What is LocalBitcoin?
LocalBitcoin made quite a splash in the crypt-world as it was one of the first peer-to-peer (P2P) Bitcoin exchanges on the market. It started operations in Finland in 2010. However, in light of new KYC and Anti-Laundering policies, LocalBitcoin has been forced to update its identity verification system.
The reason that LocalBitcoin was so successful was that Bitcoin users were able to directly deal with buyers and sellers. Once the conditions of the trade were met, fiat currencies were deposited via PayPal, Payoneer or with cash.
This news has led to mixed responses. There are those who are happy to see increased regulations and KYC compliances. Such regulations mean that a maximum of €20,000 a year can be sent anonymously. And personal information is required for all transactions.
The other side is disappointed to see one of the earliest decentralized exchanges lose its “fully decentralized” status.
For the hard-liners, this is a fundamental break from the ethos of cryptocurrency and Satoshi’s vision. Among the concerns is that LocalBitcoin, like other centralized exchanges, is now a “data honeypot.” Every time you share personal information with the exchange, your personal data gets stored. This can be a problem as personal information risks being stolen, sold, or worse, potentially lead to individual attacks.
Moreover, while in its heyday, LocalBitcoin allowed a large amount of Bitcoin to move through underdeveloped and politically unstable nations, such as North Korea and Venezuela.
By brokering peer-to-peer transactions, LocalBitcoin has made it possible for many of those facing severe instability to benefit from Bitcoin. And with its trademark anonymity, remain safe during volatile times. LocalBitcoin served more than 240 countries, making Bitcoin exchange possible.
LocalBitcoin Today: Good News, Bad News
The good news is that you can still use LocalBitcoin. The bad news is that the user must now comply with the new KYC policies set by the Government of Finland.
More good news, LocalBitcoin now also offers escrow, so that users are guaranteed to receive their money.
So the end of LocalBitcoin’s “true” decentralization comes as mixed news.
So for those who value the anonymity of the crypto-world above all, fear not, there are other options out there. Here are a list of decentralized, or partially decentralized platforms to exchange cryptocurrency with.
Keep in mind that as you are doing your research into which exchange best suits you, that each one is going to have a quality that suits your needs more. Some exchanges offer more customer support, some act in a strick P2P capacity, some offer escrow, some use native tokens, among other things.
Take a look at the following (mostly) decentralized exchanges and alternatives to LocalBitcoin, and decide which one best suits you!
10 Alternatives To LocalBitcoins
Bisq provides a fully decentralized revenue distribution. With Bisq, payments and currency trading are decentralized. While internal decision making and revenue distribution are coordinated by the collective of the DAO.
The DAO relies on the software and the judicious contributions of the Bisq network or community. The basic ethos is that of Satoshi’s, where the software determines the rules, but the community maintains the software and decides on its future state.
Therefore, Bisq relies on its native token BSQ. The BSQ token permits Bisq contributors, traders, and BSQ holders to contribute to the maintenance of the community. This is the essence of the DAO.
A decentralized autonomous organization describes a governance model that is dictated only by software. That means that unlike centralized organizations, the code defines the project and it is not limited to the jurisdiction of an individual state.
Bisq takes concerns about data mining and censorship very seriously. Their P2P network is built for traders to use freely, without fear for privacy infringement. This is possible with the decentralized BSQ token. Fees are paid to the contributors of the network and not to Bisq.
Revenue distribution is made possible with BSQ, a Bitcoin-based colored coin. This native token distributes revenue between contributors and traders. Fee payment is approved based on voting requests. Once the fee is approved, the BSQ is “uncolored.”
Bisq functions without ICOs, central leadership, or a CEO. Bisq is determined with “social consensus” alone.
Paxful also offers a peer-to-peer Bitcoin market place. Trading takes place online with live chat, with your preferred method of payment. Once the details are decided on, the payments are made to personal accounts.
Paxful also offers an escrow service, so your Bitcoin is verified before it is released from, and you can put your mind at ease. That means bits are handled by Paxful’s centralized escrow mechanism controlled by the exchange’s moderators.
Currently, Paxful’s global trading volume sits around $4 million USD, which means that Paxful’s reputation continues to grow.
They have also built a reputation system to maintain the integrity of traders.
Some ID verification required. As long as your traders are under $1500 users can remain anonymous. However, those who reach a total of $1500 in trade volume or wallet activity are required to provide ID.
LocalCoinSwap is another P2P service, with a far reach. You can also enjoy the freedom of no KYC with LocalCoinSwap. The vast majority of cryptocurrency is held in coldstorage, so it is not held on the exchange. This means it is much more secure than holding cryptocurrency on the exchange. This is because cryptocurrencies are easier to steal when held on the exchange rather than offline.
LocalCoinSwap is fully decentralized and the only marketplace to return 100% of its profit to its community. This means that using LocalCoinSwap also means they offer a venue for passive income. LCS also encourages the community to vote on operations as a way of maintaining its democratic ideals.
