LocalBitcoins Review: Close Examination and Real Feedback from Users
Finding a trustworthy cryptocurrency exchange can take a lot of digging until you find the right one for your needs. In my case, I came across LocalBitcoins and was excited to discover an exchange that seemed right for me.
Unfortunately, I soon realized the exchange is no longer active — the “sign up” button had mysteriously disappeared from the site.
This led me to wonder: Why? How could such a popular exchange discontinue its services after the success they’d had? And are there any warning signs from this case that can tip us off to cryptocurrency exchanges headed for closure?
LocalBitcoins was a major exchange that emerged at the forefront of most exchanges I found. It made peer-to-peer sales of Bitcoin very easy, hence its popularity.
LocalBitcoins was available in over 13,774 cities and in multiple languages, including Chinese, Russian, German, English, Portuguese, French, and Italian support on the platform. However, in the United States, only ten states approved LocalBitcoins for use.
What happened to LocalBitcoins, and will it ever resume operations? Read on to find out.
Advantages and Disadvantages of the Crypto Exchange
Let’s start by exploring some of the advantages and disadvantages I found while reviewing the crypto exchange.
First, let’s look at what made the exchange successful:
Pros
- Supported multiple fiat currencies on its platforms, which made it suitable for individuals from different locations to use.
- Supported multiple payment options, including Skrill, wire transfer, credit card, and debit card.
- There was a peer-to-peer (P2P) Bitcoin purchase on the platform, making it interactive for Finnish investors.
- Transaction fees were kept low on the platform.
- Ran a bounty reward program to maintain a high level of security.
Next, some complaints that users had during their time on LocalBitcoins:
Cons
- The platform only offered Bitcoin as the sole cryptocurrency on its platform — no crypto coins like Ethereum, USDT, etc.
- The exchange fee on the platform was on the high side.
- The platform had a limited number of advanced features for users to use and a limited regulatory body overseeing its operation.
- The platform requested certain private information and details, which scared away users who wanted to keep their identity private.
- The interface was difficult to use and not as streamlined as other competitors.
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Regulation on LocalBitcoin
LocalBitcoins was a licensed crypto exchange under the Finnish Financial Supervisory Authority (FIN-FSA) under the business ID 2855415-2 and has a VAT ID, FI28554152. This is clearly available for you to see when you visit the site.
Aside from the mentioned regulatory authority above, LocalBitcoins isn’t licensed by any other authorities compared to its counterparts registered to different authorities such as the Financial Conduct Authority (FCA). However, since it didn’t offer crypto assets, the limited focus on license is very understandable.
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Transaction Fees
This is rare among crypto exchanges, but transactions on LocalBitcoins were entirely free. You could buy and sell on the crypto exchange without any fee or charge. Also, sending Bitcoin to other LocalBitcoins trading accounts was free — a mind-blowing and very attractive feature for crypto enthusiasts.
So how did LocalBitcoins make their money? It was mostly made from the exchange rate and when creating advertisements on LocalBitcoin. Creating an ad simply meant putting your Bitcoin for sale or purchase on the platform.
This incurred a fee of 1% on the total transaction cost. Also, the typical network fee is charged when transferring your Bitcoin, but LocalBitcoins did not control this fee.
I also found out that the advertisement fee was avoidable. To do this, you could simply respond to adverts from other buyers or sellers. You didn’t have to worry about not seeing an active ad since the exchange was always active.
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Buy Limits
There were no trading account types on the exchange; rather, there was a purchase or buy limit for every user, depending on your verification tier. There were four levels of verification on LocalBitcoins; you move higher depending on how convenient you’re sharing certain information.
- Tier 0: Account limit of €1,000 per year. Users who provide their name, country, email address, and phone number were placed on this level.
- Tier 1: Account limit of €20,000 per year. Users on this level were required to complete extra KYC steps and provide their residence address and ID.
- Tier 2: Account limit of €200,000 per year. Required to provide proof of residence in addition to T1 verification.
- Tier 3: This account comes with no limit; extra ID required for verification.
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Security and Safety
Beyond regulations, limits, transaction fees, and the buying limit, I looked into the security and safety of the broker.
This is important to me because companies dealing with or managing a high volume of transactions need to be vigilant with security measures.
