Bitcoin Peer-to-Peer Exchange
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LocalBitcoins is the most popular and safest Bitcoin P2P (Peer-to-Peer) Exchange on the market. Users can exchange bitcoin locally worldwide both anonymous and without any third parties. LocalBitcoins was launched in 2012 and is now used in more than 200 countries and over 15,000 cities.
You can either buy bitcoin directly from their website or meet sellers and pay with your local currency. LocalBitcoins is an open platform where people can exchange bitcoin with their own terms and payment methods. LocalBitcoins also offers an escrow service that helps buyers and sellers to make secure payments.
In markets with regulatory barriers or unreliable Bitcoin exchanges, LocalBitcoins is the best solution. Buying bitcoins with credit/debit card, cash or other payment methods such as PayPal may be difficult. LocalBitcoins, on the other hand, is a free marketplace and works in a similar way to eBay or Craigslist, but for Bitcoin.
LocalBitcoins has many more options and payment methods than other Bitcoin exchanges. Local exchange means that you can meet the person and pay with cash, which is not possible at normal exchanges. LocalBitcoins offers the most anonymous way to buy bitcoins today.
However, we recommend that you only buy online at LocalBitcoins as it is safer. Besides, LocalBitcoins has no fees to buy bitcoin! In this review, you will learn everything you need to know to safely trade bitcoin on the P2P exchange. We go through all pros and cons with LocalBitcoins and all platform features.
How Does LocalBitcoins Work?
LocalBitcoins lists buy and sell ads for bitcoin in over 200 countries around the world. It’s a meeting place for people who want to trade bitcoin and is based on a reputation system. There are many security measures available, but if a LocalBitcoins profile has a bad reputation or negative feedback, users will avoid trading with the person.
In this way, the P2P exchange has a self-regulating and fair system. All users can create ads on the site and decide exchange rates, payment methods, and other options. Other people can respond to the ad and accept the terms of purchase. We will show you how to create a buy and sell advertisement.
LocalBitcoins offers an escrow service with an online wallet that receives and sends bitcoin to prevent conflicts between the buyer and seller. For new users with no transaction history, there could be others that deny trading with them because of uncertainty.
When you have opened a new account, you should make some smaller transactions to improve the reputation of your profile. The more bitcoin you exchange, the easier it will get because your profile becomes more reliable.
It’s also important to point out the price difference to buy bitcoin at the exchange. The exchange rate is decided by the seller and can vary widely depending on country, payment method and terms. The main reason behind the price will be the payment method being used.
For example, in most cases paying with Visa/MasterCard or PayPal is more expensive as it is riskier for the seller. The payment can be reversed with these options under certain circumstances.
In this review, we will explain in detail how to choose a seller and securely buy bitcoin. If you use precautionary measures and follow our security rules, you don’t need to worry about scams.
Experience of Customer Support
LocalBitcoins has a helpful customer support, but availability can be improved. They usually answer within 1 hour, but it may take up to 24 hours for a response. During the weekend, it takes longer to get help from their customer service, usually 24-48 hours.
The advantage is that LocalBitcoins has a comprehensive FAQ section with answers to frequently asked questions and guides to help users. Their customer support is also available on social media and forums to help their users. You will find LocalBitcoins on Facebook, Twitter, and Reddit.
If you have any questions that are not answered on their FAQ page, we recommend creating a post on their forum. However, if you have any problems, you should contact their customer service with a support ticket. You can also contact the support on the forum or tweet to LocalBitcoins.
LocalBitcoins is undoubtedly the best Bitcoin P2P exchange on the crypto market. It’s not a traditional exchange but is the safest option if you want to be completely anonymous. You can buy bitcoin by credit/debit card, cash and many more payment options depending on the seller.
If you want to protect your identity and pay with your local currency, LocalBitcoins is the best choice. But for beginners, it can be easier to buy bitcoin on regular exchanges such as Coinbase or CEX.IO. However, even though it’s easier there are not as many payment methods available, and identification is usually required.
The P2P exchange is also a good option for international transfers. If you need to transfer money between countries, it will take several days if not weeks with a regular bank transfer. The fee can also be expensive. LocalBitcoin is a great option for exchanging currencies with bitcoin and quickly and cheaply transfer money.
LocalBitcoin makes it possible to completely decentralized and anonymously buy Bitcoin free of charge! At the end of the review, we will help you an open account and buy/sell bitcoin at LocalBitcoins.com.
