requested payment method, more often than not LocalBitcoins will have a solution for you, just make sure to follow the safety tips I’ve detailed in this post.
Have you used LocalBitcoins yourself or have any additional questions? If so, I’d love to hear about it in the comment section below.
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