Review
Updated
LocalBitcoins is a pioneer in peer-to-peer crypto trading, but unfortunately, it's no longer a suitable option for most investors. It provides a simple platform where people can post classified ads offering to buy or sell Bitcoin (BTC). While it's a great concept, it can be frustrating to use, and it's unavailable in most of the United States. Read our in-depth LocalBitcoins review to find out more about it.
Ratings Methodology
Bottom Line
A decentralized crypto exchange that's showing its age. The lack of features, verification requirements, and geographic restrictions will rule it out for most crypto investors.
Fees:
No fees for buying or selling Bitcoin
Account Minimum:
None
Full LocalBitcoins review
This cryptocurrency exchange is a good fit for: Crypto enthusiasts who want to buy or sell Bitcoin directly with other people. For the typical investor, there are better options available.
Pros
- Peer-to-peer Bitcoin purchases
- No buying or selling fees
- Wide variety of payment options
- Reputation system
Cons
- Unavailable in most states
- Risk of scams
- Asks for private information
- Only offers Bitcoin
- Limited features
Top perks
Peer-to-peer Bitcoin purchases
If you're looking for a place for peer-to-peer Bitcoin purchases, LocalBitcoins is one of the most popular options. Users can post and respond to classified ads with offers to buy and sell Bitcoin.
COMPARE TOP PICKS: Best Places to Buy Bitcoin
On every transaction, LocalBitcoins keeps the Bitcoin in an escrow account. After the seller confirms they've received the funds, the Bitcoin is released from escrow and sent to the buyer. This provides protection for both the buyer and the seller. However, it's worth mentioning there are scammers who attempt to steal people's crypto or cash.
No buying or selling fees
There are no fees for buying or selling Bitcoin on LocalBitcoins, making it an affordable way to invest in crypto. If you post an ad, LocalBitcoins charges a 1% escrow fee on every completed trade. You can avoid that fee by responding to ads instead of posting your own. It's an active exchange, so there are usually plenty of offers available.
Wide variety of payment options
LocalBitcoins allows users to choose nearly any payment method they want. Users list the payment methods they'll accept in their ads. When you search for offers, you can add filters for specific payment methods.
Here are some of the payment methods available on LocalBitcoins:
- Bank transfers
- Money wires
- Payment apps, such as Zelle and PayPal
- Other cryptocurrencies
The most notable payment method you can't use on LocalBitcoins is cash. This actually used to be an option, but the exchange removed it in 2019.
Reputation system
Every profile on LocalBitcoins includes information on that user's trading history, including their number of confirmed trades, feedback score, and comments from other users. This is a good way to find reputable buyers and sellers, although it can also make getting started on LocalBitcoins difficult. Some users won't trade with anyone who hasn't already completed a certain number of transactions.
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What could be improved
Unavailable in most states
Due to government restrictions, LocalBitcoins is unavailable in most of the United States. It's only available to residents of the following 10 states:
- Illinois
- Kansas
- Montana
- New Hampshire
- New Jersey
- Pennsylvania
- Tennessee
- Texas
- Virginia
- Wisconsin
FIND A PLACE TO BUY CRYPTO: Best Cryptocurrency Apps and Exchanges
Risk of scams
Since LocalBitcoins has peer-to-peer trading, there are quite a few scammers who try to take advantage. Here are a couple examples of common LocalBitcoins scams:
- Buyers will pay for Bitcoin using a payment method that can be reversed, such as PayPal. After they get the Bitcoin, they'll dispute the transaction as fraud.
- Sellers will offer a discount if the buyer makes the trade outside of LocalBitcoins. Then, the seller won't send the Bitcoin, and the buyer will have no recourse because the transaction took place without LocalBitcoins' escrow.
You can minimize your risk on LocalBitcoins by checking each user's feedback before trading with them and never trading outside the exchange. However, these are things you don't need to worry about when investing on a centralized crypto exchange.
Asks for private information
During the account registration process, LocalBitcoins asks for information about your primary address, reasons for use, financial status, and activity type. It also requires that you provide a government-issued ID.
There's nothing wrong with this, and in fact, we recommend exchanges with thorough identity verification. But people who use decentralized exchanges like this one often do so for privacy reasons. That has traditionally been an advantage of decentralized exchanges over centralized exchanges. For that reason, LocalBitcoins' verifications could be considered a drawback.
Only offers Bitcoin
Bitcoin is the only cryptocurrency you can buy and sell on LocalBitcoins. That was less of an issue in the past, but with so many different types of cryptocurrency available now, it's nice to have more options to invest in.
