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LocalBitcoins.com is a very interesting Finland-based crypto currency exchange, which is looking to stay true to Bitcoin’s decentralized, peer-to-peer nature. The exchange itself is sort of like a message board, which allows its users to post advertisements and to be then contacted by those interested to take the other side of the deal they’re offering. People can agree to meet in person to conclude the crypto currency transfer, or they can trade directly, with the help of online banking. LocalBitcoins also features a web wallet, where people can store their virtual currency and where purchases can be paid directly.
Besides the fact that through its unique business model LocalBitcoin eliminates corporate overhead from the trading process, it speeds up and optimizes the activity. Obviously, to counter fraud as much as possible, LocalBitcoins also offer an escrow and a transaction service to protect buyers. Needless to say, given the setup, payment methods aren’t really a problem with LocalBitcoins: the site supports every such method that’s also supported by its user-community. The operation boasts that it only takes traders a few minutes to slice through the entire trading process from account creation to actually seeing the bitcoins land in the wallet.
Its name a clear indication in this regard, LocalBitcoins is very local-focused indeed. Through geo-location, it presents its users with the most relevant Bitcoin deals in their more or less immediate vicinity.
The declared mission of the operation is clear: it aims to assist in the proliferation of Bitcoin as a value vehicle, and it is looking to serve locations outside the reach of the traditional banking industry.
The corporate entity behind the LocalBitcoins brand is apparently LocalBitcoins Oy, based at Porkkalankatu 20, 00180, Helsinki, Finland. The VAT number of the company is FI25251957. The company does not actually offer a phone number for contact purposes, although support is available through a number of other channels.
Founded back in 2012, LocalBitcoins has indeed been around for quite a while now, giving the community plenty of opportunities to assess the quality of its services and to provide feedback on it (more on that below).
Given the nature of the operation, security is a major aspect of LocalBitcoins’ activity. In fact, it’s safe to say that it is one of its most important aspects indeed. With that in mind, the fact that they have set up a thorough and rather intricate system to deal with safety and security related issues, isn’t really surprising. While the site does in fact claim that it ensures the safety and security of all those who make use of its services, most user complaints are indeed about failings in this regard. There’s apparently some scamming going on at LocalBitcoins, obviously, not by the operation itself but by rogue users, who help themselves to others’ hard-earned bitcoins. Here’s a brief rundown on what LocalBitcoins does to prevent such swindling.
The Reputation System is meant to sort out swindlers from real traders. Every LocalBitcoins user has a reputation rating as well as a publicly available trading history. Public feedback is available on every user too.
The escrow service is another safeguard designed to protect against fraud. When a buy order is initiated, the bitcoins from the seller are held by the LocalBitcoins escrow service until confirmation is received from the seller, at which point, the virtual currency is released to the buyer.
Two-factor authentication is another link in the LocalBitcoins security chain. This is the same type of security feature that is currently used by banks and by Google. Two-factor authentication is about entering a secret code from your mobile phone and it isn’t enabled by default.
Login Guard adds yet another layer of protection, by verifying the browser from which one’s logins originate. If a different browser is used, additional verification needs to be completed.
Support and conflict resolution is where most of the user grievances stem from in regards to the services offered by LocalBitcoins. While the site does in fact give users several ways to report other users, to dispute trades and to report fraud, in practice, these channels aren’t quite as helpful and readily available. This is where the darker side of the business comes to light.
LocalBitcoins does indeed operate under a reputable jurisdiction, yet its user feedback score isn’t particularly impressive.
Many traders allege that ID theft is rife at the site, as is the use of fake feedback, artificially pumped-up reputation ratings and scam. According to some, not only do LocalBitcoins not help when it comes to such fraud, they in fact make efforts to cover up the issues.
Another problem is that new users who do not yet have a proper reputation rating, are given a hard time getting their ads to show. They are apparently muscled over by speculators with multiple accounts who are often found to have pumped up their own reputation scores.
The LocalBitcoins support offers traders an unusually high number of channels to request assistance with various issues. With all that though, users aren’t particularly satisfied with the way support handles things, for reasons some of which have been covered above.
LocalBitcoins users can request assistance with issues related to their LocalBitcoins account, with disputed trades and with transactions in their Bitcoin wallets as well as with their ads. They can also dispute trades, report fraud and report other users. All support is form-based email. There’s no phone support and no live chat support either. The brand maintains an impressive social media presence though – they may be contacted there through various channels too.
In order divide the costs of handling Bitcoin transactions in a fair manner, LocalBitcoins charge deposit fees for incoming transactions. There are also Bitcoin sending fees. All fees are adjusted dynamically based on how congested the Bitcoin network is.
You can get lower outgoing transfer fees by timing your transaction to when the network is quiet.
Deposit fees are larger than the sending fees, generally about 3x the amount of sending fees. The smaller the transaction you deposit (in kB – not Bitcoin), the smaller the deposit fee will be.
LocalBitcoins seems to be a fair operation, built on a sustainable business model. It is one of the most popular bitcoin exchanges, especially in the US, UK and China. We really love the concept as well. Our recommendation would be to visit the site, get in touch with sellers in your area, but only work with sellers with the highest ratings, who have NO bad reviews at all. Scammers may be able to give themselves a ton of positive reviews, but look for those 1-2 real negative reviews. They are much more indicative.
(When you sign up with LocalBitcoins.com using our affiliate link, we may be compensated.)
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