LocalBitcoins has been around for a very very long time. The site offers seller and buyers from around the world to meet and trade Bitcoins. It’s like the Craigslist for buying and selling Bitcoin. In today’s article I’ll review the different aspects of Bitcoin and guide you on how to choose a safe trade on the site.
Payment method accepted on LocalBitcoins
LocalBitcoins sellers/buyers accept a variety of payment methods. Here’s a list of the main ones:
- Wire transfer
- Westren Union
- Cash by mail
- Cash (in person)
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 if you don’t have a Paypal balance. Depending on the payment method you choose need to pay different fees. For example buying with Paypal on LocalBitcoins has much more risk for the seller.
Because Bitcoin isn’t like any other physical or digital goods you buy online. It’s a form of money, and even more a form of somewhat untraceable money. That’s why many credit card companies (i.e. Paypal) don’t insure Bitcoin exchanges that sell Bitcoins via credit card purchases.
You will usually get the best price for buying Bitcoins using a hard to reverse payment method such as cash deposits or wire transfers.
If you’re only looking to buy Bitcoins then LocalBitcoins will be free to use. The site only takes a commission of 1% from the sellers. Keep in mind that once you receive the Bitcoins into your account you will need to pay standard Bitcoin network fees to get the money into your personal Bitcoins wallet.
It’s highly recommended not to leave your Bitcoins lying around in LocalBitcoins’ wallet and to move it to your own secure Bitcoin wallet.
The sellers themselves don’t have a transaction fee, instead they charge higher exchange rates, so take that into account when making a trade.
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 money you send is held on LocalBitcoins’ escrow service. Only after the seller confirms the trade is completed are they released.
- 2FA – Two factor authentication means that whenever you log into your account you will require to enter an additional PIN code sent to your mobile phone. This prevents people from hacking into your account. However this option is not enabled by default – you need to enable it.
- 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, 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 that happens.
Community opinion about LocalBitcoins
If you go to the main Bitcoin community boards (i.e. Reddit and Bitcointalk) you will find various opinions about LocalBitcoins. However after going over 15 different reviews I can say that most people say the same thing – 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”
That’s why now I’m going to show you exactly how to trade securely on the platform.
How to trade on LocalBitcoins without getting scammed
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 individuals so you have to make sure you’re using the right precautions. Here’s a short guide to help you trade safely.
Choosing your seller
After filtering out your sellers for the required location and payment method you need to choose who you are going to deal with. 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 did in the past.
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 qualifies as follows:
- He has traded over 100BTC in his lifetime with a minimum of 100 trades
- He has a feedback score of at least 98%
- His account is more than 1 year old
- He is a verified seller (phone number, email, company account)
- He is trusted by at least 10 people
If you follow these strict rules then you’ll probably be good. If you can’t find a seller that matches all of the above try to find the next best thing. The idea is to due 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 the seller
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.
Only after you send the payment mark payment as made or else you will probably be denied from the trade.
Now you wait for the Bitcoins to arrive inside your LocalBitcoins account. If any issue arises try solving it with the seller first. Don’t worry about losing your money, if you used LocalBitcoins’ system you are protected by their 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 seller in order to bump your feedback so you can deal with the more respected sellers.
So there you have – now you know how to use LocalBitcoins safely. Follow these steps and you are 99% covered from fraud. Also if you have any additional questions feel free to refer to LocalBitcoins’ FAQ page. Good luck!