We are all witnesses to bitcoin’s gigantic growth spurt in last few months since the hard work in August. That kind of trend can happen with any coin out there in cryptocurrency markets, providing an abundance of opportunities for investors. Thus, it is important to find the right trade source where you, as a trader, can get most of the investment.
For that reason, this review is here to cut the time you would need to analyze LocalBitcoins, one of the most popular P2P platforms on the planet. Sit tight as we take you to a ride through the exchange, providing you with vital information about platform’s fees, accepted payment methods, verification and security.
Account Creation and Verification
Registering an account at LocalBitcoins is a very simple process, done under 5 minutes of your time. All you have to do is to provide your username, email and password and voila! You have an account at LocalBitcoins after you verify your email.
Now we reach the point where we can consider the first major advantage of the platform – verification process. What you wish to provide is completely down to you, since LocalBitcoins offers a choice for its clients to operate as unverified, semi-verified and fully verified traders.
Identity check is quite easy to do, as you need only your scanned ID, visible on all four corners of the paper.
When it comes to purchasing, LocalBitcoins trades exclusively bitcoins while other altcoins, such as Ethereum and Litecoin, are available only as payment options. You cannot purchase those using credit cards or PayPal.
LocalBitcoins excels in the field of payment methods available for clients. You have over 50 methods at your disposal, no matter where you live. A large number of fiat currencies are also a plus due to a large number of buyers and sellers.
You can use PayPal, credit or debit cards, bank transfers, OKPay and many other funding channels to get BTC. LocalBitcoins and Paxful are two out of a few exchanges that accept PayPal for Bitcoin. Read more about how to buy Bitcoin via Paypal in our blog.
Fees and Exchange Rates
Buying and selling coins at LocalBitcoins is completely free while trade ads you post on the platform carry 1% fee. Sending BTC to internal accounts would not cost you anything, while external transfers come under miner fee, equivalent to $1.92 in bitcoins. Merchant invoice service fee stands at 0.5% of the transaction’s value.
The exchange rate also depends solely on traders, as inventors decide what kind of BTC price they wish to post. With that in mind, the spread is quite narrow, as individuals tend to compete with others.
Overall, very cheap way to buy and sell digital money though you should be aware that banks and e-payment systems such as PayPal and Skrill have their own cost structures. Have them in your calculations when buying bitcoins.
The exchange functions as a singular market where traders from all over the world post ads and trade with BTC. Thus, the liquidity of the digital money depends solely on a number of traders involved. So far, LocalBitcoins is one of the largest P2P platforms out there, meaning that liquidity here is not an issue.
Although we consider this as a clear advantage, you should be aware that individual ads are prone to have small volumes available for purchase or sale.
LocalBitcoins started as an online project in Finland by Nicholas and Jeremias Kangas in 2012. Since then, the start-up had ups and downs that need to be mentioned. Firstly, the hacking incident in 2014, when 30 bitcoins (then-value $15.000) were stolen from users, damping the reputation of the company. In the same year, the platform ceased to operate in Germany as it failed to provide licensing documents to the regulative bodies.
Apart from the incidents, the business grew its customer base from 110.000 in 2013, to over 1.3 million in 2016. It is now one of the biggest P2P platforms in the world, operating in almost every country around the globe.
The security functions at LocalBitcoins can barely be called adequate in our opinion. You have two features that you can use, which are available everywhere else:
- two-factor authentication (2FA) and,
- login guard.
The 2FA would add another login factor when entering the website while login guard would accept entrances only from approved browsers.
The last function that relates to trade is escrow service that keeps the seller’s coins in hands of LocalBitcoins until the transaction has been confirmed by both sides.
Pros and Cons
⬤ verification of identity not mandatory
⬤ low trading fees and narrow exchange spread
⬤ deep liquidity due to a large number of traders
⬤ the abundance of payment methods options and fiat currencies
⬤ only bitcoins available for purchase
⬤ the platform was hacked in the past
⬤ only few security functions available
⬤ scams and money-laundering activities confirmed in the past
All in all, if you have small funds or volumes of bitcoins to buy/sell, LocalBitcoins is a good place to be. It is a good starting ground for beginners while people who are more seriously into cryptocurrencies would find the platform lacking in services. Only bitcoins are available for sale and security features are limited in numbers and scope.
Taking into account that security is low and BTCs stolen in the past, keep your wallets away from the exchange.