LocalBitcoins Closed Shop, Now What?

08 March 2023

Menno Martens

Crypto Specialist and Product Manager

LocalBitcoins was a place where it all once started, physical peer-to-peer trading of cryptocurrencies, primarily Bitcoin (soon after Bitcoin, others followed such as LocalEthereum). Many early Bitcoiners have purchased their first Bitcoins not through a modern web interface of an exchange but in a back alley of a metropolitan city or from a friend or family member using cash payment or wire transfer. LocalBitcoins came into existence to facilitate the safer trade of Bitcoin, as the name suggests, in the physical local area. LocalBitcoins was founded by Jeremias Kangas in 2012 in Helsinki, Finland. For many, it was considered to be the primary fiat on-ramp in the early days of Bitcoin.

Facing Regulatory Troubles

The website has gained popularity among Bitcoin enthusiasts who value privacy and security. LocalBitcoins.com does not require users to provide any personal information, such as their name or address, making it a popular choice for those who want to remain anonymous. However, the website has faced some criticism over the years for its lack of regulation and the potential for fraud. It was important for users to exercise caution when trading on the platform and to only deal with trusted and verified sellers.

Why has it Closed?

More recently the website had to shut down, not due to regulatory measures but due to user demand and the ongoing crypto winter. The website could no longer provide its services hence users were given a 12-month notice to withdraw any Bitcoin stored with the exchange. The landscape of fiat on/off ramps has drastically changed as well as exchanging cryptos concerning privacy and security. Current fiat on/off ramps face fierce regulations as they are seen as the gateway to cryptocurrency’s ecosystem of applications. They have also become more user-friendly and intuitive to use, which seem to be winning factors as opposed to privacy and security.

So What Happens Next?

Is the dream of peer-to-peer truly gone or are there alternatives that provide the same level of privacy and security as LocalBitcoins? One straightforward option may be to use Bitcoin ATMs, widely available in over 80 countries from 47 different producers. There are a total of 37416 crypto ATMs, that’s right, not just Bitcoin but also Ethereum, Dash and Litecoin.

We are currently seeing even decentralized exchanges such as Uniswap, wallet providers like MetaMask and payment providers such as VISA creating seamless fiat on/off-ramps. Most notable is Uniswap partnering with Moonpay to provide direct access to the world of DeFi (December 2022) and creating its fully open source and self-custodial mobile wallet (February 2023). Seamless onramps and user-friendly mobile access could be a very powerful combination.

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