From my research, LocalBitcoins established specific criteria to guarantee users’ safety and security:
KYC (Know-your-customer):
KYC was embedded in LocalBitcoins’ operations starting in 2019 to verify users’ identities and assess customer risk. With KYC, there’s an assurance that there will be a lessened possibility of money laundering and fraud, even for a supposed dedicated customer.
Two-factor authentication (2FA):
Using a 2FA is one of the best ways to secure popular exchanges. Users require two passwords to access any 2FA-enabled account. The first password you know, and the other password is a code sent to your mobile number or a registered means, although this selection is optional.
LocalBitcoins also required email verification upon registering an account.
Escrow:
The availability of an escrow on a marketplace like LocalBitcoins is essential. Here, funds are under the custody of LocalBitcoins escrow until certain conditions are fulfilled. This method limits the possibility of anyone absconding with your funds.
Other options were used to secure the platform, including support and conflict resolution, where the LocalBitcoins team answered crucial questions to resolve users’ problems.
Among the details that LocalBitcoins required were a government-issued ID card, financial status, primary address, reason for use, financial situation, and activity type, are requested while registering on the platform. However, many users, including myself, consider this verification process a flaw that interferes with the autonomy and decentralization of crypto.
The level of security by LocalBitcoins is comparable to other P2P exchanges; even experts agree. Some experts acknowledge that some digital currency exchanges, including some of the largest cryptocurrency exchanges, stock exchanges, and virtual currency providers, approach security like LocalBitcoin.
Aside from your Bitcoin, you could not store other crypto assets or digital assets on the trading platform, which isn’t what we’d want.
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Training And Education
In the words of famous American businessman Michael LeBoeuf “A SATISFIED CUSTOMER IS THE BEST BUSINESS STRATEGY OF ALL.”
Training on LocalBitcoins was solid, but it wasn’t adequately structured on the website for beginner or advanced traders. Some experienced traders won’t find anything valuable there; I barely did — some popular crypto exchanges also suffer from this.
- There were a couple of videos, tutorials and writing in the guide section, which settles most of the questions you have on your mind. From security guides, how to buy and sell Bitcoin, and account verification guides to advertisement guides. The section is fully packed for you.
- The blog contained details about the crypto exchange, global Bitcoin news, feature/product upgrade, and general information. Other than that, you won’t get any critical pieces in building a Bitcoin trading strategy. You’ll need to find an alternative if you want to learn more about Bitcoin or crypto investment strategies.
- One aspect I loved about LocalBitcoins is the “frequently asked questions (FAQs)” section. It was loaded with a wide variety of necessary information. It had six sub-sections: personal data, creating advertisements and trading Bitcoin, common problems and solutions, using LocalBitcoins, about Bitcoin, and getting started.
LocalBitcoins definitely had a more fleshed-out FAQ than most competitors, with over 50 published articles altogether in this category.
Right below the FAQs, specific crypto terminologies were explained, like online Wallet, transaction, Sepa, Satoshi Nakamoto, Satoshi, P2P exchanges, multisig, mining, LBC, hot wallet, crypto wallets, cold storage/Cold wallet, blockchain, AML and KYC, and several others.
Based on the above recommendations, you will learn how to use digital and fiat money with maximum benefit and work with them in your outlets, including online stores. Unlike other top exchanges, there are no resources on topics such as technical and fundamental analysis or on technical indicators such as RSI, Cup & handle, and head and shoulders.
Another essential point that every user of Localbitcoins Demo should remember is the mass of advertising information, which is improving yearly. These factors indicate an increase in the professional training of developers of such products.
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Deposit And Withdrawal
Numerous payment methods were available for depositing and requesting a withdrawal while using LocalBitcoins:
AdvCash;
SWIFT;
OKpay;
Wire Transfer;
Moneygram;
Web Money;
Bank transfer;
Plastic cards (Visa, MasterCard, etc.).
LocalBitcoins was the choice for many because there were no charges when selling or buying Bitcoin, unlike crypto wallets, and it doesn’t use any advanced features to complete. However, a 1% escrow fee is charged on completed trades to the Bitcoin seller.
That is, it was free for buyers. You received the real money directly into your bank accounts. There was no detail about the maker and taker fees. An advanced trading platform offers lower escrow fees which might change even on a daily basis.
