LocalBitcoins Review (2021)
LocalBitcoins is a Finnish-based peer-to-peer (P2P) marketplace. It offers a straightforward way to connect with people around the globe that are looking to sell their Bitcoin (BTC).
The primary benefit of LocalBitcoins is the fact that the platform accepts dozens of different payment methods. It’s also one of the largest P2P marketplaces, so you can find trading partners both in the UK and around the world.
The downside is that it only supports BTC and there’s no option for remaining completely anonymous when you trade.
LocalBitcoins is a global peer-to-peer network that connects buyers and sellers of Bitcoin (BTC). It offers crypto enthusiasts an alternative to centralized exchanges and it gives you a wide range of payment options
But is LocalBitcoins all it’s cracked up to be? Is it safe and legal to use?
In this LocalBitcoins review, I’ll answer all your questions about the platform. I’ll give you an up-close look at how LocalBitcoins operates, its pros and cons, and how you can use it to buy crypto directly from other traders around the world.
Let’s get to it.
Advantages & Disadvantages
- Available in the UK and in most other countries.
- Relatively low fees (1% fee when you list an advertisement and complete a trade).
- Accepts a wide range of payment methods.
- Bitcoin (BTC) purchases are put into escrow to protect you during a trade.
- Lots of information available to vet sellers before placing trades.
- Not completely anonymous.
- Requires photo ID verification to trade more than €1,000.
- No option for in-person cash trades.
- Customer support can be slow to resolve issues.
- Only supports Bitcoin (BTC) trades.
What is LocalBitcoins?
LocalBitcoins is a Finnish-based company that was founded in 2012 by software developer Nikolaus Kangas. Kangas created LocalBitcoins to make it easier for people from around the world to buy and sell Bitcoin (BTC) without the need for a centralized exchange.
The company’s mission is to “make the global economy accessible in all corners of the world through Bitcoin trading”.
Since LocalBitcoins is a peer-to-peer (P2P) marketplace, much like Craigslist or eBay, it’s hard to know precisely how much trading actually happens on the platform. However, the trading volume charts on Coin Dance state that LocalBitcoins currently has a global weekly trading volume of about US$18 million (£13.1 million).
This number is on the decline from an all-time high of nearly US$130 million (£95.2 million) in December 2017.
Peer-to-peer crypto marketplaces like LocalBitcoins pose safety risks that you don’t necessarily have to deal with on centralized exchanges.
LocalBitcoins has a number of trading security features, such as an escrow and reputation system, that I’ll discuss later on in this review. However, LocalBitcoins has been hacked multiple times over the years.
One of the first major LocalBitcoins hacks happened in 2015 when hackers used the firm’s LiveChat account to steal about 17 BTC (then worth about £3,450). More recently, in 2019, hackers gained access to LocalBitcoins for 5 hours and stole 8 BTC (then worth about £21,270).
Neither of these hacking events were as big as the US$460 million Mt. Gox disaster, but they’re certainly nothing to scoff at.
LocalBitcoins has since made 2-factor authentication optional for accounts to limit the likelihood of successful phishing attempts.
But regardless of what platform you use, it’s considered best practice to store your Bitcoin (BTC) in a personal wallet where you have full control over your private keys (like one of these hardware wallets).
The legality of LocalBitcoins depends on the laws in your country or region.
LocalBitcoins is registered as a virtual currency provider with the Finnish Financial Supervisory Authority (FIN-FSA), so it operates legally in Finland. Technically, this doesn’t give it legal status in other EU member states or in the UK; however, LocalBitcoins claims that it operates within the EU’s 5th Anti-Money Laundering Directive (5AMLD).
The 5AMLD came into effect in 2018 and it’s the main reason why LocalBitcoins now requires identity verification for all new traders. As part of 5AMLD, all crypto companies have to comply with Know Your Customer (KYC) standards, which is why you can no longer buy BTC anonymously on the platform.
With regards to the UK, in particular, LocalBitcoins isn’t registered with the FCA. It’s unclear how this affects the legality of buying LocalBitcoins based on the FCA’s mandates since it’s not a UK-based firm.
People have been arrested for selling on LocalBitcoins in the past (such as in one incident in the US in 2017). However, this seems to be more of an issue for sellers of Bitcoin because they may need to register as financial businesses in many countries.
