Finland-based LocalBitcoins.com is one of the oldest P2P Bitcoin exchanges still in activity. It started operating back in 2012 and has since provided its customers with the ability to trade Bitcoin in their local currencies. Currently, it is providing trading services in 248 countries and 7815 cities. Unlike automated stock exchange-esque trading, LocalBitcoins.com is more of a vintage buy and sell platform where users post advertisements for buying and selling Bitcoin in their preferred currency, transaction range and payment method.
LocalBitcoins.com doesn’t touch the buyer’s funds, only holding the seller’s bitcoins for adding a safety layer, specially in case of a dispute. Thus, any selling ad displayed in the platform is guaranteed to have enough bitcoins to cover a new incoming transaction. Further trust between the parties is enabled by a smart reputation system which filters out traders with low trading activity.
LocalBitcoins.com enables users to transact in any payment method they want. Some of the most popular options include face to face cash deals, bank wires and electronic payment services PayPal, Skrill, M-Pesa, Neteller, Astropay, etc. For a user searching for trades in the US, the ads typically will show payment options that are regionally supported, like PayPal, Vanilla, Serve2Serve, MoneyGram, Venmo, Xoom. On the other hand, someone from Pakistan might find offers for paying using Payoneer, Neteller, Paxum and Payza. However, there’s nothing preventing you from creating an ad selling Bitcoin for sea shells – it’s entirely up to you, if you believe that someone will be interested in trading using that method.
Using the Platform
There are two ways a user can trade in LocalBitcoins.com:
- Find an existing buy or sell ad and begin a transaction
- Create their own buy or sell ad and wait for a trader
The first option is super easy and only requires basic ID verification. Then it’s simple as searching for an ad using the various filters (currency, payment method, country, etc.), select an offer and start the transaction by filling the actual trade amount respecting the offer’s specified range.
On the other hand, frequent traders use LocalBitcoins.com mostly by creating their own buy or sell advertisements and waiting for a match. The ad creation form has many basic as well as advanced options, but most importantly one must define the desired trading currency, the payment method, the trading range per transaction (such as 0.01-0.02 BTC) and a price formula, such as “10% above the current Bitcoin price at Coinbase” or “The average price from a pool of exchanges”. Typically, if you are selling you will want to add a premium over the current Bitcoin price, and buyers might want to place ads for buying at a lower price.
Regardless of the option you choose, the transactions are carried always in the same way. Once the transaction begins, the platform will move the exact amount of bitcoins being traded from the seller’s LocalBitcoin.com wallet to a special escrow wallet, meaning the seller can’t withdraw them or sell them to another user. The buyer then will pay and notify the seller, possibly attaching a proof of payment to the transaction window. Finally, when the seller is sure to have received the funds, he or she will disburse the bitcoins which will be automatically moved to the buyer’s own internal wallet.
The buyer will always have a time window (which is a parameter upon ad creation) to complete the payment – after the time window elapses without the payment being marked as completed, the transaction is automatically canceled and the bitcoins are moved back from the escrow wallet to the seller’s wallet.
In case the buyer and the seller can’t agree on whether a payment has been made, either party may start a dispute and the LocalBitcoins.com team will intervene. The outcome is either in favor of the buyer or the seller, but they take fraud seriously and will listen to both parties and ask documents if necessary.
A note for sellers: keep in mind that unlike most traditional transactions, Bitcoin transactions are absolutely irreversible. This means that in some circumstances, the payment sent by the buyer can be later reversed, but the bitcoins cannot be recovered. Make sure that you take reversibility in account when creating your selling ads – it is much easier to revert a Paypal transaction (high risk) than a bank transfer (very low risk)
After a transaction is complete, you can give a feedback to your partner trader which would account to their public profile. There are four options: Trustworthy, Positive, Neutral, Block and Block without feedback.
- Trustworthy: Gives the trader a good feedback and adds them to your trusted list where they can be contacted again.
- Positive: Give the trader a positive review and increase their reputation.
- Neutral: This does not affect the traders ranking.
- Block: In the case that you have some issues with the trader, you can block them from contacting you ever again as well as decreasing their reputation points.
- Block without feedback: If you do not want to give feedback or work again with a trader, you can block them without giving any feedback.
The feedback you give is classified into two categories: confirmed and unconfirmed. Confirmed feedback will be shown on the trader’s profile while unconfirmed is only visible to the receiving end and to the platform’s administrators.
The conditions for a confirmed feedback are:
- Trades between the two traders must be more than 0.2 BTC
- Total trade volume of the giver must be more than 5 BTC
- Feedback giver has a verified ID and a total trade volume of at least 0.1 BTC
For users who are sending and receiving Bitcoin to and from their LocalBitcoins.com wallet, there is no transaction fee. Users who want to send Bitcoin to other wallets will have to pay a Bitcoin transaction fee which depends on the volume of the transaction and the traffic volume that the Bitcoin blockchain is seeing at that time. Using LocalBitcoins.com’s merchant invoicing service, a fee of 0.5% is deducted from the paid invoice.
Earn through LocalBitcoins.com
You can also get paid in Bitcoin through LocalBitcoins.com if you bring new users to the network using your affiliate link. A new referral will be considered your affiliate for 3 months and during this period, you can earn 20% of the LocalBitcoins.com fee which the user pays. Funds are paid on a daily basis.
For the users who live in areas where they have difficulty in trading Bitcoin or are barred to do so or people who are simply looking for Bitcoin trade through online banking, LocalBitcoins.com is a quick, convenient and trustworthy option.