LocalBitcoins, at localbitcoins.com, is the first place I ever bought Bitcoins… back in 2015 I think it was or maybe late 2014. Back then there weren’t near as many options to buy bitcoin as their are today and this place seemed to be safe from what I could tell. But now it’s years later and I know it a lot more about cryptocurrency safety, what to look for before using an exchange and so on. Do I still trusted the way it used to? Is Local Bitcoins safe? Or is this in exchange you should avoid?
The answer to this question is a bit more complicated then just a simple yes or no. Overall the exchange is pretty safe. It does a great job at providing safety to users buying and selling bitcoin but if you are not careful you could possibly be scammed.
In this review I will be going over what exactly Localbitcoins is, showing you around inside the exchange so you can see how it works if you don’t already know, and of course I’ll be going over the safety of the platform and some serious concerns there are.
What Is Local Bitcoins?… In a Nutshell…
LocalBitcoins is what you call a P2P cryptocurrency exchange. P2P stands for “peer to peer” and basically what this means is that on the exchange you will be buying or selling directly with another individual on the exchange. It’s basically the same thing as the Paxful exchange if you are familiar with them.
I once heard this type of exchange described as the “eBay of cryptocurrency exchanges”. Everyone is familiar with eBay for the most part so this is a great way of putting it in really helps to understand how these exchanges work. Just like eBay, anyone can create a profile on the LocalBitcoins platform to buy or sell bitcoin. So it’s not like you are buying or selling from LocalBitcoins or anything like that. LocalBitcoins just provides the platform which helps facilitate a safe exchange between buyers and sellers.
This is great in many ways but it also leads to some serious concerns, which is why you are probably asking if LocalBitcoins is safe or not. You don’t know who is behind the computer screen selling bitcoins on this exchange so how can this be safe? Well… I will go over the safety of the exchange shortly but first I want to take you on a little tour inside the exchange.
A Look Inside The Exchange
Inside the exchange you can do two basic things: buy or sell bitcoin. If you want to buy bitcoin you can enter in the amount you are wanting to spend, your type of currency that you will be spending, your country, and then you will choose the payment method that you want to use to purchase the bitcoin.
The upside to P2P cryptocurrency exchanges like this is that they have dozens upon dozens of different ways you can pay to buy bitcoin. The reason for this is because sellers of bitcoin can choose to accept many different payment methods and because there are tons of different sellers on this platform there are people looking for all different kinds of payments. So you can pay with PayPal, Moneygram, Alipay, Amazon gift cards, cash deposits, cash by mail, credit card, Google wallet, Walmart gift cards, Walmart to Walmart transfers, all coins like Litecoin and Dash, and many more.
Because there are sellers from all over the world another big upside to platforms like this is that you can buy bitcoin from pretty much anywhere, unlike more popular exchanges such as Coinbase or GDAX that do not allow people in many countries to purchase cryptocurrencies on their exchange.
As an example I chose to look for sellers that are willing to sell bitcoin for $100 USD in the United States and accept PayPal as a payment. It doesn’t matter what you search for the results screen will look the same. It’ll give you a list of the different sellers willing to sell bitcoin to you based on those conditions and the price that they are willing to sell it at…
A downside to this type of exchange is that the sellers bitcoin prices are higher than market value, sometimes a lot higher. This depends on the payment method that you are using and how much of a hassle it is for them. They can choose to sell at whatever price they want so you just have to try to find the best deal.
When you click on the “Buy” button next to one of the offers you will then be directed to a page where you can initiate the trade. Here you will be able to read over the overview of the trade and initiate it that’s what you want to do.
Once you initiate the trade you will be able to chat back and forth in real time with the seller. This is important because you have to deal with the seller directly. Over on the right-hand side of the screen you will see a “Terms of trade” that outlines the sellers rules for the trade. Sellers can make any roles they want to hear so it’s very important that you read this and make sure you are able to follow them.
Sellers will usually require that you verify your payment by sending a screenshots to them and also that you verify your identity by uploading pictures of an ID…
After you have sent the seller your payment you will have to verify having done so on the LocalBitcoins platform. Then after they have verified receiving the payment you will receive your bitcoin.
How Safe Is This Place Really?
There are several different safeguard measures that LocalBitcoins has in place to help keep you safe, a few of which I’ll touch on below.
The feedback system that they have in place is a pretty big deal. Just like eBay you will be able to give feedback whether you are buying or selling. This way other buyers and sellers can see who they are dealing with and see what other people think about them before engaging in a trade.
Whenever you are searching for different bitcoin offers from different sellers you will see a number beside the sellers name that appears as: (100+, 97%), just as an example. What this number tells you is the number of trades this person has made and the percent of positive feedback they have received. So a feedback number shown as (1000+, 99%) would mean that that seller has made over 1000 trades and has a 99% positive feedback rating overall.
And if you click on anyone’s name you will be able to see the statistics along with how long they have been a member, how many different partners they have traded with, what language they speak, whether or not they have verify their identity, and so on…
And if you would scroll down below this you would also be able to see what people are actually saying about them and their feedback.
LocalBitcoins also uses escrow to help keep users safe. I’ll give you an example of how this works…
So let’s say you initiate a trade with a seller. As soon as you initiate this trade LocalBitcoins will take Bitcoins out of the sellers account and hold them in an escrow account. Then after the payment is verified by both you and the seller, LocalBitcoins will release this Bitcoins to you. This helps to ensure that you actually get the Bitcoins you paid for. Sellers won’t be able to take your money and just refused to release the Bitcoins to you.
However there is the concern: what if the seller does not confirm your payment? What if you send your payment to them and they claim they haven’t received it? Well this brings me to dispute mediation…
If there is an argument between a buyer and seller over whether or not payment was sent the LocalBitcoins team will help mediate the dispute and come to the bottom of it. And since they are holding the Bitcoins in escrow at this point they will have full control over what happens.
So if you did do everything right and really did send your payment you will be able to give LocalBitcoins proof of this so that they release the Bitcoins to you. But if you cannot provide proof of this they will be forced to assume that you are lying and did not send the payment which will lead to them releasing the Bitcoins back to the seller.
Conclusion on LocalBitcoins – Good Exchange to Use?
There is no doubt that there are some safety concerns when using a peer to peer exchange like LocalBitcoins. Just as with eBay, there are going to be scammers using this platform and there is risk involved. However LocalBitcoins does a great job at minimizing this risk in providing a safe platform to exchange on.
As long as you choose a seller or buyer that is very reputable and follow the terms of the trade you should be fine. Just be sure to do these two things as well as take screenshots or collect whatever type of information necessary to prove that you did pay, or to prove that the buyer did not pay if you are a seller.
In my opinion LocalBitcoins is a safe exchange and I really like it. But it’s as safe as you make it in a way. It’s better to use more normal exchanges such as Coinbase, GDAX, Kraken, etc. because you will be able to buy Bitcoins at market price, but if you live in a place where you are not able to use these exchanges or you are trying to pay with a payment method that is not accepted with normal exchanges then LocalBitcoins is a great choice.
Anyway, I hope you have found this review helpful and insightful. If you have any questions comments or concerns please leave them below and I’ll get back to you when time permits 🙂