Localbitcoins is somewhat of a veteran on the cryptocurrency scene – the site has been operating since 2012. The crypto startup is based in Helsinki, Finland, and started as a peer to peer exchange for Bitcoin that fits the spirit of Bitcoin as a decentralized system. As such, the basic idea is that Localbitcoin functions like a marketplace, but any transactions that take place on the site are done directly between users – they do not go via Localbitcoin.
In this sense, Localbitcoin functions a little like a cryptocurrency version of Amazon or Ebay. Essentially, Localbitcoins provides a quick and secure infrastructure for people to buy and sell bitcoins between one another. They support a huge range of payment methods, and have a range of unique bitcoin solutions – including a Bitcoin ATM for personal use!
In this guide, we take a detailed look at Localbitcoins and provide a step by step guide on how to buy bitcoin using the site. We also look at the pros and cons, and whether it is safe. Below is our Localbitcoins review.
Is Localbitcoins Safe?
A common worry with these kinds of peer to peer sites is that they are unsafe. In the case of Localbitcoins, the wallet they provide and the site, in general, is all built to high-security standards. Also, Localbitcoins has been around for a long time and generated a loyal user base over those years, suggesting that security has been strong for a large period of time.
Still, the fact is that when you are buying bitcoin from other people as opposed to from a centralized exchange, the change for scammers and con artists to get involved is increased. Localbitcoins has a number of systems in place to help keep transactions safe and secure.
First, they use an escrow system, so when you initiate a sale, the crypto is placed into secure escrow by Localbitcoins. This means that neither the seller nor the buyer has immediate access to it. The funds are then released from escrow and sent to the buyer once the seller confirms they have received payment. This way, sellers cannot hold onto funds after supposedly selling them.
Second, if for some reason there is a dispute, then the bitcoin remains in escrow and Localbitcoins step in to resolve the dispute. They will look at evidence from both seller and buyer, and then will make a decision as to who is correct and who deserves the escrowed Bitcoin.
Finally, Localbitcoins offer a wide range of identity verification steps and user feedback systems that allow users to keep track of who are good (or bad) sellers and buyers. This means that you have a lot of information on any users that you are about to deal with, so you can make an informed decision.
Still, all this said, you do need to exercise caution if you are buying or selling on Localbitcoins, as there are scammers out there in the world of crypto.
How To Create An Account On Localbitcoins Step By Step
- Buy Bitcoin at some of the cheapest prices possible.
- Huge range of payment methods.
- Tried, tested & trusted method of buying Bitcoin.
To begin buying crypto on Localbitcoins, the first thing you need to do is create an account. To do this, select “sign up for free” on the homepage and then you’ll need to enter a username, an email address and a password.
For the password, you will need to choose something strong, so use a combination of upper and lower case letters, numbers and wildcards ( “, £, !, etc.). Also, your password will need to be at least sixteen characters long. Make sure that the password you choose is unique, and not a password you use anywhere else, to keep your account as secure as possible.
Once you have done this and accepted the terms and conditions, you will receive an email verification. Upon completing this, your account is set up! Also, upon verifying your email, login guard is enabled. Essentially, this means if a new device attempts to log in to your account, it cannot proceed until you click a link received by email. This gives an added layer of security, although if you find this annoying you can switch it off in your account settings.
Setting Up Two Factor Authentication (2FA)
Before proceeding to buying crypto, Totalcrypto strongly recommends that you go ahead and set up two-factor authentication (2FA) to add an extra layer of security to your account. First, go to the account drop-down menu in the top right, then select account security. Without 2FA enabled, it will say that your current Account security is weak.
Once you have navigated to the account security page, you can go ahead and enable 2FA. There are two methods of 2FA offered by Localbitcoin, you can either use a mobile, app-based 2FA or you can use a paper-based method.
- The mobile method uses a QR code and Google Authenticator (available on Android, iOS, and Windows). With this method, each time you log in you will be prompted to also use Google Authenticator to enter an authentication code. If you have access to a smartphone, this is certainly the simpler option.
