This is the final part of a 3 article series that will allow you to learn how to use LocalBitcoins. In this chapter we explain how to buy and sell your bitcoins directly or by creating an ad on the platform.
You can read the first part of this guide here, What it is and how to register with Localbitcoins, and the second part here, Learn how to deposit and withdraw bitcoins from LocalBitcoins.
Bitcoin is safe, it’s not an opinion, it’s a certainty; However, when interacting with a third party when buying or selling bitcoins, this security can work against us, because we are talking about irreversible transactions without a central entity to refund us in case of fraud. That’s why we can count on LocalBitcoins, an exchange that allows fast exchange without leaving security and with a wide range of payment methods.
Exchange within LocalBitcoins It is basic because we do it directly between users because they are P2P exchanges, based on a system of guaranteed deposits and reputation.
Forms to trade Bitcoins on LocalBitcoins
From exchange to LocalBitcoins are provided through user posted ads, there are two ways to buy and sell bitcoins:
- Direct buying or selling, where we choose another user’s ad that matches our demand and supply. This type of trade is faster because it only depends on the duration of the transaction in fiat money according to the selected payment method, but usually doesn’t give you the best exchange rate since the one who posts the ad is the one who determines the quoted rate. This type of exchange without commission.
- By posting advertisements; which takes longer to complete as it requires filling out an ad posting form plus the time it takes for another user to agree to do business with us. Besides, we should have 0.04 BTC in our LocalBitcoins portfolio As a safety measure, it doesn’t matter if it’s a buy or sell. In this type of trade you usually get a better exchange rate, but 1% is charged on the total transfer amount.
What do we need to exchange?
Apart from internal wallet funds in case of selling BTC or 0.04 BTC for posting ads, nothing else is required. However, it is advisable and extremely important to have a good reputation. To do this, it will be necessary to exchange small amounts and thus gain a reputation among LocalBitcoins users.
Depending on your trading volume, LocalBitcoins will allow you the amount of BTC you can exchange in the same ad. The more trading volume you achieve, the more BTC you will be allowed to trade per listing.
How to sell (buy) BTC directly
How to buy and sell bitcoins in LocalBitcoins It differs only in the position of the seller and the buyer, we will only explain the process of selling BTC, and in the case of buying, we only change the position of the seller to the position of the buyer in this explanation.
To start selling, obviously the first step will be to have a balance in our account. After that, we go to the “Sell Bitcoins” section, where we will be shown the following:
LocalBitcoins home page showing ads for sale.
As you can see, at the beginning of the table we see “Sell Bitcoins Online in…”. The location (country) is by default the one we registered in our system, but if it is the case that we want to buy Swedish kroner from the example in the first of these three tutorials, we must go to the end of the table and go to « Show ads in » Here we can change the location to the destination we need.
Now, in order to make a purchase online, we need to be clear about the information that the table shows us, in order to choose a good buyer (reputation) and the best price for our BTC:
The columns that make up the table.
- «Customer» refers to a user requesting a purchase. In addition to the username, we find the number of completed transactions and the percentage of trust that clients have shown you. Also a small colored circle will allow us to know if the user is currently online (green) or not (red).
- «Method of payment» is the payment method offered by the customer; in this case bank transfer.
- «Price/BTC» we find the price offered by the buyer for 1 BTC; Here it is always advisable to determine the implied local currency/dollar exchange rate offered to compare it with the market. We do this by dividing the bid price by the bitcoin price in USD.
- «Borders» is the minimum to maximum amount that the customer is willing to buy.
- «Sell» button to transact with that customer.
After choosing the offer that suits our needs, click on the “Sell” button, which will open the window below.
Sales processing start screen.
Here we are shown the conditions under which the transaction will take place with the customer. At the bottom we will put the amount in fiat currency or bitcoins that we want to sell, taking into account the minimum and maximum amount that the buyer accepts.
After that, we have to provide the customer with bank details, if the payment method was used, via internal chat. LocalBitcoins recommends using this chat to follow the whole process with the buyer.
After chatting with the customer, the following window will open with a chat with the customer on the left and right, and the customer’s information and a “Release Bitcoins” button that allows us to release bitcoins to the customer once after confirming the receipt of the corresponding fiat money. This is the platform’s escrow mechanism that ensures exchanges without mutual trust.
Screen with the sales procedure in progress.
After the funds are confirmed, we press the button to release bitcoins to the customer, which will redirect us to a window that will ask us to confirm the action. We will accept and that’s it, we have already successfully sold our first bitcoins.
