11 min read

LocalBitcoins is a Bitcoin custodial peer-to-peer exchange that has been around since 2012. It has an excellent reputation and a large geographical footprint.  It has sellers who are ready to accept more currencies and different payment methods than on any other exchange or market.

The review presents the advantages, fees, limits, payment methods, legality and possible risks.

Also, a list of alternative peer-to-peer trading platforms is presented.

LocalBitcoins is a peer-to-peer (p2p) marketplace that allows buyers and sellers to directly communicate and trade Bitcoins. In this post we’ll review the service and also dispense some tips on what to look out for if you’re new to it.

Unlike most bitcoin exchanges, that match buyers and sellers in an automated process, LocalBitcoins allows users to communicate directly. LocalBitcoins is like the Craigslist for buying and selling bitcoin. Its sellers offer a wide variety of payment options and the built in escrow makes the process secure.Having said all that, since anyone can become a seller there is a lot more room for scammers on this platform.In a nutshell, LocalBitcoins is a good place to go to buy bitcoins when you can’t find your requested payment methods anywhere else or you don't have other exchanges available in your country. However, prices are usually higher on this platform and you have to do your due diligence to avoid getting scammed.

How is LocalBitcoins secure?

LocalBitcoins allows for secure trading through the use of several measures:

  • Reputation system - Each trader has a reputation rank and also public history records showing their past activities.
  • Escrow - When you request a trade, the traded Bitcoins are held on LocalBitcoins’ escrow service. The Bitcoins are released only after the seller confirms the trade is completed.
  • 2FA (optional) - Whenever you log into your account you will be required to enter an additional PIN code sent to your mobile phone. This prevents people from hacking into your account.
  • Login guard - LocalBitcoins is also able to verify you are always logging in from the same browser. If a login from a different browser occurs, an email verification will be required.
  • Support and conflict resolution - LocalBitcoins has a support team ready to answer user questions and also resolve conflicts between buyers and sellers in case it happens.

Until recently, LocalBitcoins acted as one of the main places you could still buy Bitcoins anonymously. However, as new legislation came into play, LocalBitcoins now verifies customer identities with traditional KYC (Know Your Customer) processes. Additionally, the option to buy Bitcoins with cash was removed from the site. If you're specifically looking for an option to buy bitcoin with cash, check out LocalCryptos.

Currencies and Payment methods

LocalBitcoins itself doesn't accept any fiat currencies or payment methods since it's not involved in the payment occurring between buyer and seller. It's entirely up to the sellers to decide which currency and payment method they want to accept. The good news: there are trades available in most countries and you can easily search for them by filtering for your currency. Users on the site accept a variety of payment methods including:

Since you’re buying and selling to individuals, you won’t be able to use a credit card. However, you can use your credit card to load up your Paypal or Transferwise wallet and then use your balance to pay a seller on LocalBitcoins.

Keep in mind that different payment methods will result in different exchange rates, since some methods are riskier than others. For example, sellers willing to accept PayPal are usually selling bitcoin at a premium to the market price. 

There's two reasons for that: 

  1. buying bitcoin with PayPal is in high-demand. 
  2. the method can be risky for the seller since the buyer can initiate a chargeback after the trade, potentially leaving the seller with nothing.

Because of this, you will usually get the best price for buying Bitcoins using an irreversible payment method such as cash deposits or wire transfers.

LocalBitcoin Fees

Registering for an account and buying Bitcoins on LocalBitcoins is completely free. LocalBitcoins users who create advertisements are charged a 1% fee for every completed trade. So basically, only the people who are actively promoting their services (i.e. makers) are being charged.

Bitcoin transactions to wallets of other LocalBitcoins users are also free of charge. Each time you send Bitcoins outside of LocalBitcoins, you will only be charged the standard Bitcoin Network fee, which varies depending on how crowded the network is.

That said, it’s never advisable to leave your Bitcoin in an exchange or marketplace wallet, and is highly recommended to keep in a secure hardware wallet.

