How to

What is it and how to create an account on LocalBitcoins?

Key facts:
  • It allows us to exchange our bitcoins in different currencies around the world depending on the offer.

  • LocalBitcoins is a peer-to-peer bitcoin exchange platform.

Content updated as of January 2020

This is the first article in a series of three that will teach you how to use a P2P exchange platform LocalBitcoins. In this first part, we will make a general overview of the platform, its operation, its commissions and how to register on it so that you can carry out transactions of buying and selling Bitcoins.

Those who are familiar with exchanging bitcoins for other currencies easily find their way to favorable prices and a good buyer. But what happens if you’re a newbie? How do you know who to trust so you don’t fall for a scam? Let’s take a simple example: Let’s imagine that we are going on a trip to Sweden; The national currency of this country is the Swedish krona. For this trip the only available funds we have are our bitcoins. Now, how do we exchange our bitcoins for crowns?

As known in the cryptocurrency ecosystem, bitcoin is accepted globally and is a decentralized entity that is not governed by any private or government institution. This absence of a central authority makes it difficult to exchange them in traditional exchanges. That’s why one of the most used alternatives is person-to-person exchange, where we risk completely ignoring the person we’re going to exchange with.

The mentioned difficulties are solved with LocalBitcoins. This is a platform that not only acts as an exchange intermediary, protecting our funds until the transaction is completed, but also allows us to exchange our bitcoins in different currencies of the world depending on the offer. And yes, the Swedish kroner from the previous example can be found on this platform.

LocalBitcoins is an electronic marketplace for buying and selling bitcoins created in 2012 by the Kangas brothers: Jeremías and Nicholas, in Helsinki, Finland. The platform allows anyone to exchange their bitcoins for local money with another person without any intermediary other than the platform.

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How LocalBitcoins works

Each person or operator functions as an exchange by establishing its own exchange rules, including its own exchange rate. Yes, any person can determine the price at which they want to buy or sell bitcoins, and depending on certain key factors, reputation, operations performed, minimum/maximum exchange amount accepted, this person can be selected to perform the operation.

What role does LocalBitcoins play in the exchange?

The platform acts as a guarantor of the exchange between the parties through the escrow of traded bitcoins, which are released and delivered to their new owner upon confirmation of receipt of the amount of fiat money exchanged.

Since the bitcoins to be exchanged, in case we buy BTC, must be previously deposited into the platform – whose private keys are managed by LocalBitcoins – the amount to be bought is blocked from the seller’s wallet, making it impossible for the seller to run away with our BTC. After the BTC seller confirms the transaction upon receipt of the agreed funds, he releases the bitcoins to the buyer, which will be reflected in his wallet balance.

Likewise, in the event that either party is not satisfied, the LocalBitcoins dispute team will take action to resolve the dispute between the parties.

reputation system

In order to improve trust between platform users, LocalBitcoins It operates a reputation system based on individual comments and ratings for each exchange made. Every time you perform an operation, the system will show you a list where you can evaluate the work and the way the transaction was carried out; Additionally, you can add a comment detailing another user’s behavior. However, keep in mind that feedback is reciprocal; That is, another user will also have to rate you.

This system enables and to some extent forces users to behave not only honestly, but also decently, as a low reputation translates into distrust by the LocalBitcoins community.

Payment methods

A rather striking feature that we will find in use LocalBitcoins payment methods are available. Because they range from cash deposits or bank transfers, to gift cards from Amazon or other platforms and transfers through Mercado Pago. This is because, since it is a peer-to-peer exchange, they are the ones who define the method to be used.

However, you have to be careful here because this plays like a double-edged sword. With a wide variety of payment methods, which differ depending on the country or local currency we choose to exchange, we will find unreliable payment methods such as PayPal, in which vice versa transaction It is extremely simple and we could end up falling victim to a scam.

commissions

The fees within LocalBitcoin are quite basic and low compared to other exchanges. For deposits from off-platform wallets, it currently charges us 0.00015 BTC for each deposit. This commission may vary depending on the price of bitcoins in the market.

The current fee for off-platform withdrawals is 0.00005 BTC, which may also vary depending on the market and network congestion. However, for withdrawals to your own LocalBitcoins addresses, no commission is charged.

