LocalBitcoins Cryptocurrency Exchange Review
In June 2012, Jeremias Kangas founded the bitcoin startup LocalBitcoins. The Finish company provides an over the counter trading platform for individuals to exchange local currency for Bitcoin. LocalBitcoins allows users to advertise exchange rates and payment methods, and allows individuals to complete the transaction online or in person. For exchanges done online, they offer an escrow service to protect users. The premise of LocalBitcoin is that it allows people to buy, sell, and trade bitcoins directly with other users.
To open an account, simply visit LocalBitcoins.com, and register for a new account. After the account is set-up, users can search for people selling Bitcoin locally, and limit searches to vendors who offer a particular payment method. You are also able to look at a seller’s reputation score and transaction history, and directly contact the seller to ask any questions. To complete a transaction, you need to set a purchase amount and type of payment. If the vendor requires you to validate your identity, you will need to do so before the purchase is finalized.
Currently, the available payment methods include cash in person, cash through the mail, PayPal, Webmoney, Western Union, and wire transfers. LocalBitcoin offers several services to ensure users are protected and transactions are honored. They offer an escrow service which holds the payment until the seller verifies that the Bitcoin was transferred to the buyer. For transaction disputes, they have an online conflict resolution department, similar to what Amazon and eBay offer. LocalBitcoin with investigate the transaction after receiving a complaint, and mediates the problem between the customers.
Reputation scores and sales history are public, meaning sellers cannot hide the information from buyers. To guard against hackers, users can set up a two-step verification process, and LocalBitcoin will send a PIN to your phone whenever you attempt to log in.
LocalBitcoin charges sellers a 1% transaction fee. Bitcoin prices are generally higher compared to larger exchanges.
LocalBitcoin has been involved in several scandals since its conception. In April 2014, 30 Bitcoins ($15,000.00) were stolen from its users when they were hacked. LocalBitcoin ceased business operations in Germany in 2014 over licensing issues and in August 2015 in New York when they failed to buy a BitLicense from the New York Department of Financial Services.
Since users have the option of meeting in person to buy and sell Bitcoin, certain safety precautions should be followed to avoid falling victim to a scam. Make sure that you research the seller’s reputation. You can see if a vendor is a certified merchant, and you should stay away from sellers with recently created accounts, few trades, and reputation scores below 98%.
Use the escrow service whenever possible, and avoid meeting in person for transactions. The Escrow service is free, and provides an additional layer of protection. Use the forum on the website to learn more about Bitcoin sales, and ask any questions you may have.
LocalBitcoin offers a way to buy Bitcoin directly from individuals, offers low fees, and free escrow and conflict resolution services. It provides a highly accessible platform to buy Bitcoin, and is principled upon its commitment to providing a truly decentralized marketplace for Bitcoin. However, the site features fewer users than typical exchanges, and the Bitcoin prices are more expensive than on larger sites.