LocalBitcoins

LocalBitcoins

LocalBitcoins
Introduction
Licensing & Regulation
Mobile Trading
Brand & Functionality
Registration Process
Depositing Process
Product Offering
Trade Execution
Banking
Customer Support
Trading Tools
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  • LocalBitcoins

Introduction

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Based in Helsinki, Finland, LocalBitcoins offers both over-the-counter and online trading in cryptocurrencies. The website enables users to place advertisements, stating exchange rates and payment options for purchasing or selling bitcoins. The advertisements are replied to by interested parties and arrangements made. LocalBitcoins has a feedback mechanism for users as well as a resolution service and within its first year of trading had over 110,000 active traders and daily trading volumes of 1,400 up to around 3,000 bitcoins.

Founded by Jeremias Kangas in 2012, who implemented the escrow system by the end of the same year, the LocalBitcoins website started trading from 2013. One year later the trading company announced the addition of bitcoin ATMs, although in the same month a security breach resulted in 30 bitcoins at the time worth US$15k being stolen and an invoicing tool was added a few months later. While around 8,000 German traders actively used the service at the end of 2014, the company was contacted regarding licencing by the Federal Financial Supervisory Authority and LocalBitcoins stopped offering services in the country. LocalBitcoins was also forced to end its services in New York state after sellers were required to have a New York State Department of Financial Services granted BitLicense. Even though the company did experience difficulties with jurisdictional laws, it continued to enjoy success, and by August 2016 it was reported that its active member volume has increased to 1.35 million and weekly transactions were estimated at US$14 million.

LocalBitcoins was also blocked in September 2016 by the executive agency of telecommunications, Roskomnadzor, in Russia. This took place after the finance ministry advised that the use of bitcoin was criminalised and the company provided users with instructions on how the restrictions could be bypassed. By December 2017, registration of new account was paused when the LocalBitcoins site experienced extremely high record-breaking traffic. By 2018 the company was at the top of the best financially performing companies in Finland and registered user volume reached 4 million.

Licensing & Regulation

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While licensing details are not displayed on the website, the use of service terms & conditions does state that the use of the services might require users to fulfil legal obligations determined by their country of residence. LocalBitcoins do not offer services to residents in countries regulated by the laws of the State of New York, the Federal Republic of Germany or Washington in the USA.

Mobile Trading

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Google Play store offers a downloadable local trader app for LocalBitcoins users enabling traders to view advertisements, send messages, trade and release or fund trades as well as handle payments. With the local trader app, mobile users can trade in several cryptocurrencies including Litecoin, Monero, Dash, Ethereum, and Bitcoin. iOS users can use the LCB Ticker v1 app downloadable from the iTunes store. The light version enables users to check the latest bitcoin news. Although traders can also access the LocalBitcoins

Brand & Functionality

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LocalBitcoins is a P2P marketplace for bitcoin exchange offers members the opportunity to trade the cryptocurrency directly from each other. Traders get to create their own advertisements, stating the payment method preferred as well as the price. Other members can browse the advertisements and buy or sell online.

LocalBitcoins enjoys use success and provides users with one of the most convenient and private way to trade bitcoins, while in several countries it is the only option available to citizens to trade in bitcoin. One of the biggest benefits is that the P2P marketplace enables users to purchase via a variety to different payment options, plus LocalBitcoins imposes no limits on selling or buying limits. While almost all trading can be anonymous, sellers of huge amounts will need to provide ID verification.

Registration Process

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In order to start selling or buying bitcoins, traders need to register a new account by selecting the “sign up for free” option. The registration form requires a username, valid email address, choosing a password, and confirming the password. By selecting the register button, terms of service notification-pop-up are displayed. The version last updated in May 2018 explains the service agreement once agreed upon the privacy policy is displayed. A verification link is sent to the email address supplied within seconds, and by following the link, the new account is active and protected via login guard.

New members gain instant access to the How to Buy Bitcoin tutorial also available via a video, which explains searching for advertisements via the user’s location, preferred currency and payment option. The website also offers a list of traders in each region. Once registered the account section also provides a QR code receiving address enabling new traders to send bitcoin via mobile once the code is scanned in, and an address is valid for a period of 12 months.

Depositing Process

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Once a new member identifies an advertisement and presses the buy option, the terms will be displayed. If the trader is happy with the posted terms, the amount can be typed in on the blue box and it is time to trade. LocalBitcoins accepts a huge variety of currencies including USD, AUD, UGX, CAD, NOK, SEK, USD and many more.

Product Offering

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LocalBitcoins enable traders from around the world to exchange bitcoins in any or their local currency. The website offers a huge variety of trading advertisements placed by traders who want to sell or buy bitcoin, while each post features the payment method and number of tradable bitcoins. Potential buyers can reply to the advertisements and agree to meet in person or trade in cash or via bank transfers. Each advertiser can determine whether they require the seller to provide his/her full name, to meet in person or to trade online. Once the trade is confirmed the bitcoins is placed in the web wallet of LocalBitcoins.

Trade Execution

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LocalBitcoins hugely differs from other online cryptocurrency traders in so far that all trading takes place through advertisements. These are either placed by members that are interested to buy bitcoins or those interested in selling. The buyers and seller trade directly with each other, which makes the process fast and easy. All payment methods and currencies used by traders are supported by LocalBitcoins, and for every transaction, the P2P company offers escrow to protect the buyer. The company do not trade and is basically a platform for traders to deal directly with other traders from across the globe and basically takes a small percentage as a commission.

Banking

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Unlike any other Bitcoin trader, LocalBitcoins do not require users to make deposits. All trading takes place between members directly. The only time a deposit is needed is when the buyer identified an advertisement they are interested in and decides to buy. LocalBitcoins supports all currencies that are used by its millions of traders as well as all banking methods. Trading can take place via local communities or internationally and protect the buyer the bitcoins are stored in the LocalBitcoins wallet.

Customer Support

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Member support is offered via a massive FAQ section that answers all the most asked questions regarding trading, commission and how to place an advertisement or trade. Several pages of guidelines are available to all members and support is available should members enter the incorrect password. Support can also be contacted by sending a message that describes the issue. These include reporting problems with advertisements, hacked accounts, disputed trades or any other queries not answered via the tutorials, FAQ or guides.

Trading Tools

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LocalBitcoins provides international and local traders to buy and sell directly from each other. The most important trading tool is the advertisements placed by members. Each member receives a bitcoin address that remains valid for 12 months. Sellers are free to ask the potential buyer for identification and buyers need to provide the sender with their receiving wallet address. Trading can take place in person, online or via iOS or Android mobile devices.

Advertisements are based on the exchange rates of bitcoin and updated every five minutes. While the prices are shown and cached, updates can be a bit slower. However, it should be noted that the purchase price is determined the moment the potential buyer sends his/her trade request.