Acquiring Bitcoin: Alternatives to LocalBitcoins.com
LocalBitcoins may be a solid, widely used choice for peer-to-peer Bitcoin trading, but it is not the only choice.
A site which grew in popularity during the initial government attacks on the classified advertising site Backpage is Paxful.
This writer has had limited experience, but no successful trades with Paxful. Buyers on LocalBitcoins seemed to be asleep, so he checked out Paxful. There were some favorable advertised prices. However, some of these favorable prices seemed a bit too good to be true. Finally, when this writer found a buyer who had significant good feedback on the site, he opened a trade only to have it canceled. Then the user requested he open an another, and canceled again later on with no explanation. These are exactly the sorts of things advised against in one of our previous Acquiring Bitcoin articles.
Paxful does have a nicer user interface, and seemingly better support staff. As stated above, one of its major rises to prominence was in attracting advertisers on Backpage.com, who were left with only the payment choice of Bitcoin, to easily purchase bitcoins in order to place their ads. Their goal was to make it as easy as possible. Presumably in the intervening months since this writer’s last use of the site, support staff have actively weeded out scammers and the community’s size has further grown.
An added benefit is that many of the same people who trade on LocalBitcoins also trade on Paxful. The confirmation time issue that has affected the Bitcoin network as of late makes moving in between sites, for the seller, a bit more difficulty (and potentially costlier). In this regard it is advisable to be open to using an alternative site for escrow if the seller insists. However, do not send payment without funds held in escrow somewhere, because that is not called trading, it’s called making a donation to a scammer – especially if these funds are sent via Western Union or MoneyGram.
All of the same rules that apply to LocalBitcoins apply to Paxful, which may encourage a dedicated buyer to pick a site and stick with it, in order to consolidate feedback rating. One could still post a listing on one or the other and then privately encourage the user to go to the one where they have more feedback, or simply link to that feedback in some verifiable way in order that the seller knows better who they are dealing with. Insofar as the terms of service allow you to, being clear about your history as a Bitcoin trader is comforting to sellers.
Bitcoin OTC (Over-the-Counter)
Bitcoin-OTC is one of the oldest ways to trade bitcoins peer-to-peer. In execution, it relies even more on feedback and verification of users, but it also offers a live interaction and the ability of people to compete for sales/buys.
Bitcoin-OTC uses IRC as its primary mode of trade. IRC may be new to many coming from the financial world, but it is basically a very stable, universally-usable chat protocol. Bitcoin-OTC allows the users the most freedom, and requires the least amount of hassle in getting started. No identification is required, and one is answerable only to the community there. Every buyer and seller can put in place whatever process they want.
If you like IRC, or live interaction, Bitcoin-OTC may be for you. It is like more like an active marketplace than a static website could be. Real-time feedback on past behavior of users can be brought to light, as the one thing that can be said about the Bitcoin community is that we are quick to spot scams and, in general, the average user tries to help others avoid them.
There have been other efforts at peer-to-peer trading, but many have stalled in development or in operation. Bitcointalk.com qualifies as peer-to-peer trading as well, but it’s hard to see what advantages it offers over the other methods listed, or LocalBitcoins.