If you’re concerned about the legality of LocalBitcoins, get advice from a financial law expert in your area before you sign up.
LocalBitcoins is one of the world’s oldest P2P crypto trading platforms, but is it trustworthy?
Currently, LocalBitcoins has a 4.8* rating (58,000+ reviews) on Trustpilot. For a crypto platform, this is a very high rating.
But I have some reservations about the legitimacy of many of the ratings on the LocalBitcoins Trustpilot page.
Nearly 90% of reviewers give the platform 5*. However, if you read these 5* reviews, you’ll see that most are one-line responses that don’t give you any information about the user’s experience with the platform. While I don’t expect reviewers to write a novel on Trustpilot, such a high number of one-line responses is a bit suspicious.
To be fair, many of the 1* reviews on Trustpilot are also one-line responses. But many mention negative experiences with LocalBitcoins that include getting scammed by sellers, problems receiving payouts, and issues with the company’s escrow and dispute resolution services.
So, are LocalBitcoin’s Trustpilot reviews legit?
It’s hard to know. The best way to deal with this sort of uncertainty is to tread with caution. If you want to use LocalBitcoins, be sure to do your homework when vetting potential sellers.
How Does LocalBitcoins Work?
LocalBitcoins is a peer-to-peer Bitcoin (BTC) marketplace where you can trade Bitcoins directly with other people from around the world. This makes it different from a crypto exchange, like Coinbase Pro, where the exchange facilitates trades between buyers and sellers.
When you buy BTC with LocalBitcoins, you are responsible for finding someone who’s willing to sell you coins at a price you’re okay with paying. This can make buying BTC more time-consuming than simply placing a buy order on an exchange.
But there are benefits to P2P marketplaces, like LocalBitcoins.
One of the biggest benefits of a P2P marketplace is that it lets you and the seller decide the terms of your trade. You can also often use payment methods that aren’t available on many traditional exchanges, like PayPal or Skrill.
Creating a LocalBitcoins account is a fairly straightforward process. You simply go to the company’s website, click the button to create an account, and then follow the prompts.
Due to European regulations, LocalBitcoins is required to collect certain information about all account holders. The information that you have to provide depends on your verification tier level and is as follows:
|Tier 0||Tier 1||Tier 2||Tier 3|
|Country of Residence||✔||✔||✔||✔|
|Proof of Residence||✔||✔|
|Second Photo ID||✔|
You need to provide all of the information listed under Tier 0 when you create an account. You’ll need to provide everything for Tier 1 if you want to buy or sell more than €1,000 worth of BTC. (For more on limits, scroll straight down to the ‘Limits’ section.)
Before you can buy Bitcoin (BTC) on LocalBitcoins, you need to find a seller on the platform.
To find BTC sellers on LocalBitcoins, you’ll go to the trades section of your account dashboard.
Then, you can select:
- How much BTC you want to buy.
- What crypto or fiat currency you want to pay with.
- Which country you want to see offers from.
- What payment method you prefer.
After you click ‘Search’, you have a list of all open sell offers for BTC.
Now comes the hard part.
Once you see all your potential offers, you need to find a reliable seller. There’s no fool-proof method to avoiding scams on P2P networks, but there are things you can look for to lower your risk of transaction issues. In particular, look for:
- High Feedback Scores: Opt for a seller with a positive feedback score of 98% or higher.
- Established Account: Consider limiting your trades to sellers that have been on LocalBitcoins for more than 1 year.
- Verified Account: Ensure that anyone you buy from has a verified email address and phone number.
- Company Account: Anyone with a company account on LocalBitcoins has to complete additional verification steps, which can lower your risk of fraud.
- Trade Volume: Search for sellers that have a trading volume of at least 10 BTC.
- Confirmed Trade Total: Sellers with a larger number of confirmed trades (100+) with many trade partners (100+) are more likely to be reliable.
- Trust Numbers: Look for sellers that are trusted by at least 10 different LocalBitcoins accounts. Stay clear of sellers that are blocked by many people.
- Seller Escrow Release Times: If you want to process a trade quickly, opt for sellers that have fast escrow release times. This is because any BTC that you buy will be put into escrow by the seller until they receive your payment. Delays in escrow release times can keep your BTC tied up for longer than necessary.