SafePal securely stores your crypto assets in the most simple and easy way. Truly mobile-friendly, supporting major cryptocurrencies like Bitcoin, BNB, Ethereum, and all ERC20 tokens in one wallet. Start your worry-free crypto life with SafePal everywhere, every day

Buying Limits

Depending on your verification level you’ll have different buying limits:

  • T0 – Requires your name, country, email address and phone number. The limit for trade is €1,000/year. 
  • T1 – Requires T0 + physical address, ID verification and KYC info. The limit for trade is €20,000/year. 
  • T2– Requires T1 + Proof of residence. The limit for trade is €200,000/year. 
  • T3 – Requires T2 + extra ID verification. There is no limit for trade.

LocalBitcoins vs. Paxful

Aside from LocalBitcoins, there is one more peer-to-peer marketplace with similar trade volume and popularity called Paxful. Paxful is popular for small trades and settles more trades than LocalBitcoins, whereas LocalBitcoins features fewer but larger trades. 

Moreover, outside of the US and Europe they have different regional focus. 

LocalBitcoins is more popular in Latin America whereas Paxful is strongest in Africa.

How to use LocalBitcoins safely

Before we go into how to use LocalBitcoins safely make sure to watch this short video on how to use the platform.

LocalBitcoins is a great platform, however sometimes the traders on it are not so great. At the end of the day, you’re trading with strangers so you have to make sure you’re taking precautions.

Finding a reliable seller

After filtering out your sellers by the preferred location and payment method, you need to choose who you are going to deal with. As a rule of thumb, DO NOT CHOOSE A SELLER BASED ON PRICE.

Sometimes it’s worth paying 5% more in order to conduct a transaction with a more reputable seller. Look at the seller’s transaction history and see how he was rated in past transactions.

Also, don’t post a request to buy Bitcoins, that will just attract a lot of scammers. Instead, look for people who are actively selling Bitcoins as they are probably more legit.

Go over the seller’s profile and make sure that he or she qualifies as follows:

  • They have traded over 100BTC in total with a minimum of 100 trades
  • The seller has a feedback score of at least 98%
  • The seller’s account is more than 1 year old
  • The seller is verified (phone number, email, company account)
  • The seller is trusted by at least 10 people

If you follow these strict rules then you’ll probably be fine. If you can’t find a seller that matches all of the above, try to find the next best thing. The idea is to do your homework and see that the seller has actually completed large successful trades in the past. Below is a screenshot of a profile of a trader that looks trustworthy.

You can also search the LocalBitcoins’ forum for that seller’s username. If any complaint comes up, you’ll probably find it there.

Initiating a trade

Send a message to the seller requesting a trade and wait for their response. DO NOT:

  • Send additional information before receiving a response from the seller.
  • Agree to trade with the seller outside of LocalBitcoins since you will not be protected by LocalBitcoins’ escrow service.
  • Send your payment information in any other way other than the LocalBitcoins message box. No emails, text messages or phone calls. Use the LocalBitcoins interface only.
  • Once everything seems in order, you can start the trade and send the payment.
  • Make sure to mark the payment as made only after you send payment, or else you will probably be denied from the trade.

Additional tips

If any issue arises, try solving it with the seller first. Don’t worry about losing money, since you are protected by LocalBitcoins’ escrow service. Keep in mind that if you’re totally new to LocalBitcoins, “power sellers” may not want to trade with you because you do not have enough feedback yet. This means you may have to make a few small trades with less trustworthy sellers in order to bump up your feedback so you can deal with the more respected sellers.

Is LocalBitcoins legit?

LocalBitcoins offers a variety of payment methods for buying Bitcoin. However, this flexibility usually comes with a higher price tag and is also a magnet for scammers, so you’ll need to do extra background checks before getting into a trade. If you can’t find a regulated exchange that supports your country or requested payment method, more often than not LocalBitcoins will have a solution for you, just make sure to follow the safety tips we’ve detailed in this post. 

