LocalBitcoins Exchange Review 2018: Is It Actually Safe?
Want to buy Bitcoins immediately and not wait weeks or months for verification? LocalBitcoins.com is a great way to get crypto quickly without bureaucracy. But it isn’t anything like other exchanges. If you don’t take the proper precautions, you can lose all of your coins or fall victim to one of the many scammers lurking on the exchange.
The good news is that with the right guidance, you can have a fast, secure, and fun experience that will lead to big profits in the cryptosphere. This LocalBitcoins review will teach you everything you need to know about getting started and safely trading on the world’s largest peer-to-peer Bitcoin exchange.
LocalBitcoins (LBC) is a Finnish peer-to-peer Bitcoin exchange based out of Helsinki. It currently has traders in nearly 16,000 cities across 248 countries. The ability to use nearly any payment method under the sun (have a Walmart gift card? You can get Bitcoin!), makes it a great way to get coins hassle-free. The world is taking notice—the site’s traffic has doubled in the past year alone!
It isn’t without its pitfalls though. If you make some common LocalBitcoins mistakes, you will pay the price. Don’t worry, thousands of trades happen daily without issue.
Despite the number of scams and relatively high risk, the site has a number of security features that help users make safe trades.
Verification is not necessary; however, some users will require verification for larger transactions. LocalBitcoins.com is one of the most private ways to purchase crypto.
Ease of Use
A simple interface, all payment methods imaginable, quick trades—what’s not to like? The only downside is getting used to the user review metrics and finding a trade partner.
Support is generally responsive, and the site has a complaint area for filing grievances. It’s email only, though.
LocalBitcoins is a fast, convenient, and private way to buy/sell Bitcoin with no barriers to entry; however, it is extremely risky compared to other exchanges.
LocalBitcoins is a worldwide Finnish Bitcoin startup based out of Helsinki that offers users a chance to exchange their local currency for Bitcoin. It’s often called “the Craiglist” of Bitcoins.
Unlike a traditional broker or exchange, it is a peer-to-peer (P2P) network. Users make ads, set their own prices and requirements, and make the exchanges themselves.
Founded by Jeremias Kangas in 2012, it is one of the oldest exchanges in business. This global exchange offers a wide range of options to its users, which is why it’s so appealing to both seasoned and casual traders. Since you’re dealing directly with other people, the process is lean and fast. You can often get your coins instantly.
It offers secure (somewhat), fast, and convenient ways to buy crypto directly from other users. It even suggests that you guys meet in person. All of this is done via a simple interface with a streamlined model.
Since you’re dealing directly with others, scams are a common threat. Thankfully, there are plenty of tools in place to help you make sound decisions.
How Does LocalBitcoins Work?
LocalBitcoins is the most popular (P2P) network. This is a different model than brokers (Coinbase) or traditional exchanges (Bittrex).
A P2P network is a type of Bitcoin exchange where users deal directly with each other. It’s a truly decentralized process. With brokers or exchanges, the price of crypto is determined by a market rate and bought or sold at a fixed price directly via the platform. With LocalBitcoins, the seller sets their own rate and requirements and buyers answer those ads. From there, you can either meet in person or use online payment options to complete the exchange with each other.
The reason it’s called the Craigslist of Bitcoin is because it is a lot like a classified ads website. Users create ads under usernames (often anonymously) and buyers respond. LocalBitcoins is not involved in the terms of the trade or payment processing. It acts only as escrow during transactions (remember this term. Your security depends on it).
Sellers can set their payment methods, verification specs, price, and limits. Next to each username is the number of confirmed trades and feedback score. Check out this screenshot…
In general, buying and selling are a breeze. After users agree on terms, the escrow service holds the seller’s BTC. Once you make payment, the seller disperses the coins to your wallet. In the event of a dispute, support makes a decision.
Common payment options are:
However, there are a few options you should almost never use. We’ll cover that later, too. This Reddit thread offers some good advice.
Is LocalBitcoins Safe?
During my research I came across a lot of threads asking if LocalBitcoins was a scam. It’s true that trading there is riskier than using a broker or exchange.
However, there are plenty of security measures in place to help users trade safely. If you follow the rules, use escrow, and are smart about your trades, you shouldn’t have any issues. As one Reddit user aptly put it:
“There are thousands of successful trades by other payment methods every day on LBC where both parties are happy. Some are riskier than others.”
He’s right. It’s up to the user to do a lot of their own security. Thankfully, LocalBitcoins helps you out. Here why LocalBitcoins is mostly safe.
Verdict: LBC is generally safe IF you follow a few safety guidelines.