Searching for good sellers using these criteria can lower your risk of getting involved with a scammer, though it’s hard to completely eliminate that risk. The best thing to do is to look for sellers with a long track record of quality performance and to be willing to walk away if things look sketchy.
As soon as you find a seller that you want to buy from, it’s time to initiate a trade. To initiate a BTC trade on LocalBitcoins:
- Click on the BTC sell offer that you want to buy from.
- Double-check all the information in the listing to ensure that you’re happy with the terms of the trade.
- Enter the amount of BTC that you want to buy.
- Add a message to the seller indicating your interest in buying BTC.
- Click ‘Open a Trade’.
- Process your payment using your chosen payment method before the payment window expires.
- Click on the ‘I have paid’ button.
- Wait for your BTC to be released from escrow and deposited in your LocalBitcoins wallet.
Note that your BTC won’t be released from escrow until your seller confirms that they received your payment. However, after you click the ‘Open a Trade’ button, you’ll have access to a chat with the seller where you can work out any payment details.
If you have an issue with a trade, you can contact customer support by opening a support ticket.
You can submit a support ticket for a disputed trade no sooner than 1 hour after you press the ‘I have paid’ button. Be sure to include proof that you’ve paid your seller and any relevant information about your trade.
Once that happens, you and your trading partner will both receive emails and SMS notifications about the dispute.
If your trading partner doesn’t respond, your trade will go to LocalBitcoins for mediation. Keep in mind that it can take upwards of 3 days to receive a response from the company.
LocalBitcoins is available in most countries around the world, including the United Kingdom and all of Europe.
That being said, LocalBitcoins is only available in certain US states, including:
- New Jersey
- New Hampshire
Note that residents of some countries are required to verify their account to Tier 1 status before they can do anything on LocalBitcoins. Residents of some other countries are required to submit additional identity verification information.
Check out this list from LocalBitcoins for a full list of supported countries and information about specific regional identity verification requirements.
There are only a handful of countries that aren’t supported by the platform, including:
- North Korea
As its name suggests, LocalBitcoins is a place to buy and sell Bitcoin (BTC).
However, while BTC is the only cryptocurrency that you can sell on LocalBitcoins, you can buy BTC using a slew of other coins.
- Cardano (ADA)
- Bitcoin Cash (BCH)
- Ethereum (ETH)
- Litecoin (LTC)
- Dogecoin (DOGE)
- Polkadot (DOT)
- Chainlink (LINK)
- USD Coin (USDC)
- Tether (USDT)
- Stellar Lumens (XLM)
- Ripple (XRP)
- Verge (XVG)
- OKB Coin (OKB)
Basically, you can buy BTC on LocalBitcoins with pretty much any cryptocurrency so long as you can find a seller that’s willing to accept your trade.
One of the key benefits of LocalBitcoins is the fact that you can buy or sell BTC with nearly any payment method.
There are dozens of fiat payment methods available on LocalBitcoins, so I can’t list them all here. But on any given day, you can find BTC sell offers on LocalBitcoins in the UK that accept the following payment methods:
- FPS bank transfer
- SEPA bank transfer
- SWIFT bank transfer
- Credit card and debit card
- Western Union
Long story short, no, you can’t buy Bitcoin (BTC) with cash on LocalBitcoins.
Back in the day, LocalBitcoins let you buy BTC from other people using cash – much like you would if you bought a chair off of Facebook marketplace. However, in 2019, LocalBitcoins removed the option to buy in-person BTC using cash.
Since LocalBitcoins is a P2P marketplace, fees on the platform operate a bit differently from those on traditional exchanges.
BTC Exchange Rate on LocalBitcoins
When you buy BTC on LocalBitcoins, you’re buying it directly from another person. Therefore, the price that you pay depends on what a seller is willing to accept at any point in time.
With LocalBitcoins, you can peruse listings of current sell advertisements until you find someone that’s willing to sell you BTC for a price that you’re willing to accept. These prices can vary widely from the current market price of BTC on the open exchange at the same time.
For example, these are the lowest offers to sell BTC on LocalBitcoins that I found when the BTC–GBP exchange was approximately £41,964:
The going rate for BTC on the platform at that time wasn’t too bad. It was as low as about £41,999, which was just slightly above market price.
