You may have seen the news that LocalBitcoins is shutting down. To be honest, this news took me by surprise. Their official response on their twitter identified what lots of my industry colleagues are feeling. As a result, you may be looking for some LocalBitcoins Alternatives to buy bitcoin and sell bitcoin.
Some of my very first bitcoin were purchased on LocalBitcoins. At the time, it was one of the only ways to buy bitcoin with cash, which was great for a Bitcoin ATM operator in 2014! I met some of our first customers on LocalBitcoins, most of which are still loyal to Bitcoin Well today. In many ways, LocalBitcoins set the stage and the baseline for bitcoin trading in a lot of different countries. Frankly, the thought the world would need a LocalBitcoins alternative is wild!
There are very few organizations that can facilitate the many different payment rails and features that LocalBitcoins seemed to offer, but we’ll try to round up a few of them in this article. We’ll go through a brief understanding of why people used LocalBitcoins. Then we’ll dive into some of the viable alternatives to the market hole that will be left. Finally, we’ll speculate on why this decision is being made.
Why do people use LocalBitcoins?
After a quick scan of the internet (mostly chatGPT) we can deduce that people use LocalBitcoins for these primary reasons. Based on some reflecting on my own personal experience we can assume these categories need to be met to make a viable LocalBitcoins alternative :
Privacy: LocalBitcoins used to allow users to buy and sell bitcoins without revealing their identities, which appeals to individuals who value privacy. This changed in Canada a couple of years ago. I imagine this was a large part of their decline.
Accessibility: LocalBitcoins is available in most countries, and users can buy and sell bitcoins in their local currency.
Flexibility: LocalBitcoins allows users to trade bitcoins in a variety of ways, including face-to-face transactions, online transfers, and even cash deposits.
Perceived Decentralization: Many users saw LocalBitcoins as a decentralized platform because they rarely interacted with the platform itself. It was a sort of a perfect blend of classified ads and an online exchange.
Speed: Transactions on LocalBitcoins are usually processed quickly, making it an attractive option for people who need to buy or sell bitcoins quickly.
Avoiding restrictions: In some countries, the use of bitcoins may be restricted or regulated by the government. LocalBitcoins provides an alternative for users in these countries to buy and sell bitcoins without facing such restrictions.
As you can see, LocalBitcoins was a lot of different things to a lot of different people. They were pretty good at it too. If I were to sum up the six bullet points above, I would say ecosystem. LocalBitcoins had an ecosystem of products, services and community that gave their users an experience that was difficult to match. It really felt like a Bitcoin OG site. They had a first mover advantage and a nostalgic UX. From the six core reasons someone might use LocalBitcoins, let’s breakdown which services can be used to accommodate.
Privacy - LocalBitcoins Alternatives
We won’t waste any time here. The majority of LocalBitcoins people thought of it as pretty private. In all honesty, it hasn’t been since 2020 ish. However, there are still possibilities to buy bitcoin privately. A few examples of ways to buy bitcoin are:
- Bitcoin ATMs
- Most Bitcoin ATMs don’t require ID verification under $1,000.
- You can use cash or request cash at a Bitcoin ATM.
- Classified Ads
- You can treat Kijiji or Craigslist or Gumtree or whatever your local classifieds site is like LocalBitcoins. Of course, you won’t have the escrow services, but if you care about privacy you’ll be meeting in person any ways.
- I started my business selling people bitcoin from Kijiji. that was in 2013, but it was and still is very possible.
- Network Marketing
- Use your social media following to buy and sell bitcoin.
If you break it down, LocalBitcoins was simply a classified ads site with escrow services. The whole point of a classifieds site is network and reach. With some reach, and want to keep your TXIDs relatively private, you might not miss LocalBitcoins too much.
Accessibility - LocalBitcoins Alternatives
Funny enough, “making bitcoin accessible and understood” was a tagline I used from 2013 – 2016 under our old brand, Bitcoin Solutions. I am very passionate about bitcoin accessibility. And if I’m being honest, in Canada, it’s mostly solved.
- Bitcoin ATMs (it strikes me ATMs are going to show up lots on this list).
- One seemingly on every street corner in major cities.
- Competitive market making them more consumer friendly every day.
- Accepts cash ($5 and up).
- Buy bitcoin at your convenience!
- Fairly limited to quantity of bitcoin, but very accessible for amounts under $3,000.
- Payment options are generally e-Transfer or Visa Debit.
- Generally reserved for larger transactions.
- Can meet with someone in person or virtually and make an order.
- Payment options vary from cash to Wire Transfer and everything in between.
I don’t want to be a shameless self-promoter (ok, maybe I do) but I do think Bitcoin Well is actually one of the most viable alternatives to LocalBitcoins. Bitcoin Well just lacks the P2P angle (for now).
Flexibility - LocalBitcoins Alternatives
As mentioned above, Bitcoin Well has one of the most expansive product offerings in the country. Here’s a breakdown of multiple different payment methods and their limits:
- e-Transfer up to $3,000 per tx.