Although we have already confirmed the transaction, we have one more step left, which is the buyer’s assessment. A series of rating options will appear on the right side of the main transaction screen. In this case, we will post the one we like and make a relevant comment. Likewise, the customer must rate us to increase our reputation.
Post an ad on LocalBitcoins
Requirement: Have a wallet balance of at least 0.04 BTC
Already gained a bit of a reputation in the LocalBitcoins We can post a sale ad. Although it is not necessary to have a reputation to post, users generally look for people with a good reputation.
In order to post a sale ad, the system will ask us for a minimum amount of bitcoins to sell, otherwise the post will not be published. Since all the conditions are met, we will move on to creating an ad, which in our case will be for the online purchase of bitcoins.
To begin, we must go to the top menu and click on the “Post exchange announcement” tab, which will direct us to the following window.
Home screen for creating ads.
Here, the first thing we will do is select from the “Exchange Type” option to buy bitcoins online for our case. It’s worth noting that the template is only slightly different for each option, so if your purpose isn’t to create an ad for online shopping, don’t worry, it can still serve as a guide.
After that, we have to set the country in Location.
In the payment method, we must select the option we are interested in from the list. In our case it is a bank transfer specifically.
In the section More information, we post data related to the ad as such. First, we must indicate which type of currency we will deal with, in our case bolivars (VEF), then the name or names of the banks we will work with, then, the profit margin we want to get on the current bitcoin price on the market. If we set negative margins, we will get a lower margin, but the offers will be more attractive.
Ad terms definition screen.
In the countryside The price equationif you have not defined a profit margin percentage in the More Information section, you can include a a formula to automatically update the price with Bitcoin price fluctuations from one or more of the hundreds of market data sources it manages LocalBitcoins.
To create a custom pricing equation, you select market data sources and combine or modify them with operators. To add, for example, a 12% markup to a price, you need to multiply the market price source by 1.12 to increase the price by 12%. The resulting equation would be: bitstampusd_avg*1.12
You can leave the min and max limit blank if you don’t want to set limits on your transaction amounts, otherwise set the range you want to work within.
The amount limit means that each exchange can only be made in certain amounts.
The scheduling part is vital to being able to keep our future clients happy.. The reason lies in the fact that we have to publish the ad only when we are available, because subsequently we have to add a payment deadline, which is a time limit set by us, in which we promise to complete the transaction or else it will be automatically canceled.
In addition, we have Terms of Trade where we spell out literally what conditions we need for a successful exchange.
Screen for defining ad security options.
As we discussed earlier, we need to set a time frame for payment so that our customers know How long can we complete the transaction? Obviously, many people are looking for speed, so the shorter the payment period, the more attractive the list will be.
Then we will find liquidity and security options. The liquidity option allows us to keep the maximum liquidity limit at the maximum amount that we have previously set.
On the other hand, security options They allow us to maintain relationships only with verified people -which is the most suitable for security-, so, as a tip, it is better to keep the options selected so that only people who have a verified identity and phone number can exchange with us.
To finish, click on the Publish ad button and the following window will appear:
Completed ad is waiting to be published.
The ad will be published at a time we specify. To see this announcement and open transactions, we can go to the dashboard in the top right icon. As you can see, we now have our ad ready.
Tips for using LocalBitcoin
- Always check the reputation of whoever you are doing business with. To avoid bad times, do not transact with disreputable users. If you decide to do so, also check the comments on their profile to see the reason for this reputation.
- When you start this business, try to trade small amounts of bitcoins and build a reputation, because users will avoid doing big operations with you because the community doesn’t trust you yet.
- Avoid, as much as possible, using payment methods where it is very easy to reverse a transaction in fiat money, such as PayPal and Neteller or any other you consider, to avoid being a victim of fraud. And if you do, transfer the money to another account before releasing the BTC to the buyer.
- When selling, always remember to verify that fiat money has been received before releasing BTC. If it’s a bank transfer, check your account. For a gift card, apply the code to your account to confirm it’s valid.
- Don’t believe it, check it out!
As we can see, simplicity is not a strong point. LocalBitcoins. Sometimes it’s a little intimidating because of the amount of text on their website. But don’t let this put you off, as long as you know the steps, you can achieve it. Furthermore, as it is a leading P2P exchange, it has the most bidders for both buying and selling, which drives competition between them, reducing their margins and resulting in a better price for you.
Read the first part of this guide What is it and how to register on LocalBitcoins and the second part Learn how to deposit and withdraw bitcoins from LocalBitcoins to learn more.