Speaking of safety guidelines…
How to Not Get Scammed on LocalBitcoins
You know the famous saying “guns don’t kill people; people with guns kill people”? That’s a lot like LocalBitcoins. The site never scams you—it’s the people using the site that can scam you. With a little bit of common sense, some extra research, and a few basic safety precautions, you can avoid most scams on the site. Here’s how to not get scammed on LocalBitcoins:
When you’ve collected enough information, you can make a calculated risk. The majority of transactions are completed successfully without incident.
LocalBitcoins Fees & Limits
If LocalBitcoins is your first exposure to a P2P trading network, then the fee system might be a bit confusing.
The basics are extremely simple:
Aside from this, there are network deposit and sending fees based on the blockchain.
Now here’s where things get a bit tricky. Unlike brokers or exchanges that set the price based on the market, on LocalBitcoins sellers set their own prices. That’s why you’ll often see prices much higher on LBC than elsewhere.
In general, the more reputable a seller, the higher the price. You are essentially paying for higher security. Think of it like the difference between buying brand and buying generic: you’re paying an extra price for the guaranteed quality. It is highly recommended NOT to go with the cheapest price unless that seller is reputable.
Visit Localbitcoins.com/fees for a full explanation.
Another major factor in the price is the method of payment. More convenience equals a higher price. Isn’t bartering fun!
Limits: It’s up to the seller how much they want trade with you. Some sellers only want to sell a few hundred dollars. Others, typically verified companies, will sell tens of thousands of dollars worth.
There are no verification requirements for LocalBitcoins; however, if you are making a large transaction, the seller may require it. It’s all at the seller’s discretion.
Privacy and anonymity are the major draws for LBC.
What We Like/Dislike
LocalBitcoins is one of the most popular exchanges on the web. With 1 million registered users and traffic increasing at record rates across the world, it’s clear they are doing something right. It’s well known for its anonymity and wide range of payment options, but what I like the most is its accessibility. Sign up, find a seller, and get some of those Bitcoins that everyone keeps talking about.
There are still a few downsides, though.
How to Use LocalBitcoins
The lack of verification means you’re only a few clicks away from buying your first Bitcoin.
Here’s how to get set up and start trading:
Go to LocalBitcoins.com and click the sign up button.
Then enter the required information to register your LocalBitcoins account. Once you’ve completed the signup process, you are ready to go.
2) Search For a Seller
Locating a seller is simple. LBC’s search function allows you to filter sellers by price, currency, payment method, and verification requirements.
Step 3) Confirm the Amount and Details
Once you’ve chosen a seller, you’ll be taken to the transaction page. Here you can see all of the important details and enter the amount you wish to buy.
The whole process is extremely straightforward. Most trades are completed extremely quickly unless there are extenuating circumstances.
That’s really all there is to it. See why everyone loves it so much?
Community sentiment toward LBC is very favorable. I actually found it funny how most users who posted complaints about scams were immediately blasted by other users. Most people were scammed because they didn’t take precautions.
In fact, most reviews were very positive and sang the same song. Users generally liked how easy it was to use, the anonymity, and payment options. Complaints had to do with scams.
One Reddit user claimed his brother was scammed, but then later edited saying he got a refund. The support even showed up in the thread!
What the Good Reviews Say:
What the Bad Reviews Say:
Here’s a link to a Reddit thread talking about a “scam” that ended up getting resolved.
Top 3 LocalBitcoins Alternatives
If you are put off by the LocalBitcoin’s business model or lack of other currencies, there are plenty of exchanges on the web that offer better security. The top 3 LocalBitcoins alternatives in 2018 are:
Coinbase is the largest broker on the web and a starting point for most new Bitcoin users. It offers a seamless buying experience, extremely user-friendly interface, tight security, and convenient payment options. Over $20 billion dollars worth of crypto has been traded here. If you want to buy Bitcoin with a credit card, it’s recommended to use Coinbase. You should almost never use CC on LocalBitcoins. You’ll pay a high credit card fee, though.
Bitsquare is a truly decentralized Japanese P2P network. It is hosted by the series of nodes that run it, not on a central server. The degree of privacy is extremely high due to Tor hidden services and encryption. The escrow system is very efficient and protects both the buyer and seller. It isn’t nearly as liquid as LBC, though. This is slowly changing as it picks up steam.
Coinmama is a reputable Israeli broker with highly touted support. It’s a strong alternative to LocalBitcoins, but there are a few downsides. Credit cards fees are 6% and you can only buy up to $150 of BTC without verification. It’s a good alternative if you prefer a broker with better security but don’t feel like dealing with Coinbase’s bureaucracy.
