LocalBitcoins Review (UPDATED 2018): Is LocalBitcoins Safe? | VKOOL

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AVG Rating: 5.5/10

Looking to get into buying and trading Bitcoins? There's a great service that could help you. It's called LocalBitcoins, and it's connecting sellers with buyers in a transparent, helpful, open way. Lots of people don't really know what the “best” way is to get the most out of the Bitcoins experience, and there are lots of different services out there all competing for your attention. That's why we've come up with this introduction to help people figure out what's best for them. Feel free to use the following short guide to get involved, and see how you can get the most out of this service.

What LocalBitcoins Is

We'll start off with what they are not: they are not your usual marketplace like Coinbase, where you sign up for service and get busy buying and selling Bitcoin. LocalBitcoins instead provides a space where Bitcoin enthusiasts can meet one another one-on-one to buy and sell. While this can be a good thing, letting you decide who seems trustworthy enough to deal with, there's also a slight drawback: LocalBitcoins isn't responsible for what the other person does, and if you get scammed, there are ways to get restitution. The problem is that it can be annoying and take a lot of time to get done.
Other people actually prefer things this way. Instead of giving up your bank information to be stored on a private server with your Bitcoin keys held in a cloud, where it could be vulnerable to hackers or server outages, people can instead connect one-on-one and buy and sell with little personal information being released or transferred over any system.

How Is LocalBitcoins Different?

This service works differently from other services you've probably been used to dealing with. Other companies operate as exchanges, where you can sign up, give your bank information to the company (where it's closely guarded) so that you can directly pay for the Bitcoins you're buying. Since many exchanges are free to sign up for, they make their money by charging a percentage of each sale. There are no fees, however, when you buy.

But that's not what LocalBitcoins does. In fact, it operates more like a forum or message board, where you can find people people who are offering Bitcoins at various prices, depending on the exchange rate. You can get directly in touch with them, hash out the details of the transaction, and make an agreement. Then it's up to you both to determine how you want the payment to proceed: either you can use an online option like Paypal or direct transfer from your banking institution, or you can even meet up in person to give the person cash or a money order – really putting the “local” in LocalBitcoins.

The service then transfers the Bitcoins to your LocalBitcoins account, from which you can move the Bitcoins to your personal account. Sounds pretty simple.

How Do I Avoid Scams?

Obviously, since this service doesn't have its hand in any part of the trading process (unlike marketplaces), the onus is on you to make sure you're dealing with someone trustworthy. LocalBitcoins does offer a little bit of assurance for people doing the buying by holding all Bitcoins themselves before payment goes through, so that no one ends up losing their Bitcoins to someone who hasn't paid in full yet. However, that doesn't mean that scammy things don't happen, and there's are a few easy ways to make sure you're not going to have to deal with filling out that customer complaint form.

First, you need to figure out who you're dealing with, and that starts with simply clicking on their username. When you do that, you're shown their history, and this is what you can use to make sure they're the kind of person you want to deal with. Not only will you see their “trade volume” and the total number of trades they've done, but also how long they've been purchasing for and the average amount of time their coins are released from escrow. You can also see if they have a verified phone number and email address, crucial if you want to make sure the person you're dealing with is legit or not.

There's also the “trust” score. With a peer-to-peer service, it all hinges on personal interactions, and since you'll only want to deal with people who others have dealt with and have deemed trustworthy, this is one of the most important metric to judge the person by. You can also see how many people have “blocked” the person. If you see someone with lots of blocks and few trusts, those are obvious red flags that should definitely make you think twice about dealing with them.

Make sure they have a high feedback score. Just like with Yelp, Ebay, and other services where people can rate their interactions, this will be a major determinant of whether the person can be trusted. If they have a feedback score over 98%, you can be sure they won't give you any trouble.

How Do I Get Started?

Easy! Sign up for the service and start browsing the listings. One thing newbies will note is that you won't start off with a high level of reputation. You're new, so to them, you're “unproven.” What this means is that at the beginning, most people probably won't want to trade with you, since you could be a “gamble” – and no one wants that. Instead, you might have to start off small, doing trades with people who might not have the best reputation and who are willing to do business with you. This way, you can build up your feedback score, your trust score, and get your profile turned into something robust and trustworthy, proving that you're someone others will want to do business with.

Once that's done, you're in business and you can start dealing with others that have higher scores.

How Does Escrow Work?

“Escrow” is what keeps the transaction as safe and fair as possible. See, the seller doesn't send you the Bitcoins directly. Once you decide on how much to buy and the method of payment, the seller sends that amount of Bitcoins to LocalBitcoin. They're the ones who hold the Bitcoins until the buyer can submit proof that they paid for them. Once that's done to their satisfaction, LocalBitcoin sends you your Bitcoins, and you can transfer them to your wallet. Sure, they're a middle-man, but that 1% surcharge for each transaction means you can be sure that the transaction is being done safely and securely, without the worry of doing things directly (and with a total stranger).

Where Can I Use Local Bitcoins?

That's the good news. You can use this service almost anywhere in the world. The only two places we know of where you can't are two places where regulations have made the service unwelcome: New York (state) and Germany. Other than that, you're free to use the service as you see fit!

Are There Any Limits To How Much I Can Buy/Sell?