- Alternatively, you can use the paper method instead. With this method, when you activate it a code table of 90 authentication codes is generated. You print this and keep it in a safe place, and each time you log in you will be prompted to enter a different one of these codes. This means after 90 logins, your paper set will now be done and you will need to reactivate 2FA and print out the newly generated code table.
NB: Do not store these codes on your computer – it is important that you print them out and store them securely. If they are on your computer, you run the risk of hackers getting hold of them.
How To Buy Crypto On Localbitcoins – Step By Step
Once you have your account set up, you are ready to buy bitcoins! To do this first navigate over to the “Buy Bitcoins” section, which is on the top left of the main header. Clicking this brings up the marketplace. You can search through these options for a specific trade using the search bar, or alternatively just browse what is available by scrolling down.
There are many different ways to buy bitcoin on Localbitcoins, as discussed above. I will outline two of the common methods, buying via bank transfer and buying in person. Many of the other methods of payment function along exactly the same lines, just involving a different transaction at the end, so these guides will be useful even if you plan on using a different payment method.
Selecting a Seller
First, though, I want to take a quick look at how you can select a seller for any kind of bitcoin transaction. This part is really important because as LocalBitcoins is a decentralized exchange, it attracts more scammers. As I have already discussed, there are a number of systems that Localbitcoins have in place to help protect you as a buyer, but it is still really important that you ate the time to check out a buyer’s profile before entering into a transaction.
From the marketplace screen, you can find a list of sellers. A wide range of information about sellers is displayed: along with their name, you will see:
- The number of transactions they have carried out. Ideally, you want to go for a high number here, as this way you know that the user has been on the service for a long time and their reputation will be more trustworthy.
- A percentage rating of how other users have rated transactions with them. With this, you really want to aim for something in the high 90s. In fact, many sellers have a 100% rating, so you often don’t need to settle for anything less.
- A colored dot that tells you how long it takes them to respond to requests on average. A green dot means sellers reply within a few minutes, a yellow dot means they reply in around half an hour, a grey dot means you could be looking at more than half an hour for a response.
Clicking on an individual seller’s name will bring up a more detailed view of their stats, which means that you can see how long they have been on the site and a whole bunch of other stats. It is recommended that you take a look at these detailed stats before choosing to buy from a particular seller, as this can help you determine whether or not they are trustworthy and legitimate.
This detailed breakdown of a user should give you a more rounded picture of a buyer. Ideally, you want to be looking for people who have used the site for a long time, with a wide variety of verification methods completed. This way, you can be more confident that you are dealing with the person you think you are. It is also worth checking that they have completed lots of transactions with different users, as this means the positive feedback has come from a wider pool of people.
Buying Via Bank Transfer
Purchasing via bank transfer allows you to buy bitcoin without leaving the comfort of your own home. The process is very simple and is made more secure by LocalBitcoins’ built-in escrow process and dispute resolution service (see below for a more in-depth discussion of this).
First, you select ‘national bank transfer’ from the dropdown menu in the Quick Buy box, then put in the amount of GBP you are looking to spend on Bitcoin, and hit search. This will give you a break down of every seller with an offer that matches.
Alternatively, you can simply browse current offers from current sellers, and search out a deal that way.
Different sellers will have different criteria they require of you before they are willing to sell to you – for example, a lot of sellers using bank transfers will require that you have verified your real name on your account.
Once you have found a seller that you like the look of, you can hit the buy button. Enter exactly how much you are looking to buy, and also a message to the seller if you wish, and then you submit your trade request. This lets the seller know that you are interested and lets them know how much you are looking to buy. It is very important that you are able to pay once you have sent this request – by clicking you are agreeing to the sale, so be ready to pay.
After sending the trade request, you’ll want to then go ahead and make the payment. In this case, we are talking about a bank transfer, so at this point head over to your banking app and send the payment through to the address of the seller. You will be informed exactly what to include as the reference code – do double check this before making the payment.
