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What Is LocalBitcoins? How Does It Work?


Crypto trading has extended beyond regular crypto exchanges to peer-to-peer (P2P) trading, thanks to decentralized marketplaces.

It is now possible to buy bitcoin directly from a seller using fiat currency, and you can also sell bitcoin directly to a buyer for fiat currencies on these marketplaces.

One of the top decentralized bitcoin trading platforms is LocalBitcoins, and this is how you use it.


What Is LocalBitcoins?

LocalBitcoins is a household name when it comes to P2P bitcoin trading. It is a decentralized marketplace where people from all over the world can buy and sell bitcoin directly to each other without using a centralized exchange.

As a decentralized marketplace, there is no single entity responsible for regulating trades the way centralized exchanges do; only rules set by buyers and sellers govern how users behave—well, almost. Unlike a traditional decentralized exchange, however, LocalBitcoins requires proper registration and verification to use it.


This is necessary because instead of trading with an exchange, you are trading directly with a stranger on the other side of the world. Some traders may find this uncomfortable as crypto transactions are ideally not supposed to be traceable back to you

Like other P2P crypto marketplaces, LocalBitcoin allows sellers to receive payments through Payoneer and other payment methods that centralized exchanges don’t support. This also gives buyers the option to pay for bitcoin using such payment methods.

Depending on the payment method you wish to use, you can trade bitcoin on LocalBitcoins with traders outside your country of residence, provided you both use the same fiat currency. For example, a buyer in Europe using Payoneer can buy bitcoin from a seller in the US, if he has USD in his Payoneer account.

This removes the limit of geographical boundaries on LocalBitcoins, unlike the P2P features on centralized exchanges, which do not allow the use of most payment methods.

How Does LocalBitcoins Work?

LocalBitcoins connects bitcoin buyers and sellers in a decentralized setting. Users have to register and get verified to start trading, but this takes only a few minutes to complete. Once this is done, they can place trades to sell bitcoin or search for available offers to buy bitcoin from sellers.

As a seller, you can set the rules for your trade, such as the rate, the payment methods you accept, and other details. Buyers who agree to your terms will then indicate interest in buying, and the exchange can be complete within minutes, depending on how quickly both parties respond.

Once you agree to sell your bitcoin, LocalBitcoins locks it in escrow and will release it to the buyer as soon as you confirm receipt of payment (or vice versa if you’re buying—the seller will release them on receipt of your fiat payment). If there is any issue with the trade, such as false claims by the other party, you can file an appeal, and the team will look into it. Such issues are easily resolved in most cases.

Which Countries Does LocalBitcoins Support?

There are more than 200 countries supported on the LocalBitcoins marketplace. Unsupported countries include the US, China, Indonesia, Syria, and North Korea. The restriction is mainly due to regulatory and other financial restrictions that make it illegal for residents of the countries to use the marketplace.

If you don’t live in any of the restricted countries, you can hop on LocalBitcoins at any time and start using the platform once verified.

Is LocalBitcoins Secure?

Security is a major concern when it comes to trading cryptocurrencies, even more so on a decentralized marketplace. LocalBitcoins has security measures in place to ensure that its users, both buyers and sellers, are protected.

First is the escrow it uses to hold bitcoin to be sold. Once a seller agrees to sell a particular amount of bitcoin, it is locked in escrow and released to the buyer when fiat payment has been successfully sent. This ensures that the seller cannot receive payment and decide to hold on to their bitcoin.

In a case where the seller does not receive a payment within a stipulated time, the bitcoin is sent back to them, and no one loses.

Secondly, LocalBitcoins ensures that all traders are verified before they can buy or sell bitcoin. Although some may find this intrusive, It significantly reduces the chances of scammers coming out of nowhere and deceiving verified users.

In addition, two-factor authentication (2FA) is applied to all user accounts to confer an additional layer of security. Accounts that have 2FA activated cannot be accessed until the registered email address or phone number returns a confirmation that the owner of the account truly wants to transact.

All these measures make LocalBitcoins one of the most reliable decentralized marketplaces for trading bitcoin.

LocalBitcoins Fees

It is absolutely free to buy or sell bitcoin on LocalBitcoins, provided you don’t create an advertisement. If you create an advertisement, you will be charged a 1% fee for every completed trade. Other than that, sellers set prices, which may be slightly higher than bitcoin’s market value.

Sending bitcoin to the wallets of other LocalBitcoins users is also free, as well as incoming transactions to LocalBitcoins wallets from wallets outside the marketplace.

However, a fee of 0.00020001 BTC is charged for sending bitcoin to a non-LocalBitcoins wallet. This is charged automatically from your wallet when you initiate the transaction. The fee may be higher or lower than the stated amount at the time you carry out the transaction, depending on how congested the bitcoin network is at the time.

LocalBitcoins will adjust the fee automatically so that your transactions are confirmed as quickly as possible. Note that bitcoin transaction fees are often higher than other cryptocurrencies.

LocalBitcoins Pros and Cons

LocalBitcoins has so many features that make it ideal for P2P bitcoin trading. However, it also has its weak points, so here are some of LocalBitcoin’s pros and cons.


Pros

  • Trusted P2P marketplace with high security
  • Registering, buying, and selling bitcoin is free
  • Supports most countries of the world
  • Supports many payment options
  • KYC required

Cons

  • Risk of hacks
  • KYC required
  • Bitcoin is the only available asset
  • Bitcoin can be relatively expensive

Should You Use LocalBitcoins?

If you are looking for a reliable platform to buy and sell bitcoin directly using your local currency, LocalBitcoins is a good choice. It also doesn’t charge a lot of fees, making it quite affordable.

You are also able to use payment options that you cannot use on centralized exchanges, so it is far more convenient. Therefore, LocalBitcoins is a good marketplace to carry out P2P bitcoin trading, and you should use it if you don’t mind the cost of the bitcoin.


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