That's another plus to LocalBitcoins: there is no limit to the amount you can buy or sell. It's entirely up to you. If you want to sell a dollar's-worth of Bitcoin, go ahead. If you want to sell a million dollars'-worth, you can do that too. You can also determine the price you want to sell at, but keep in mind that people won't be willing to buy a higher-priced coin from you if you have low standing in the community, so you'll want to build up your profile first.

What Are The Fees and How Do They Work?

Since you don't use the service to pay for any transactions, LocalBitcoins gets their money by adding a 1% surcharge onto the total amount being sold, keeping that little bit and sending the rest to the buyer. So it's the seller that pays the fee, never the buyer. A word of warning, though: some sellers want to get around this by tacking on an extra 1% to the price they're selling for, passing the charge on to the buyer so that the seller loses nothing. This is totally up to the individual seller, and if you'd rather not pay that extra fee, you can definitely find sellers that don't do that.

LocalBitcoins vs Coinbase

These are two totally different services, but they're also for people with different levels of experience in the Bitcoin community. Coinbase is very much geared towards those who are new to Bitcoin, offering a simple one-stop shop for buying, selling, and trading Bitcoin in a marketplace setting. You sign up, give them your banking information, and you're all set up to start dealing. LocalBitcoins, on the other hand, is more for people who want to buy or sell one-on-one with people that they personally vet, and instead of giving the service your bank information, you do everything privately through cash, bank transfers, or Paypal.

LocalBitcoins vs Paxful

These services are fairly similar. While LocalBitcoins is more of a message board service allowing people to connect individually and engage in transactions privately, Paxful is more of an all-in-one service that not only allows people to list and sell Bitcoins, but also store them in the Paxful online wallet. Paxful, like LocalBitcoins, charges a 1% fee to sellers. Paxful appears to accept more forms of payment as well, including gift cards and prepaid debit cards.

LocalBitcoins vs Kraken

Both of these services seem to be relatively popular, but they're very different. LocalBitcoins is focused on Bitcoin only, and provides a space for people to buy and sell one-on-one, while Kraken is a larger cryptocurrency exchange where you can not only deal in Bitcoin, but also Ethereum. Both services are supposed to have good security. Kraken works more like a traditional market (like the stock market), where you agree to trade or exchange a real-life currency like the dollar or the yen to either Bitcoin or Ethereum, and it handles the payments as well. LocalBitcoins is more minimalistic and merely offers a way for people to meet up and trade with each other directly.

Frequently Asked Questions

  1. Where can I read a review of LocalBitcoins?
    Feel free to check out our review above! Otherwise, if you'd like to check out other reviews, you can find those on numerous cryptocurrency websites.
  2. Is there a LocalBitcoins app?
    No, there is no official app for LocalBitcoins. There is a fake one floating around on Google Play for Android, but apparently it's a scam – do not download it.
  3. Can I use LocalBitcoins in the UK?
    Yes, this service is currently available for people in the United Kingdom.
  4. Does LocalBitcoins have its own wallet?
    Technically yes. When you get Bitcoins sent to you, they appear in your temporary LocalBitcoins wallet, but from there you can transfer them to your own wallet.
  5. Is LocalBitcoins available in India?
    Yes, luckily you can use this service in India.
  6. Does LocalBitcoins deal in cash?
    Yes, LocalBitcoins deals in cash, but you can also use any other way to pay people, including bank transfers and Paypal.
  7. Is LocalBitcoins safe in 2017?
    As far as we can tell, yes, LocalBitcoins has proper security precautions and you can be assured reasonable protection.
  8. What are the fees for LocalBitcoins?
    The service charges a 1% fee for sellers in each transaction.
  9. Is LocalBitcoins trustworthy?
    As far as we've seen, there haven't been any major customer complaints about the service, and they don't seem like they're out to scam anyone.
  10. What about a LocalBitcoins app for iPhone?
    As far as we've seen, an iOS app hasn't been developed yet for LocalBitcoins.
  11. What is the LocalBitcoins wallet?
    It's for storing the Bitcoins you buy from sellers, or for temporarily storing the Bitcoins you're going to sell to others. It's a way for the service to make sure that no one receives anything they haven't paid for yet.
  12. Is there a LocalBitcoins APK?
    There is a file out there claiming to be an Android app, but apparently it's not official, and some people have had their coins stolen because of it.
  13. What about the LocalBitcoins API?
    The service released an API (application programming interface) so that people can create their own programs that interact with LocalBitcoins.
  14. Is there a LocalBitcoins section on Reddit?
    Yes, you can find more information and conversation about LocalBitcoins at Reddit.
  15. What do I need for my Local Bitcoin wallet login?
    All you need is your username and password.

Conclusion

LocalBitcoins is more geared to people who prefer small, one-on-one interactions that can be managed and determined at their own pace and on their own terms, instead of massive marketplaces where personal information needs to be given out and held in servers which, no matter how secure, could still be vulnerable to exploitation.

The great thing about Bitcoin is that there are lots of different ways to buy, sell, and trade. While some people prefer to use marketplaces – or even mine Bitcoins themselves – other people will appreciate the directness and individualistic nature of the peer-to-peer model used by LocalBitcoins. As long as you do your homework and make sure that everyone you're dealing with is legit, and you're willing to

Peter Lehmann

Peter is a blockchain investor and cryptocurrency writer at Vkool.com. Since 2014 Peter has advised blockchain startups and ICOs on content marketing, strategy and business development.

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