The blockchain may be uniform and democratic, but the process of buying Bitcoin around the world can be quite the opposite. To this view, exchanges such as LocalBitcoins are making it easier to trade bitcoins globally.
This is proof that buying into Bitcoin is becoming easier across the globe, and trading portals are proliferating for citizens everywhere.
Supported by a peer to peer network, the LocalBitcoins exchange allows one to buy Bitcoin directly from another trader. LocalBitcoins allows the user to skip overheads and receive payment immediately. The exchange also offers an escrow service to enable a truly decentralized trading experience.
The benefits of using LocalBitcoins
Private and pseudonymous
Staying true to the pseudonymous nature of most blockchains, LocalBitcoins is one of the most private ways to purchase bitcoins. Users can be rest assured that they will not be identifiable when they trade their bitcoins for cash. Some forms like bank transfer do need the user to be identifiable.
With over 1MM users from over 249 countries around the world, LocalBitcoins allows the user to access trade options almost anywhere. In some countries, it is the only available method to obtain or purchase bitcoins.
LocalBitcoins operates on a reputation system whereby traders are responsible to earn a reputation score. The better the users’ scores, the more trustworthy the trades. In addition to a reputation score, the LocalBitcoins platform has an escrow system built into it. This escrow system ensures that both the buyers and the sellers are protected in any trade.
Pricing and payment options
Due to a large number of users, there are often several deals available at any given time. This facilitates dynamic pricing and real-time valuation. Users can also enjoy the ability to pay using over 60 payment methods including debit and credit cards, PayPal and altcoins.
The risks of using LocalBitcoins
As with all decentralized platforms that exclude the intermediary, there are some risks that must be factored into all trades.
Scammers and con artists
The advent of the digital world has brought with it, many versions of scams and phishing schemes. This is not foreign to blockchains and the LocalBitcoins exchange is not exempt. Users do have access to reputation scores as a means of verification, but this is an extra step of due diligence. LocalBitcoins has made it easier to for users to integrate this verification. It has done so by making the reputation score visible right next to the user’s name.
Lack of availability in some major American States and/or countries
The State of New York and the entire country of Germany does not have access to the LocalBitcoins platform. This is a big drawback for those looking to trade bitcoins in these regions.
Fees, pricing and payment
Despite LocalBitcoins charging a flat 1% per transaction, fees can run high for the user depending on their payment method. Moreover, some users can charge high trading prices for cash trades. Cash trades are typical amongst those that are hypervigilant about their privacy and anonymity. Also, as concerns the fulfilment of payment, users are at risk to payment reversal options through vendors like PayPal.
In spite of these risks, many users have found LocalBitcoins to be an extremely beneficial platform for bitcoin trading. It is likely that these users exercised due diligence and caution with their trades. This is the cornerstone for a successful trade and an enhanced reputation score on the platform.
Now that you are fully informed, let’s review the steps required to begin using LocalBitcoins.
Step 1: Register for an account
Registering for an account is easy. All you need to provide is an email address and a password. LocalBitcoins has excluded the Know-Your-Customer (KYC) procedure for the purposes of maintaining anonymity on the site.
Once you have confirmed an email address and password, confirm that you are a real human and then click Register to create your account. Once this has been done, you will be taken to a terms and conditions page. Please ensure you read all the requisite information as this is a decentralized platform. Once you are satisfied, you will need to accept the terms and conditions.
Upon accepting the terms, you will see the main landing page and a green “Success” message at the top. You are now a registered user on the platform! Congratulations!
Step 2: Search for and select a buyer
Enter your preferred purchase amount and choose the currency you would like to buy bitcoins in. You will not need to select the location as the site will pick it up accordingly. Click the search button when you are ready.
Once you have searched, you will find a number of advertisements in the listing below. Each advertisement displays the seller’s username, number of trades completed and their reputation score. If you hover over the advertisement, you can even see how long the trade has been online.
Additional columns will show you the price or rate offered by the seller, payment method accepted, the minimum and maximum amounts that can be purchased and an option to buy.