LocalBitcoins have been around for a long time. It’s one of the oldest exchanges in the bitcoin market. The company was founded in June 2012 by Jeremias Kangas, programmer, and entrepreneur. LocalBitcoins quickly became popular and spread throughout the world.
The escrow service system that protects users was implemented in the marketplace by the end of 2012. LocalBitcoins started to generate revenue early in 2013. Today, the exchange is located in over 200 countries and 15,000 cities with headquarters in Helsinki, Finland.
The company announced in August 2016 that LocalBitcoins had 1.35 million users from 249 countries on the platform with a trading volume of over 50 million dollars a month. The P2P exchange is available worldwide with the exception of Germany and New York due to local regulations.
LocalBitcoins is known as eBay/Craigslist for Bitcoin that matches buyers and sellers. People can advertise about bitcoin and exchange online or meet face-to-face. The bigger the country or the city, the higher the chance of finding a good deal. Great Britain is one of several countries where LocalBitcoins are very popular.
Mr. Kangas, founder and CEO, has always been sincere with the business. The company doesn’t release financial audits, but the business model is transparent. LocalBitcoins is very scalable and appears to be financially stable with low marginal costs. If a security breach has occurred, the company has conducted self-audits, published the results and compensated all its customers.
LocalBitcoins has a responsive and mobile-friendly interface but not the most inviting site compared to other exchanges. The website doesn’t have a modern design but is easy to use. At the end of this review, you will find screenshots of the exchange.
Open an account at LocalBitcoins is easy and only takes a few seconds. We will help you to open an account and trade Bitcoin safely on the exchange. There are two ways to buy/sell bitcoin on LocalBitcoins: online or face-to-face.
Users can safely buy and sell bitcoin online with their escrow service. LocalBitcoins stores and protects users bitcoin in their online wallet. If you’re a buyer and the seller doesn’t send your purchase, LocalBitocins will refund your money and punish the seller. If you are a seller, you will be protected until the buyer pays.
LocalBitcoins has a safe and well functioning system. We have had no trouble buying or selling bitcoin on the marketplace. LocalBitcoins helps users to distinguish between serious sellers and scammers. Further down the review, we will help you choose a professional seller and avoid scams.
For new users at LocalBitcoins, it can be harder to buy/sell bitcoin. There may be sellers who don’t want to trade with you because your profile lacks transaction history and good ratings. However, your profile will gain feedback over time and it will get easier to complete trades.
Aside from the fact that buying bitcoin for new users is not as easy, the user experience is very good. If you are patient and follow our advice in this review, you will have no trouble buying bitcoin at LocalBitcoins.
Payment Methods and Fees
|Buy or sell (without ad)||Free|
|Buy or sell as advertiser||1% when using escrow service|
|Transfer bitcoin to LocalBitcoins wallet||Free|
|Transfer bitcoin to third-party wallet||0.0001 – 0.0010 XBT (depending on network traffic)|
|Merchant billing service||0.5% per invoice|
LocalBitcoins has minimal fees if any at all. As you see in the price table above, LocalBitcoins has favorable and low fees compared to other Bitcoin exchanges. All payment methods are available, and there are no buying and selling limits on the marketplace. The seller and buyer determine the bitcoin price and payment method. It is an open market, and therefore the price will vary.
If you buy bitcoin, there is no fee. The same applies if you sell bitcoin by accepting a listed ad. In other words, it’s free to buy and sell bitcoin without advertisement. There are no fees to pay with cash. For users who buy and sell as an advertiser, the fee is 1% if they use the escrow service.
It’s free to transfer bitcoin between LocalBitcoins wallets, but there is a small fee for sending bitcoin to an outside wallet. The fee varies between 0.0001 – 0.0010 bitcoin depending on how much traffic is on the bitcoin network. This price feels reasonable considering there are few other fees.
Sellers have no extra fees, but as said, the exchange rate for bitcoin varies. The price of bitcoin depends mainly on the payment method you use. For example, it’s usually more expensive to pay with PayPal or Visa/MasterCard on cryptocurrency exchanges. The reason is that the seller is exposed to a higher risk. Under certain circumstances, the payment can be reversed, and therefore the exchange rate will be higher.
One advantage of buying bitcoin on LocalBitcoins is all the different payment methods available. The advertiser can choose any payment method they want. Examples of some payment methods:
- Bank transfer
- SEPA transfer
- Amazon gift card
- Google Wallet
- Western Union
- Cash (sent by mail)
- Cash (face to face)
- Other local payment methods
Security and Protection
LocalBitcoins uses several security measures to protect users and their money. The exchange has its own online wallet where private keys are stored and protected. The company has said that they use cold storage for a majority of bitcoins on the platform. This means that private keys are encrypted and protected offline.