- Cash – no limit.
- Visa Debit – up to $1,000 per tx.
- Bank Draft – no limit.
- Wire Transfer – no limit.
- Bill Payment – up to $100,000 per tx.
Whether you are looking to buy or sell bitcoin, DCA or enhance your bitcoin education, if you are looking for flexibility and need an alternative to LocalBitcoins there isn’t a better one stop shop than Bitcoin Well.
Decentralization - LocalBitcoins Alternatives
This is an interesting one to me. I know this perception exists because I, too, think of LocalBitcoins as decentralized. It’s not though. They’re horribly centralized, basically PayPal for bitcoin – and in some cases the escrow release is worse! That said, buying bitcoin from a decentralized offering can be tricky. Some exist (bisq for example) but these protocol driven sites have been known to have failure points (much like centralized ones). If your aim is to use a decentralized offering I would strong suggest going the route of a classified ad or utilizing a social media network.
To be clear, this is directly due to a failure of the existing legacy financial infrastructure. If legacy fiat payments weren’t so damn easy to reverse and defraud, decentralized offerings would be very viable. Unfortunately, that’s not the world we live in.
Speed - LocalBitcoins Alternatives
I might actually disagree with LocalBitcoins being a fast place to buy bitcoin. In most cases you had to wait for the other side of the trade to confirm money received and wait for an escrow release. There were some bots that made this instant (or near instant) but I wouldn’t say LocalBitcoins was any faster than other offerings that exist. I would say the 3 fastest ways to buy bitcoin in Canada right now are:
- Bitcoin ATM – walk up, insert cash, receive bitcoin. Some ATMs might batch transactions and send every few minutes, but for the most part this has been the fastest way to buy bitcoin since 2013.
- Visa Debit – literally instant. This gives stacking sats a similar experience to buying something on Amazon… with digital delivery instead of waiting for the postman to bring it.
- Interac e-Transfer – as close to instant as you can get with Interac. I have personally achieved a 9 second time between sending an e-Transfer and having bitcoin (on the blockchain) in my wallet. So, if 9 seconds is fast enough then you’ll be in good shape (click here to use e-Transfer).
Avoid Restrictions - LocalBitcoins Alternatives
Avoiding restrictions is a little bit of a different concept than privacy, though some of the motives could be similar. In many authoritarian or communist countries bitcoin is illegal or heavily restricted. Bitcoin is freedom money and authoritarians generally don’t like their people to be free. In other cases, government sanctions can have adverse effects on normal citizens. This was the case in Venezuela. Here is an article from Decrypt highlights LocalBitcoins in Venezuela:
“The implementation of unilateral sanctions by the United States against the Venezuelan government made it difficult for individuals to send money from abroad to Venezuela. International banks were unable to conduct normal operations with Venezuelan banks, and businesses like MoneyGram and Transferwise stopped servicing the country. This left many Venezuelans abroad with few options when attempting to send money to their families in other countries.”
That said, the trading volume on LocalBitcoins in Venezuela has been in significant decline over the last few years.
It’s hard to imagine there aren’t other countries in a similar position to Venezuela. I find it tragic that we have a legacy financial ecosystem that can actively prevent people from opting into bitcoin. The problem will only get worse worldwide (it’s already being brought to the forefront in places like China and England).
Alas, it seems LocalBitcoins wasn’t immune to government overreach. If I’m reading between the lines of their cryptic tweet (as of writing their website still doesn’t have an official response) this sounds like regulation trouble.
When trying to skirt regulation in your country, the ONLY way will be to access a P2P market (which is probably only found in small networks and classifieds) and use cash. On the off chance a highly regulated market has Bitcoin ATMs, that would be my suggestion.
Closing thoughts on LocalBitcoins
It’s sad to see an industry OG close its doors. When I first heard the news I thought “maybe the founders have made their mint and they’re just exiting” (which still may be true) but it feels off. No company announcement on their website, a canned response on twitter when pushed on their reasons, the timing of it all…
I don’t think this is the end of the story. With that said, all of this highlights the importance of custody. Luckily for their users, they seem to be doing the right thing and giving ample time to withdraw funds.
“We encourage all Customers to withdraw their funds from their LocalBitcoins wallets in the next 12 months.”
Importance of custody
Maybe that’s the play here. Perhaps they have an unusually high percentage of inactive users (dormant accounts) and they’re hoping people won’t withdraw and take the excess. The platform could be insolvent and this is a their way of “getting ahead of it”. Or, maybe this is really is “despite our efforts to overcome challenges faced during the crypto-winter, like our volumes & market share continuing to decline, we’ve regretfully had to come to this conclusion” as they’ve copy/pasted on Twitter.
Regardless, when I hear of a company shutting down my first thought is always “how many customers are going to lose their funds”. This is a sad reality of our custodian-centric society, and one that we are aiming to abolish by making self-custody bitcoin the standard.