LocalBitcoins Vs. Coinbase: Which is Better for Buying Bitcoins?
On one side, Coinbase—polished, secure, and backed by major investors. On the other, LocalBitcoins—raw, anonymous, and run by a pair of brothers from Finland. One represents the corporate way of doing things, and the other fully embraces the nature of cryptocurrency.
That being said, when it comes to Coinbase vs. LocalBitcoins, both offer a great way to buy Bitcoins.
Coinbase is by far the most popular way to buy Bitcoin, Ethereum, and Litecoin. This industry-leader is often compared directly with its upstart little brother. They serve different markets, though. And the results of my research might surprise you.
Let’s look at the basics of Coinbase first.
Coinbase is the world’s largest Bitcoin broker, and the world’s highest-funded Bitcoin startup. With over 13 million users, it is a common “launching point” for new users. It offers fast credit card payments, secure transactions, and a seamless buying experience.
The credit card fees are a bit high, but it’s worth it for the convenience and security. There are some in the community that resent its ties to big money and strict verification requirements, but there’s no doubt it is a great place to buy BTC, LTC, and ETH.
The downside is its lack of currencies and heavy verification issues. Recently, their support has been buried under a flood of new registrants.
While I was tempted to pick the more established name, LocalBitcoins is so simple I couldn’t resist. Getting setup is so easy, and the site is safe enough with the right precautions. The fact that you can use nearly any payment option is what really did it for me. Of course, it depends on what you are after.
Use Coinbase if you want to buy BTC, LTC, or ETH securely with a credit card.
Use LocalBitcoins for basically everything else.
Users had more questions about LocalBitcoins than any other platform I’ve researched. The security risks lead most users to do a lot of research before making a trade. That’s a good thing. I’ve aggregated the most frequent questions and answered them here for you.
Q: How Does LocalBitcoins Protect Me From Being Scammed?
A: As soon as you enter into a trade, the amount of Bitcoin is automatically deducted from the seller’s wallet and held in escrow. Only the buyer can cancel a trade. As soon as the seller receives payment from you, they will disperse the coins. If the seller tries to run away with your money, support can release the BTC into your account. If you’re a seller, NEVER release the BTC until you’ve received payment confirmation.
Q: Why is Buying With PayPal or Credit Card So Expensive?
A: You’ll notice much higher prices for BTC with credit card or PayPal. This is because the seller is increasing the price to mitigate the risk of fraud. Credit card and PayPal transactions are easily reversible. This means it’s possible for you to send the money, receive your BTC, and then cancel the payment. This would bog the seller down in a dispute against you that could take months.
Q: What Happens if the Seller Doesn’t Give Me My Bitcoins?
A: If they won’t release the Bitcoin, you can open a dispute with support and we will handle the issue. The agreed upon amount of crytpo is automatically placed in escrow and held until the transaction is successfully completed.
Q: What is a Local Trade?
A: LocalBitcoins.com encourages crypto users to meet. A local trade is when you meet in person to exchange crypto for cash, gift cards, etc. Face-to-face meetings of course carry risk, so always do this in a public place. Here’s a thread addressing local trade safety.
Q: How do I Put Bitcoins into My LBC Wallet?
A: If you want to sell BTC, you’ll need some in your LBC wallet. First, create an account. Then, send BTC from another Bitcoin wallet to your LocalBitcoins wallet. Here is a screenshot to help.
Q: Is LocalBitcoins Safe?
A: In short, yes. Thousands of transactions are carried out without incident every day. However, LocalBitcoins is riskier than other exchanges. If that bothers you, seek an alternative.
Q: How Long Does it Take Support to Respond?
A: It typically takes 2-3 business days. Don’t be discouraged. They will get to you.
Q: Can I Use PayPal for LocalBitcoins?
A: Yes, you can buy Bitcoins with PayPal; however, it is not recommended.
As someone relatively new to the cryptosphere myself, I liked how easy LocalBitcoins was. Just two steps separate you from buying your first Bitcoin. The flexibility of using everything from cash to PayPal (though not recommended) to Walmart gift cards is unmatched.
Buying is easy, the interface is simple, setup is laughably easy, and there isn’t as much risk as you might think. Yes, there is more risk buying here than on traditional brokers, but escrow and user feedback/trust help you avoid those risks. The community is active and scams are easily detectable. To top it off, support is helpful and resolves most issues.
The negatives about LocalBitcoins are obvious: it’s Bitcoin only, prices are higher, and there is risk involved in trading. But with the right precautions, you can avoid issues.
Cryptopositive Says: It’s worth the risk; just be careful.