It is important to understand that bitcoin trading without their escrow service is more risky. In that case, LocalBitcoins cannot protect your money and help you make a secure transaction. When you are done trading bitcoin, we strongly recommend that you transfer your bitcoins to a private and secure bitcoin wallet. You should not store bitcoin at exchanges.
LocalBitcoins also has a whitehat program for security experts. The company pays individuals who find bugs on their platform. This creates an incentive for users to improve the security. LocalBitcoins whitehat program is powered by Cobalt, a crowdsourcing platform.
Here are different types of security measures that LocalBitcoins uses to protect user accounts. It includes their reputation-based framework, escrow service, two-factor authentication, login guard, and support to help resolve conflicts between users. We’ll go through them all in detail below:
- Reputation-based framework: All profiles are rated by users, and their transaction history is public on the exchange. This is a self-enhancing framework that protects users from scammers. Your ranking works similarly as on eBay or Amazon.
- Escrow service: LocalBitcoins offers an escrow service that protects both buyers and sellers. The exchange then acts as an intermediary that stores bitcoin from the seller until the buyer has paid. Once the seller has confirmed that the payment is completed, the buyer gets his bitcoin. This is a proven safe system.
- Two-factor authentication (2FA): We recommend that all people use two-factor authentication no matter which bitcoin exchange. It’s a standard way to protect your account from being hacked with an additional PIN code. The easiest way is to install Google Authenticator on your mobile and then activate 2FA on LocalBitcoins.
- Login guard: The website has a login guard that controls that you are using the same browser after login. If it changes, you will need to verify yourself with your email address.
- Support and conflict resolution: LocalBitcoins has a support team that answers questions and helps users. The customer service also resolves any conflicts between buyers and sellers. In the next sections, we will help you avoid conflicts.
How to Choose a Seller
Choosing a seller on LocalBitcoins should not be done spontaneously. There are several things to check, and you should read this section before selecting one. We list tips and advice on choosing the best seller. There are stories on the Internet about people who have been tricked by users on LocalBitcoins. But a clear majority of advertisers are professional, and if you follow our security rules, you can’t be scammed.
Below we have a checklist that you should use to evaluate and select a seller. Once you have found a good seller, there are some rules that you should follow when exchanging. All the different payment methods and options can seem overwhelming for beginners. At the end of this review, we will help you buy bitcoin with easy and clear step-by-step instructions.
What to think about
The first and most important thing is not to choose a seller solely based on price. This is a common mistake for beginners, which can result in conflicts or, at worst, fraud. If someone offers a bitcoin price that is significantly better than others, the person may try to fool new users.
If it seems too good to be true, it probably is. When selecting sellers, you need to check their profile to make sure that the user has a good reputation. There you can see transaction history and recommendations from other users. Make sure that the person has not received any complaints or unresolved conflicts before trading with them.
It may be worth paying 5% more if the advertiser has an established reputation. You should also be aware that buying ads can attract scammers. Therefore, read our section “Setting up Advertisement” before publishing a buy or sell ad.
Checklist for the seller’s profile
These are criterias that the seller should fulfill before you trade bitcoin with the person. If you visit the user’s profile, the following information will be clearly displayed. We don’t say that the users must fulfill all criterias. This is more supposed to serve as guidelines:
- Trade volume: The profile should have completed trades for 100 BTC minimum.
- Number of confirmed trades: At least 100 trades with 100 different users.
- Feedback score: User feedback score should be at least 98% last months.
- Account created: It’s good if the user account has existed for more than 1 year.
- Verified information: The profile needs to have verified its e-mail address, phone number, and identification.
- Trust level: There should be over 10 people who consider the profile reliable and no one who blocks the user.
Communication with the seller
Once you have chosen a seller, send a message to request a trade. There are some important things to consider when communicating with the seller. Do NOT do the following when contacting the seller:
- When your request is complete, send no more information before the seller answers you. (If it’s the first time you buy, never share your bitcoin private key!)
- Do not send any payment information outside of your LocalBitcoins conversation. (Avoid sending emails, texts, and phone calls.)
- Do not accept a trade outside LocalBitcoins. (We don’t recommend meeting any seller. In that case, you will not be protected by the LocalBitcoins escrow service.)