Limited features
LocalBitcoins is best described as a no-frills crypto exchange. It does one thing: Connect people who want to buy and sell Bitcoin.
Unlike other crypto exchanges, there are no advanced trading tools or crypto lending programs to earn interest on your crypto. There is some educational content on LocalBitcoins' blog, but it isn't on the same level as what many of the major exchanges offer.
Alternatives to consider
If you want a user-friendly exchange with more cryptocurrencies: Coinbase is one of the most popular exchanges for beginners and advanced users. It's easy to use, provides great educational content, and has over 200 cryptocurrencies.
If you want a decentralized exchange with no geographic restrictions: Bisq is similar to LocalBitcoins in that it connects crypto buyers and sellers. It has a few key advantages, though. There are no geographic restrictions, it doesn't ask for private information, and it allows users to trade other cryptocurrencies besides just Bitcoin.
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Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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= Excellent
= Good
= Fair = Poor |
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| Commissions |
Variable fees (Coinbase), 0%-0.80% (Coinbase Advanced Trade), $29.99 monthly (Coinbase One)
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Pay in Bitcoin or BSQ cryptocurrency, fees vary by option (see fees section for more)
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How LocalBitcoins works
LocalBitcoins is a peer-to-peer Bitcoin trading platform. It allows users to buy and sell Bitcoin through classified ads, a bit like what you'd see on Craigslist. It also has user profiles with feedback scores similar to those on eBay.
Here are the options available on LocalBitcoins:
- Buy: Search for and respond to ads posted by Bitcoin sellers. Ads include the price of the Bitcoin, the accepted payment methods, and the limits (the minimum and maximum amounts you can buy from that seller).
- Sell: Search for and respond to ads posted by Bitcoin buyers. Ads include the price the buyer is willing to pay, the payment method they're offering, and the limits (the minimum and maximum amounts they're willing to buy).
- Create an ad: Post your own ad to buy or sell Bitcoin.
To use LocalBitcoins, you need to register an account by providing your:
- Full name
- Email address
- Phone number
- Country of residence
- Government-issued ID
- KYC (know your customer) information
After you register, you'll have a Tier 1 account with an annual limit of 20,000 euros in trading volume. There are two more tiers, Tier 2 with a 200,000-euros annual limit, and Tier 3 with no trading limit. Each tier requires going through additional identity verification.
Fees overview
LocalBitcoins is free to use. It doesn't charge any fees for buying and selling Bitcoin or registering for an account.
If you create an advertisement on LocalBitcoins, you're charged a 1% fee on every completed trade. This fee is easily avoidable, as you don't need to create an advertisement to use the exchange. You can respond to existing buy and sell offers to use LocalBitcoins fee free.
Cryptocurrency selection
LocalBitcoins is designed for buying and selling Bitcoin. That's the only cryptocurrency available on the exchange.
As such, it's lacking compared to other platforms, many of which offer 50 or more different cryptocurrencies. If you want to invest in smaller cryptocurrencies or market leaders outside of Bitcoin, such as Ethereum (ETH), you'll need to look for another option.
RELATED: Best Places to Buy Ethereum
Is your cryptocurrency safe with LocalBitcoins?
LocalBitcoins is generally a safe place to buy and sell Bitcoin, but we don't recommend using it for storing your crypto. Instead, transfer any Bitcoin you buy from your LocalBitcoins wallet to your own crypto wallet. If LocalBitcoins gets hacked, which has happened multiple times in the past, your crypto will be safely in your possession.
If you don't have a crypto wallet, there are plenty of hot wallets (digital wallets) you can download and use free of charge. There are also hardware wallets that keep your crypto in cold storage, meaning offline.
COMPARE OPTIONS: Check out The Ascent's list of the Best Crypto Wallets.
Because of the scammers on LocalBitcoins, buying and selling Bitcoin there does require care on the user's part. Before you use it, familiarize yourself with the common scams to avoid losing your cash or your crypto.
LocalBitcoins is right for you if:
- You like the idea of decentralization and peer-to-peer Bitcoin trades.
- You want to have more payment options available than what the major exchanges accept.
Our Cryptocurrency Expert
Lyle Daly is a personal finance writer who specializes in credit cards, travel rewards programs, and banking. He writes for The Ascent and The Motley Fool, and his work has appeared in USA Today and Yahoo! Finance. He was born in California but currently lives as a digital nomad with a home base in Colombia.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Lyle Daly has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Best Buy, Bitcoin, Ethereum, PayPal, and Target. The Motley Fool recommends the following options: short April 2023 $70 puts on PayPal. The Motley Fool has a disclosure policy.