AirSwap is another option. It is primarily designed to be an instant and easy way to trade Ether. You can fill any size order and are not subject to spending limits, and they use trustless escrow. They are a good option if you want to keep your private information private, as they do not ask a lot of questions.
BitKan has built a trading platform for P2P Bitcoin trading. Like others, they offer an escrow service to ensure the safety of your funds.
Similar to LocalBitcoins, small amounts of Bitcoin can be traded totally anonymously, however, larger sums must comply with KYC and AML regulations.
Coinffeine is a Spanish based company that has remained a fully decentralized Bitcoin exchange. The exchange is fully anonymous and automated. The only information you need to share is your payment processor account. This is so that the money is transferred to the correct address involved in the exchange.
The convenience of using Coinffeine is what sets it apart from other decentralized exchanges.
All the user needs to do is place an order to buy or sell Bitcoin. Coinffine takes care of the rest. You do not even need to find someone to exchange your money with, everything is automated by Coinffine.
Once your transaction is approved, your money (crypto or fiat) goes directly into your wallet or bank. There are absolutely no third parties necessary.
There are also no limits on how much you can spend or send with Coinffeine.
Altcoin is an Ethereum based blockchain and exchange. They offer a fully decentralized service for coin exchange. They will also help you design and build your own blockchain project.
Rather than function as an escrow service, Altcoin’s platform enables Ethereum based smart-contracts. That means that your Bitcoin is only released once the conditions of the exchange are met.
All data on the Altcoin network is embedded and therefore public. However, to participate Altcoin requires contact information and financial information.
Currently, there are no limits on the amount of cryptocurrency that can be exchanged.
Shapeshift.io is another P2P option. With Shapeshift you can safely create a reusable deposit address. They are great because they are simple to use, and have competitive exchange rates.
Shapeshift deals only in cryptocurrency, and not in fiat. So it is an exchange for cryptocurrencies only. The coins they exchange will change depending on the liquidity of a coin.
They also offer the option of a “quick trade” or you can make more “precise trades” depending on your exchange needs.
Changelly an instant cryptocurrency exchange. Using their platform you can exchange crypto quickly. You can also use your bank card to buy cryptocurrency.
They offer a non-custodial cryptocurrency exchange. That means that no users’ funds are held by the service. Changelly acts only as an intermediary between crypto exchanges and the users.
They have a high exchange limit and use a straightforward transaction fee. Transaction fees are a flat-rate of 0.25% on every trade. The fee does not change with the varying liquidity of a coin.
Their service supports over 150 available cryptocurrencies for exchange.
Waves DEX is a centralized exchange that offers decentralized exchanges. What that means is that your cryptocurrency is never held by the exchange. Waves match your order before processing your exchange instead of using escrow.
Waves have married the service of a centralized server with the privacy and security of decentralization.
LocalBitcoins may be a bit of a lesson in the changing times. While I was putting this list together for you, I found many stale or failed exchange projects. What I mean is that a fully-decentralized exchange may face several challenges over the long haul.
The reason I say this is that as cryptocurrencies have a great reach and their impact is seen more on a global financial scale, we can expect lawmakers to try and step in.
My advice is simply to know what you are getting into when you sign up for any exchange service. Understand what information they need, and be careful about what kind of detail you offer third-party sights.
The fact is fully-decentralized systems are an ambiguous concept, to begin with.
Here is a quote from a Bisq employee from Bitcoin Magazine:
“Decentralization has become a buzzword which tends to contribute more noise than signal in a sentence. The only way I can see LocalBitcoins being ‘decentralized’ is in its sourcing of offers, since they come from many people who are not a part of the LocalBitcoins company (as opposed to a single order book maintained by the company). However, that’s really no different from the way Facebook and Twitter source their media, and calling them ‘decentralized social media’ would be ridiculous.”
Bottom line, if someone is providing you a service, there is some kind of “centralized” process. You also have to ask yourself if you want a fully decentralized service. It may be in your interest to work with an exchange that has more security through escrow, or support with helping broker your cryptocurrency exchanges.
KYC & AML
Finally, be smart. Know your local KYC and AML regulations.
Privacy is crucial when it comes to keeping your money and your information safe. Sharing your information with an exchange means that your data is a risk of being breached by an attacker.
On a lighter note, all 10 of the LocalBitcoin alternatives offer crypto users many valuable services. Just remember to read the fine print, and only share the information that you need to. There is an endless debate about what “decentralization” means, and what it boils down to is what is best for you and your trading needs, and the level of support you want and need.
Unfortunately, those living under seriously unstable governments who benefited from LocalBitcoin will suffer most while they find the best alternative. Luckily there are many manifestations of Satoshi-ideal and cryptocurrencies are creating new wealth for people all over the world.