How to Avoid Scams
Some users have been scammed on the marketplace because they don’t follow some general safety rules. A common denominator for these users is that they didn’t use the escrow service. You need to use their escrow service for LocalBitcoins to be able to protect you against fraud.
LocalBitcoins is a secure exchange to buy and sell bitcoin, but users have a responsibility to educate themselves about potential risks with peer-to-peer trades. In the section above we talked about how to choose a good and safe seller on LocalBitcoins.
Below we have listed general safety rules that help you avoid scams. LocalBitcoins also has a Fraud and scam warnings page where users can help each other to trade bitcoin safely. In the next section, you can learn more about risks with P2P exchanges.
General safety rules
- Use our checklist when selecting a seller. In the section above we have a checklist to help you choose a good seller.
- Avoid ads with unusual bitcoin prices. If it seems too good to be true, it probably is. People who try to fool others usually set an unusually low bitcoin price to attract inexperienced users.
- Do not buy bitcoin outside LocalBitcoins. The risk of fraud is higher if you meet the seller face-to-face. You are also not protected by the escrow service and can lose your money.
- Avoid unusual payment methods. We advise against using unusual payment methods such as gift cards, which LocalBitcoins consider a high-risk option.
- Always use their escrow service! Check that the payment method uses LocalBitcoins escrow service to protect yourself against scams.
Risks with P2P Exchanges
There are, of course, risks of buying and selling bitcoins between individuals. However, if you follow our general security rules listed above, you don’t need to worry about buying/selling bitcoin on LocalBitcoins. For readers who are interested in learning more, we talk about the main risks of P2P exchanges below.
Sybil attacks: Because LocalBitcoins is a platform based on user rating, there is a risk of “Sybil attacks”. This means that a person creates multiple user accounts and manipulates the rating. The person can then trade bitcoin between his user accounts and create a false positive reputation. This can be recreated again and again until LocalBitcoins finds a connection and closes the network. But we would not worry about this if you follow our checklist for the seller’s profile.
Cash transactions: There are a variety of risks associated with exchanging bitcoin for cash. If you search the internet, you will find people who have been fooled by cash transactions. Everything from counterfeit bills to threatening people. Also, if the counterparty is criminal and is laundering money, you can be convicted of a crime. However, if you’re going to trade bitcoin with cash, only meet in public places and require identification. To avoid these risks, you should use the escrow service at LocalBitcoins.
Escrow lock-in: Even if you can’t lose your money with their escrow service, your money can be locked for your advertisement. The buyer has 90 minutes to complete the payment before the escrow service pays back the money to the seller. However, if the buyer is lying and claiming that the payment has been completed, your money can be locked in for a period. How long your money is locked depends entirely on LocalBitcoins customer service.
Setting up Advertisement
Here we will help you create an ad to buy or sell bitcoin. Sometimes it can be challenging to find a good match among existing ads. If so, you can create your own ad on LocalBitcoins.
If you want to buy bitcoin, we recommend that you choose an existing ad because it’s easier. At the end of the review, we have done a bitcoin buying guide for LocalBitcoins. But if you want to sell bitcoin, there are many opportunities to earn money on the P2P exchange.
We want to pay attention to the risks with different payment methods for those who plan to sell bitcoin. PayPal is an example of a popular payment method that is risky for the advertiser. The seller is not protected by any terms, and the payment can in some cases be reversed after the transaction has been completed. We encourage you to check the risk level shown when you select payment method on LocalBitcoins.
How to create an ad
- You need to open an account if you don’t already have one. In the next section, we have clear step-by-step instructions for opening an account on LocalBitcoins.
- When you’re signed in click on “Post a trade” in the navigation menu to create a buy or sell advertisement.
- First, choose if you want to buy or sell bitcoin online / locally and in which country you sell.
- The last is to choose the payment method. Depending on the payment method you choose, more information is needed.
- For more information, please fill in the info required for your payment method and more. It includes price, buying limits, opening hours, terms and conditions for users to trade with you, etc.
- Once you have filled in all the information required and your conditions, you can click on “Post advertisement” and your ad will be published.
1. Registration of Account
Opening an account on LocalBitcoins is free and couldn’t be easier. All you need to register an account is a username, email, and password. Then you need to verify that you’re not a robot with reCAPTCHA. When you have filled in all the information and clicked on “Register” you will be logged in directly to your account. Here you can open an account at LocalBitcoins.