Note: the usual Bitcoin network transaction fee applies to all transactions made.
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Bounty And Reward Program
To further secure their exchange, LocalBitcoin had a scheme where individuals or you as a user could report security and vulnerability issues of the platform through responsible disclosure. In essence, LocalBitcoins paid for security and vulnerability researchers who identified bugs that posed a risk to the platform and its client. It was certainly a unique approach.
LocalBitcoins, on its website, made a list of areas where vulnerabilities are of major concern to them, which are Stored and reflected XSS, RCE / command injection, SQL injections, XML injections / XXE, Serious data leakage vulnerabilities, CSRF or broken session management with exploitable PoC, SSRF, and Authentication and authorization flaws.
The team provided an email to report any vulnerability issues and a public key block to encrypt any security issues if found (this is a secure way to identify the vulnerabilities without allowing bad actors to spot these issues). In addition, bounty hunters (those who spot the problems) received payment following the analysis of the LocalBitcoins team on the relevance and risk level of the bug detected.
Beyond this bounty, there were no free ways to earn crypto assets since trading signals or other advanced features like copy and social trading.
Frequently Asked Questions
How Trusted Was LocalBitcoins?
Although there is an absence of varieties of cryptocurrencies on the platform, LocalBitcoins was a very trustworthy platform for any crypto trade, and it was licensed by the Finnish Financial Supervisory Authority, which added to its layers of security and credibility. The platform has made an appearance on Bloomberg and Forbes.
Why Is LocalBitcoins Closing its Service?
The platform claims to be ceasing Bitcoin transactions on its platform because of a decline in its trading volume. If the platform copied other P2P exchanges and offered Bitcoin, Ethereum, and other crypto assets, it would be a liquid exchange.
Can I Trade Another Cryptocurrency on LocalBitcoins Aside from Bitcoin?
No, you cannot. There are no varieties of cryptocurrencies. You’re only allowed to trade strictly Bitcoin on the platform, nothing more. Crypto investors looking to trade on the platform can ensure it operates based on industry standards.
Why Does LocalBitcoins Not Have Training?
The reason behind this is unclear. If you want to learn about the crypto landscape and how to trade and develop strategies, consider doing in-depth research on other platforms.
Is Crypto Safe to Invest In?
Yes, it is. But you need to be aware of the volatility of the crypto assets and have a deep understanding of how the financial markets work and the wide variety of crypto assets. In a world filled with many, I did find one called LocalBitcoin.
LocalBitcoins was a crypto exchange that emerged at the forefront of most exchanges I found. It made peer-to-peer sales of Bitcoin very easy. And has since provided value and a myriad of opportunities for many through its Bitcoin sales.
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More About LocalBitcoins
LocalBitcoins was a Finnish Bitcoin exchange operated by a peer-to-peer (P2P) system. It means transactions of crypto assets between two individuals; one is willing to buy crypto, and the other is willing to sell.
LocalBitcoins was founded in 2012, a few years after the creation of Bitcoin, by computer programmer Jeremy Kangas and has scaled into operating in some of the world’s foremost countries. According to current statistics, LocalBitcoins is available in over 13,774 cities.
Since there is no variety of cryptocurrencies like Bitcoin, Ethereum, XRP, etc., that you’ll usually get on other exchanges, it’s limiting for people in LocalBitcoin’s operational cities.
Being reliable stands at the company’s vanguard with a series of updates, features, and transitions it has taken to meet this end. Some prominent examples include the addition of KYC (know-your-customer) to boost the layers of security and the distinct languages supported on the site, including Chinese, Russian, German, English, Portuguese, French, and Italian.
Due to government restrictions, LocalBitcoins isn’t available in certain Jurisdictions in the United States; only ten states have access to it: Illinois, Kansas, Montana, New Hampshire, New Jersey, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin.
It is open to everyone, with no interference from the web administrator, giving you more freedom to experiment with trading styles. You also get to convert your cryptocurrency into your local currency with the help of blockchain transactions.
So far, LocalBitcoin has maintained the position of solid exchange. LocalBitcoin has one of the safest wallets with a high level of security, a low-fee platform, advanced trading tools, and several additional features.
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