How to buy Bitcoin on the Localbitcoins platform (quick guide)

Step 1. Register

Register an account with LocalBitcoins. You get a free and secure online bitcoin wallet. No additional apps are needed. If you already have an account, skip to the next step.

Step 2. Search for advertisements

Go to the main page and in the search box fill in the form with the amount you want to buy in your currency, your location and choose a payment method. If you're unsure how you want to pay, choose "All online offers" as your payment method. The site will list bitcoin traders available in your region.

Localbitcoins: How to buy bitcoin - Step 2. Search for advertisements

Step 3. Select an advertisement

From the list of advertisements, choose one from a trader with a good reputation score and a high amount of trades. The response time indicator shows if a trader replies within five minutes (green), within 30 minutes (yellow) or slower than 30 minutes (grey). You can click the 'Buy' button to view more information about an advertisement.

Localbitcoins: How to buy bitcoin guide - Step 3. Select an advertisement

Step 4. Pay the seller

After you press the 'Buy' button you'll see more information about the advertisement, including the terms of the trade. Read through them before submitting the trade request, if you don't agree with them you can go back to the previous page and choose another advertisement.

To start the trade, type in the blue box how much you want to buy, enter a message for the seller and click the Accept terms and send trade request button to the start the trade. Be sure you're ready to pay when clicking the button, if you don't pay before the payment window is over, the trade will be automatically cancelled.

Localbitcoins: How to buy Bitcoin guide - Step 4. Pay the seller

Step 5. Mark payment complete

Once you have made the payment, click the I have paid. Once the trader has verified that your payment has been received your Bitcoin will be released from escrow and they are instantly available in your LocalBitcoins wallet.

Localbitcoins: How to buy Bitcoin guide - Step 5. Mark payment complete

Alternatives to the Localbitcoins peer-to-peer platform

You can also use peer-to-peer platforms similar to Localbitcoins. Most of them operate on a global level and offer a wider range of exchangeable cryptocurrencies.

Learn more, read our reviews, and visit the official websites of these platforms:

TOP 20 peer-to-peer platforms

Buy and sell bitcoins and other cryptocurrencies instantly, locally, without a third party, using different payment methods on the best peer-to-peer platforms:

Paxful, Localbitcoins, LocalCoinSwap, LocalCryptos, Binance P2P, Vertex Market, HodlHodl, Agora Desk, Remitano, Coindirect, WazirX, Shiftal, CryptoLocator, Bitpapa, Chatex, CoinCola, TotalCoin, BitZlato in the:

UAE, Argentina, Australia, Bangladesh, Brunei, Bolivia, Brasil, Belarus, Canada, DR Congo, Switzerland, Côte d'Ivoire, Cambodia, Cameroon, 中国, Colombia, Algeria, European Union (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden), the United Kingdom, United States, កម្ពុជា, Ghana,  日本, Hong Kong, ประเทศไทย, Indonesia, Israel, India, Kenya,ាSouth Korea, Myanmar, Mexico, Malaysia, Namibia, Nigeria, Norway, Nepal, New Zealand, Oman, Peru, Philippines, Pakistan, Qatar, Russia, Rwanda, Singapore, ประเทศไทย, Turkey, Taiwan, Tanzania, Ukraine, Uganda, Venezuela, Việt Nam, South Africa, Zambia, Zimbabwe.

Have you read this article to the end? Then a gift for you! Follow this link and get a 30% discount when buying the world's only biometric hardware wallet D'CENT.

DCENT Wallet - The safest and most convenient blockchain cryptocurrency wallet. Biometric hardware wallet - Keep your cryptocurrency secure with your biometrics. D'CENT - Biometric hardware wallet is the most convenient next-generation hardware wallet with highest security. Easily connect with mobile app via Bluetooth and securely manage your digital assets with biometric authentication. D'CENT Wallet supports various cryptocurrencies such as Bitcoin, Ethereum, XRP, Stellar, Klaytn, and many more

Sources: LocalBitcoins.com, Cryptotesters.com, BuyBitcoins24.com, Paxful.com