2. Verification and Information
When you’re signed in, you’ll need to verify your email address before you can start exchanging bitcoin. It is also recommended that you verify your phone number and identity to make it easier to buy and sell bitcoin. In the navigation menu under the user icon, click “Edit Profile” to submit the information. You can be completely anonymous, but it means that fewer users will trade with you.
3. Start Buying/Selling Bitcoin!
Now you’re ready to start exchanging bitcoin. Use our checklist in the section “How to Choose a Seller” and search ads on LocalBitcoins. When your profile is new and lacks transaction history, it may be difficult to purchase bitcoin with some payment methods. Over time, your profile will gain confidence and make bitcoin trading easier. To help get you started, we have made a buying guide and selling guide below.
Bitcoin Buying Tutorial
We have made a guide to help you buy bitcoin at LocalBitcoins. If you have opened an account on LocalBitcoins and verified your profile, there are many buying options. LocalBitcoins has a good video tutorial on how to buy bitcoin that we have included below. Under the video, you can follow our easy step-by-step instructions to buy bitcoin directly!
1. Create Account
Above we went through how to open an account on LocalBitcoins, which only takes a few seconds. All you need to enter is a username, e-mail, and password. You will be logged in directly but need to verify your email address before you can start buying bitcoin. Here you can open an account at LocalBitcoins.
2. Search for Ads
On the homepage, you can search for ads. Enter how much you want to buy with your currency, which location and choose a payment method. You can also select “All online offers” to compare different payment methods on the exchange.
3. Choose an Ad
From the list, you choose an ad from a seller that have done many transactions and has a good reputation. You should also check the indicator next to the username which displays the response time. The color of the indicator depends on whether the seller responds within minutes (green), within 30 minutes (yellow) or slower than 30 minutes (gray). Click on “Buy” for more information about the ad.
4. Send Trade Request
You will find terms of purchase and all information required in the advertisement. To send a trade request, fill in how much you want to buy along with a message and click “Send trade request”. Make sure you’re ready to pay when you click the button. If you don’t pay on time, the transaction will automatically be canceled.
5. Buy bitcoin!
Now you can buy bitcoin by paying and clicking on “Mark payment complete”. Once the seller has verified your payment, LocalBitcoins will transfer the seller’s bitcoin to your wallet on the exchange.
Bitcoin Selling Tutorial
It’s easy to sell bitcoin and earn money on LocalBitcoins. To create a selling ad, we recommend that you read the section “Setting up Advertisement” above. On the other hand, it’s easier and faster to choose an buying ad listed on the exchange. Below we have made a guide with simple step-by-step instructions for selling bitcoin directly!
1. Create Account
Above we went through how to open an account on LocalBitcoins, which only takes a few seconds. All you need to enter is a username, e-mail, and password. You will be logged in directly but need to verify your email address before you can start selling bitcoin. Here you can open an account at LocalBitcoins.
2. Transfer Bitcoin
Before you can sell bitcoin, you need to transfer bitcoin to your LocalBitcoin wallet. Click on “Wallet” in the navigation menu and transfer your bitcoin to the address. If you need help, there is a video guide below:
3. Search for Ads
On the homepage, you can search for ads by clicking on “QUICK SELL”. Enter how much you want to sell with a currency and choose a payment method. You can also select “All online offers” to compare different payment methods on the exchange.
4. Choose an Ad
From the list, you choose an ad from a buyer that have done many transactions and has a good reputation. You should also check the indicator next to the username which displays the response time. The color of the indicator depends on whether the seller responds within minutes (green), within 30 minutes (yellow) or slower than 30 minutes (gray). Click on “Sell” for more information about the ad.
5. Send Trade Request
You will find terms of purchase and all information required in the advertisement. To send a trade request, fill in how much you want to sell along with a message and click “Send trade request”.
6. Sell Bitcoin!
Once you have submitted the selling request, the buyer will ask for payment information (for example, your account number if the user pays by bank transfer). The buyer will then confirm the payment, make sure you have received the money and then click on “Release bitcoins”. LocalBitcoins then transfers your bitcoins to the buyer, and you have sold bitcoin.
Screenshots of LocalBitcoins
Pros and Cons with LocalBitcoins
- Instant and secure Bitcoin Exchange
- Anonymous (no ID verification required)
- All payment methods available
- No buying or selling limits
- Available in over 200 countries
- Need to keep an eye for scams
- Rates set by sellers (some unreasonable prices)
- Basic website interface (see screenshots above)