LocalBitcoins to Buy and Sell Bitcoin [Guide]
LocalBitcoins is undoubtedly a different website than usual, it is not a classic cryptocurrency exchange where you pay money and convert it into Bitcoin or other digital currencies. On LocalBitcoins we look for other people who want to exchange Bitcoins and negotiate with them.
But is it safe? Well yes and no, continue reading and you will find out.
As you can guess from the name, this site only offers Bitcoin and it does it as if it were a trading announcement platform. Obviously, there will be a commission to be paid for each transaction performed.
In this guide you will find all the information you are looking for on LocalBitcoins, so you can decide if this website is suitable or not for your needs.
The main topics covered will concern:
- What is LocalBitcoins
- How this website works
- Comparison with CFD Brokers
- Commissions and security
Overlooking the security issues that we will explore more in the course of the guide, commissions are the real Achilles heel of LocalBitcoins, so we will also make a comparison with brokers like eToro, who do not charge commissions.
Below you will find a list of the best trading platforms for cryptocurrencies, to facilitate your choice:
Platform: Min. Deposit: 50€ License: Cysec |
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Platform: Min. Deposit: 100€ License: Cysec |
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Platform: Min. Deposit: 50€ License: Cysec |
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Platform: Min. Deposit: 250€ License: Cysec |
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Platform: Min. Deposit: 100€ License: Cysec |
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72.30% of retail CFD accounts lose money
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Platform: Min. Deposit: 250€ License: Cysec |
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Index
LocalBitcoins: a little bit of history
This website was born in 2012 from an idea of Jeremias and Nicholas Kangas in Finland and precisely in Helsinki.
This website is not like the classic cryptocurrency exchanges and we have said this, but the differences are not only about the Bitcoin exchange system but also the regulation.
Unlike sites like CEX, Bittrex, Bitpanda, etc. LocalBitcoins has attempted to be “regulated” even though the cryptocurrency sector still offers somewhat weak regulation.
However, the Financial Supervisory Authority (FIN-FSA) has authorized LocalBitcoins to act as an intermediary for the trading of cryptocurrencies.
This authorization does not secure transactions unfortunately and exposes users to many scam risks, but we will discuss this more in the next paragraph.
LocalBitcoins’ registered office is: Porkkalankatu 24, 00180 Helsinki, Finland.
Is LocalBitcoins safe?
After giving you some good news in the previous paragraph, which concerns the Fin-FSA authorization in possession of this site, we come to the safety factor as a whole.
Like all cryptocurrency exchanges, even the largest such as Coinbase, Binance or Kraken, LocalBitcoins also suffered from cyber attacks.
In 2019 some hackers hacked some accounts on LocalBitcoins and stole 8 Bitcoins. But this was not the first theft of this website, from which another 17 BTC had already been stolen in 2015.
Although LocalBitcoins uses classic security systems such as two-factor authentication and cryptographic keys to protect accounts, unfortunately the risk of a cyber attack is always present.
If you want to buy cryptocurrencies safely, without having to worry about where to keep your precious Bitcoins, there are intermediaries who do not risk any cyber attack, because they do not really hold cryptocurrencies but only offer derivatives to trade them: CFDs.
Is it better LocalBitcoins or a CFD Broker?
If you are attracted by the possibility of profit generated by the continuous fluctuations of Bitcoin and major cryptocurrencies, CFD brokers offer many advantages over LocalBitcoins and other exchanges.
- These brokers are all regulated by the most prestigious control bodies such as our CONSOB or CySEC.
- They don’t charge commissions
- They do not risk cyber attacks because they do not exchange cryptocurrencies but only contracts (the Contracts for Difference)
These are just some of the advantages of CFD Brokers over LocalBitcoins and other trading sites.
The only reason that may push you to use LocalBitcoins instead of CFD brokers is that you are not interested in speculating but you want to buy Bitcoins to keep them for a long time, perhaps for years and you are just looking for a site that acts as an intermediary.
In the latter case, be very careful because the risks in using LocalBitcoins are high, after making your transaction, keep the Bitcoins in a safe place, preferably an offline cryptocurrency wallet.
If, on the other hand, you want to earn by trading Bitcoin and other cryptocurrencies in total safety and without paying commissions, here are the best CFD brokers for cryptocurrencies on the market: eToro, ForexTB and IQ Option.
eToro
eToro is a really safe alternative to LocalBitcoins, its reliability is confirmed by over 10 million users worldwide.
Furthermore, the security of the trading platform, considered the most intuitive of all, is very high and has allowed it to obtain a prestigious CONSOB license. Below you can see the BTC in the eToro trading platform:
Register for free on eToro by clicking hereIf you prefer to rely on the experience of expert traders for your trades, eToro provides you with a system that allows you to copy the market operations of the best traders in the world (on eToro) in a totally automatic way.
The system is called Copy Trading and it works like this:
- Register on eToro, it's free.
- Decide whether to access the Demo account or the real one (by depositing € 200 as a minimum)
- In the People section, choose the traders to copy, selecting (if you want) only those who invest in cryptocurrencies.
- With a click, Copy Trading will copy the operations of these traders, on your account, automatically and free of charge.
To give you an idea of the yield possibilities offered by this system, here is a screenshot:
Click here and choose which trader to copyForexTB
ForexTB has now become a reference point for traders, both for its ease of use and for its safety, certified by the CySEC license it has.
This Broker has a much higher reliability than LocalBitcoins and offers its investors two trading platforms and you can trade Bitcoin with both:
- The web platform is simple and accessible from any browser, without downloading any software.