However, the exchange rate that you’ll pay on LocalBitcoins greatly depends on your chosen payment method.
Here are some exchange rates that I found on LocalBitcoins when the BTC–GBP exchange was approximately £41,964.
These were the offers available for paying with a UK bank transfer (which tends to be the cheapest option in the UK). The lowest cost seller was selling BTC at a price that was about 2% higher than the real exchange rate.
These are the ones that were available if you were paying using PayPal. The lowest cost option here was selling BTC at prices that were about 6.7% above the real exchange rate.
While you can find decent exchange rates for purchases made via bank transfer, you’ll pay much more for purchases made via other methods like PayPal or credit card.
The only trading fee that LocalBitcoins charges is a 1% fee for each completed trade.
But you only pay this fee if you’re the person who creates an advertisement to buy or sell Bitcoin (BTC). If you respond to someone else’s advertisement, you’re not on the hook to pay any fees directly to LocalBitcoins.
Transactions sent to other LocalBitcoins wallets are free. There are also no fees for BTC deposits that you send to your LocalBitcoins wallet.
The only transaction fee that LocalBitcoins charges is a withdrawal fee when you send BTC to external addresses. These fees vary based on network congestion, but you can get the current withdrawal fee by checking your account dashboard.
LocalBitcoins places certain limits on accounts based on your verification tier.
The limits for individual accounts are as follows:
|Tier 0||Tier 1||Tier 2||Tier 3|
|Maximum Annual Trading Volume||€1,000||€20,000||€100,000||None|
|Reply to Buy and Sell Advertisements||✔||✔||✔||✔|
|Send Bitcoin (BTC) to External Wallets||✔||✔||✔||✔|
|Create Buy and Sell Advertisements||✔||✔||✔|
|Access LocalBitcoins Wallets||✔||✔||✔|
|Create Business Account||✔||✔||✔|
LocalBitcoins used to be a popular place to buy Bitcoin (BTC) anonymously. But now that the company complies with European anti-money laundering laws, that’s no longer the case.
Anyone that wants to use LocalBitcoins needs to provide at least their name, email address, phone number, and country of residence. Plus, LocalBitcoins doesn’t support in-person cash payments anymore, so you’d be hard-pressed to find a payment option that lets you stay anonymous.
The closest alternative to LocalBitcoins is Paxful.
Like LocalBitcoins, Paxful lets you trade directly with other users. It also has more than 300 payment methods – including in-person cash – as well as a slightly more advanced interface. However, prices on Paxful seem a bit higher than what you’d find on LocalBitcoins in the UK.
Another popular P2P marketplace that’s worth considering is Bisq.
To use Bisq, which is a decentralised platform, you need to download the desktop app. Then, you can trade BTC and other cryptocurrencies, all without registering or making an account. The downside is that you have fewer options for mediation if a dispute arises during a trade.
Finally, even though it’s not a P2P platform, you might want to consider CoinJar.
If you’re new to crypto or you simply don’t want the risks that can come with P2P trades, CoinJar’s seamless interface and 30+ supported coins are worth checking out. It’s also fairly affordable when compared to other centralised exchanges that I’ve reviewed.
The Bottom Line
LocalBitcoins is one of the best-known P2P crypto marketplaces. It provides a convenient platform for placing trades with sellers of BTC in nearly every country on Earth.
Here are some key things that stood out to me about LocalBitcoins:
- Accepted Payment Methods: Unlike with traditional exchanges, LocalBitcoins lets you pay in nearly any way you choose, be that a bank transfer, PayPal, or Skrill.
- Escrow Protection: LocalBitcoins requires sellers to place their BTC in escrow when you initiate a trade to help ensure that you get the crypto that you paid for.
- Seller Reputation Verification: With LocalBitcoins, you get access to a lot of information about a seller’s reputation and their trading history before you place a trade.
However, there are some aspects of LocalBitcoins that I wasn’t too jazzed about.
In particular, anyone that wants to use the platform needs to provide personal information and, in most cases, a photo ID. In-person cash trades are also prohibited on LocalBitcoins, so staying completely anonymous isn’t possible.
Plus, LocalBitcoins only supports BTC trades, which means that you’ll need to look elsewhere if you want to buy other coins.
Check it out yourself! Head over to the LocalBitcoins website.
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