Once the payment is made, you can click the blue button that says “I have paid”. This lets the seller know you have sent the payment. The seller will then verify your payment, and once they are satisfied then your bitcoin is released from escrow and into your wallet.
Buying With Cash
Buying bitcoin with cash in person follows the same basic procedure. You start by setting up the trade with the seller, and organizing a place and time to meet. It is important if you are doing this that you feel comfortable about the place you are meeting – it should be somewhere public, and it might be a good idea to ask someone to come along with you just for extra security (although, do check with the seller too – you don’t want to surprise them by showing up with company!).
Once you meet the seller, it is simply a case of them transferring the Bitcoin and you handing over the cash. In this way, it can actually feel more secure as you can see the seller and talk through the transactions.
Still, for some people, this idea of meeting and exchanging paper money for Bitcoin might seem a little daunting. Actually, though, it could not be simpler.
Accepted Payment Methods
As has already been mentioned, Localbitcoins offers a wide range of payment methods. In fact, at the time of writing, Localbitcoins lists over 45 different types of payment being taken by sellers! Broadly these fall into 5 categories:
- Bank Transfer – including Western Union and other international services
- Cash – either in person or in the post.
- Gift Cards – Amazon and Steam gift codes are common.
- Online Payment Services – including PayPal, Pingit, and Paym.
- Altcoins – Dash, Ripple, Litecoin, Monero, and Ethereum are currently offered.
Essentially, LocalBitcoins offer one of the most comprehensive set of transaction types in the world of cryptocurrency. This makes them a great choice if you are needing to buy bitcoin in a less common way.
The great news for buyers and sellers is that using Localbitcoins services is free. A network fee is incurred if you move bitcoins from the Localbitcoin wallet to another bitcoin wallet. Similarly, a fee is applied when you move bitcoin between Localbitcoin wallets too. At the time of writing, that fee is 0.00005BTC.
If you are a seller and you are looking to get more exposure, you can also create advertisements which are charged at a cost of 1% of each completed trade.
Pros and Cons
A huge pro compared with buying through exchanges is that the competition between sellers keeps prices very competitive. Many sellers will offer BTC at below the market rate, which means that you can find really good deals on cryptos.
As an example of this, at the time of writing this article, I could buy 1 BTC on Coinbase for £2,930, but there were sellers on Localbitcoins offering bitcoins for below £2,500.
Localbitcoins has been in the game a while and has amassed a loyal user base. This means it gets more sellers and buyers than other peer-to-peer bitcoin services. Also, the fact that it has been around the crypto scene for so long has given it a good reputation. Its longevity does show that the system they use works: it is tried, tested and trusted.
One downside of Localbitcoin’s age is that its user interface may not look as slick as other offerings out there on the market. However, this is really little more than an aesthetic criticism – everything on the site works quickly and well.
Still, for some people, the fact that deals are person to person and do not go through a central exchange may be a little off-putting. Although the site takes lots of steps to ensure that it is safe, the risk of being scammed is still higher than using a recognized centralized exchange. As such, some might feel it is just too risky, especially for purchasing a large amount of crypto.
Finally, a big con here is that you can only buy bitcoin. Although you can use altcoins to buy BTC, there is no official option to buy altcoins. Some sellers will offer transfers of other cryptos, but this takes place outside of the Localbitcoins escrow system and is therefore not advisable. If you are looking to invest in altcoins then, Localbitcoins is certainly not a one-stop shop. Still, you can buy bitcoin here (often at a great rate) and then use this BTC at other exchanges to get into other cryptocurrencies.
If you are looking at buying or selling bitcoin and want a wide range of transaction options open to you, then Localbitcoins is definitely for you. If you are looking for a way to buy or sell bitcoins for cash, Localbitcoins is a great option. It is fast, safe and easy to use. However, some will be put off by the peer to peer nature of Localbitcoins, as it does not feel as slick as the bigger centralized exchanges. But then, that is kind of the point of Localbitcoins, it places the power to buy and sell cryptocurrency in your own hands and gives you a huge amount of freedom in the process.