- Metatrader 4 is a platform with numerous tools available, which meets the needs of the most experienced traders.
Here’s what the web platform looks like with Bitcoin ready to be traded:
Register for free on ForexTBIf you are a beginner in online trading, ForexTB has also thought of you by creating a very high level but easy to understand Trading Course.
This course is in pdf format and represents a real trading manual, with the most profitable strategies to use.
Among other things, the ebook is totally free, download it now:
Click here and download the trading course for freeIQ Option
IQ Option is a perfect alternative to LocalBitcoins, in addition to being commission-free, it allows you to open an account with a very low amount: 10 euros.
Obviously, this intermediary is also regulated by CONSOB and thanks to the low deposit threshold, it allows you to buy Bitcoin even by investing a few euros, without paying commissions!
Here’s what Bitcoin looks like in the trading platform developed by IQ Option:
Click here and sign up on IQ Option nowIf you want to buy Bitcoin with IQ Option, just follow these 4 steps:
- Register for free on IQ Option
- Log in to the Demo or real account (by depositing at least 10 euros)
- Select the Bitcoin in the trading platform
- Click on Buy or Sell
How does LocalBitcoins work?
Although we have clarified the risks involved in using a website like LocalBitcoins, let’s see how it works, so you will understand better what it is.
People use this site to post their “announcements” to buy or sell Bitcoin specifying the price.
Like any ad site, you can pay to advertise on LocalBitcoins and promote your ad. This is one of the ways the company makes money.
The announcement also specifies how you can pay or receive payment: Bank transfer or other methods such as cards and electronic payment services.
This is not about trading cryptocurrencies but about buying and selling Bitcoins among “ordinary” people.
In fact LocalBitcoins stands out from the classic exchanges precisely for acting only as an intermediary. When trading, the money is held by LocalBitcoins in an escrow service and when the exchange is completed and the Bitcoins received, the money is also transferred to the counterparty.
The reputation of the LocalBitcoins users
Added to this is an ebay-style feedback system that rewards serious users and deters scammers.
Bitcoin transactions are irreversible but traditional ones are not, so you have to be very careful because some Bitcoin buyers could pocket the cryptocurrency and then say they haven’t received it and try to recover the money sent to the seller.
The system is designed to avoid these frauds with accurate checks on transactions, but if you really want to try LocalBitcoins, check the feedback from the user you trade with!
If there are any issues with the transaction, a dedicated support team comes to help users resolve disputes.
LocalBitcoins commissions
Here we are at the sore point of LocalBitcoins, which makes it similar to the classic cryptocurrency exchanges: Commissions.
- Buyers on LocalBitcoins pay no commissions (in theory)
- Sellers, on the other hand, pay 1% commission on each transaction performed.
- The commission is added to the Bitcoins that the seller is selling and withheld by Local Bitcoins.
Usually the sellers add the commission to the total price of Bitcoin and therefore in essence they just charge it to the buyer.
LocalBitcoins review
The reviews on LocalBitcoins are mostly positive, the site is well done but the security problem and the commissions make many users turn up their noses.
Some negative reviews we have read concern the fact that LocalBitcoin “froze” some accounts without warning.
This practice derives from the anti-money laundering regulations which in the European Union are very stringent, but users do not believe it to be lawful behavior.
The other negative reviews focus on the safety issue. Intrusions, thefts and cyber attacks are scary and lead users to consider it very risky to have money or Bitcoins transit from this platform.
LocalBitcoins is not a fraudulent or illegal system but the users who use it are not all honest and you have to pay close attention, especially to the feedback from “advertisers”.
LocalBitcoins: Pros and Cons
Let’s summarize the strengths and weaknesses of LocalBitcoins in these points to keep in mind:
Pros of LocalBitcoins
- FIN-FSA licence
Cons of LocalBitcoins
- You can trade only Bitcoins
- High commissions
- High risk of fraud by dishonest users
- High risk of cyber attacks
Conclusions
LocalBitcoins is a very original site, not a classic exchange but more a regulated ad site.
It offers a Bitcoin trading system based on user feedback and earns from transaction fees and advertising offered for “bulletin board” ads.
Although it has a Finnish license it has suffered numerous thefts and cyber attacks from which it cannot escape, this makes it very dangerous to use.
Added to this is the risk of being cheated by dishonest users who unfortunately exploit the vulnerabilities of LocalBitcoins.
After reading our guide, you can consciously decide whether to use LocalBitcoins or rely on CFD Brokers, which are much safer and more reliable.
Furthermore, we must not forget that with CFD Brokers you do not pay commissions and this is not a secondary factor.
If you want to test the platforms made available by these brokers without investing money, there are the Demo accounts, totally risk-free because they use virtual money.
Here are the links to access these Demo accounts for free:
- Access the eToro Demo account for free by clicking here
- Register for free on ForexTB and access the Demo account from this link
- Access the IQ Option Demo account for free by clicking here
Unfortunately not, the site has suffered numerous thefts resulting from the frequent cyber attacks to which it is subjected.
The company has a FIN-FSA license but this does not protect users from the risk of running into some fraudulent transaction.
Yes, LocalBitcoins charges 1% commission to sellers and none to buyers. However, sellers often increase the price and in fact charge this commission to buyers by reloading the final price of Bitcoins.
The best alternatives are CFD brokers like eToro, which allow you to trade Bitcoins without paying commissions and without any risk of theft or cyber attack.