When buying or selling from an ad posted by another user, no commission is charged, however, if the ad is posted by us, we charge 1% of the total exchanged.

Benefits of using LocalBitcoin

  • Easy to use.
  • Basic AML-KYC verification.
  • Accepted in more than 200 countries worldwide.
  • A large number of payment methods.
  • It allows sending remittances by exchanging bitcoins for various fiat currencies. If you want to learn more, here’s a tutorial.
  • Low commissions
  • Fast withdrawals and deposits, which depend only on network congestion.

What do you need to create an account?

In order to trade on the platform, you will need to create a basic account which consists mainly of registering a username, email and password. However, compliance with international Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations is necessary as a minimum requirement to be able to negotiate a maximum amount of €200,000 per year, as you can see in the following table.

DATA FOR VERIFICATION Level 1 Level 2 Nivel3 Level 4
Full name
Country of residence
E-mail address
Telephone number
Address
Identity verification
KYC information
Proof of residence
Additional ID confirmation
Annual limit amount €1,000 €2,000 €20,000

In order to comply with these regulations, it is necessary to have a real phone number that needs to be verified via SMS and a photo of an identity document (identity card, identity card, passport). With all this in hand, the first thing you need to do is go to the main page of LocalBitcoins.

Account registration on LocalBitcoins

Tip: Always remember to verify that the link you are entering is LocalBitcoins.com

What we see above is the main page of LocalBitcoin. After entering we will find different ads for buying and selling bitcoins. But for now we will focus on registration, so the next step is to click on Register or Register for free, marked in the red box.

Initially, it will be necessary to create and register our username, which It can NOT be changed then an email and a strong password that uses a combination of uppercase, lowercase letters, numbers and special characters.

You must repeat this password and check the box I am not a robot to complete the registration, all that remains is to press Register and a new screen will appear, where we will be shown two legal documents about the Terms of Use, first and then the Privacy Policy of the company.

You must read both documents carefully and if you agree, click the Accept button that you will find at the end of the document.

Now it’s time to verify our email. To do this, we will need to go to our inbox, look for the email sent by the LocalBitcoins team and click on the verification link in it.

Once your email has been verified, the next step is to provide some personal information such as your first and last name as it appears on the bank account you will be using, a phone number with your country code, which will then be verified by LocalBitcoins using a code for confirmation which will be sent via SMS and your country of residence.

We will receive a verification code on our phone or, alternatively, a phone call where the electronic operator will dictate the verification code to us. We need to enter this code on the screen displayed on the platform and click on Submit to complete this first stage of registration.

As you can see, at this point you already have an account on the LocalBitcoins platform, however, it is disabled for any type of transaction until you receive level 1 verification. To do this, click on the Continue option to verify its identity that you see on the screen.

A screen will appear with a list of Level 0 requirements that have already been verified, followed by Level 1 requirements that we must complete. As level 1 is the minimum required to work within LocalBitcoins, we will continue by selecting the Go to next level option.

The first part of the level 1 verification is answering a socioeconomic survey where we will provide information about what we do and why we will use LocalBitcoins. In these options, we will mark all those that we consider correct. At the end they ask us if we are a politically exposed person where we will simply check yes or no.

To move to the next step, we have to click on Send.

We will then provide information about our residential address. However, although at this level of verification we will not send any document confirming the veracity of the given address, when you opt for level 2, it will be mandatory that the address entered here and the address of the document sent match.

The last step to be completed in level 1 verification is to provide an identification document that allows validation of our identification. Depending on the selected document, you will be asked for either a photo of the front and back of the document, or just the front.

The identification document required by LocalBitcoins can vary depending on the country of residence you choose, between a passport, National Identity Document (DNI) or driver’s license. It can see the full list here.

Regarding the photos in the document, please make sure that they are clear photos weighing no more than 5 MB and that their four edges are clearly visible.

The maximum waiting period for verification is 72 hours, however, if all documents are correct, in less than 24 hours you will have your account ready to buy and sell bitcoins in LocalBitcoins.

Read the second part of this tutorial here, Learn how to deposit and withdraw bitcoins with LocalBitcoins, or part three here, Learn how to buy and sell bitcoin with LocalBitcoins.

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