Once you have selected an advertisement, you will see the option to enter a specific amount of bitcoin to purchase in exchange for fiat currency along with the trade limits. You will also be able to see the seller’s terms of purchase. At this point, if you are happy with what you see, all you need to do is enter the amounts and hit the buy button.
Step 4: Finalize your purchase and complete the payment
Once you hit the buy button, you will be taken to a screen to finalize your purchase. All transactions are protected through the escrow feature on the platform. You have a time limit within which to complete the payment to prevent an automatic stop of the trade.
Once the payment is complete, your seller will be notified. They will then release the bitcoins to your online LocalBitcoins wallet.
You will be able to confirm this when you view the balance in your wallet upon completion of the trade.
Perhaps you are looking to sell your bitcoins on LocalBitcoins
The steps would be the same save for the following exceptions:
- You already have an account now, so there is no need to register again.
- Instead of searching for a seller, you would search for someone to buy your bitcoins from you. You are the seller.
When you do find a buyer, you will be taken to the screen to determine how much Bitcoin you would like to sell.
You will need to fill in all relevant information like the amount of fiat you want in exchange for your bitcoins. It is also necessary to enter account details for a direct bank transfer which is the payment option selected here. These details include the Account owner, Sort code and Account number.
You determine the terms of trade with the buyer. They show up on your sell screen and on their buy screen as we have seen in an earlier example.
As always, do your due diligence to determine whether the buyer is legitimate or not. You can do so by checking their reputation or feedback score. This buyer appears to have a feedback rate of 100%, which is as high as it can get. He is trustworthy and highly recommended on LocalBitcoins. This is the kind of buyer you will want to work with on your Bitcoin trades.
When you are satisfied with the responses you get from interacting with the buyer, you can opt to release bitcoins. The best response rate is always when the user has a green dot near their name. Other colours are yellow or grey. Yellow appears when the user is contemplating the deal or “thinking”. Grey is when the user is offline or unresponsive.
If you have any trouble with the buyer you can dispute the trade. The dispute feature is available one hour after releasing your bitcoins. You can also contact the LocalBitcoins support team for help if the funds are still not in your account after one hour.
Ensuring the safety of anyone transacting on LocalBitcoins:
Logins, email addresses and forms of authentication
Ensure that you have enabled the Login Guard feature on LocalBitcoins. This is a feature that sends an email to your email address every time you login to your LocalBitcoins account. You will also want to enable two-factor authentication. Two-factor authentication sends an SMS or email code to your device or email address to confirm the login. It is highly advisable that you do not use your primary email address on LocalBitcoins. It is always better to use an email address that isn’t associated with other personal credentials.
Login history, authorized browsers, passwords and cybersecurity
Review your LocalBitcoins login history and double-check how many times you used the site. If the logins tally up with your personal records, you are safe. It’s also important to know which browsers (Google Chrome, Mozilla Firefox, Internet Explorer or Safari) have been authorized. If you find unauthorized browsers accessing your LocalBitcoins account, something is not right. Please verify this. As for passwords, never use the same passwords on all the sites you log into. Keep different passwords for different sites, especially for your LocalBitcoins account.
It is always helpful to update yourself on the latest cybersecurity news and developments. Read up on common attacks to know whether you may be a victim of phishing scams.
Outside links or attachments
Avoid opening any links or attachments that a buyer or seller tries to send you. Only use the tools provided within the LocalBitcoins platform to communicate. Limit all transacting and communication to within the platform.
Payment fulfilment methods
Be mindful to avoid using any payment methods that LocalBitcoins has identified as high or medium risk. There is a likelihood for payment reversal that you do not want to get caught in. Although you can dispute a trade, prevention is better. To see a list of high-risk payment options, you can refer to this link on the LocalBitcoins website.
The seller’s due diligence
Always take a moment to read up on the buyer’s profile. If you see any high-risk activity on the buyer’s profile, you must proceed with the utmost caution. You can identify scam-like behaviour when the buyer is in a rush or wants to fulfil payment outside the LocalBitcoins platform.
As we have mentioned before, in spite of these risks, many users have found LocalBitcoins to be an extremely beneficial platform for bitcoin trading. Exercise caution and enjoy successful trades!