Looking to move some BTC in exchange for fiat currency? Maybe you have a bill that needs quick payment? More of the digital currency market has been using services like LocalBitcoins.com this year than ever before.
Think of LocalBitcoins.com as the eBay or Craigslist of the Bitcoin space. Its user interface is very eBay-like, but it performs most of its business in a Craiglist local meet-up style. This week, I gave them a whirl in my first real trade via their website.
Trading BTC on LocalBitCoins
Wanted $100 in United States Federal Notes (Technically, all dollar bills are IOUs and are not backed by anything but the user’s or the intended’s, belief of the note’s value. The U.S. moved off of the Gold Standard and went pure fiat in 1971 under Richard Nixon. Your dollar says, “Federal Reserve Note” at the top.). So I opened up the LocalBitcoins.com website and logged-in. It charts when the last time you have logged-in, and tells you (A month and some days for me). Since I was finally going to use the website for business, it was time to update my security and activate two-factor authentication (Advice: Never use any wallet for transactions without TFA enabled, and keep in mind that LocalBitcoins.com doesn’t have a perfect reputation, as we’ve covered here in other articles.) Since I do not currently have a smartphone (Evander Smart without a Smartphone? Fancy that!), the site will provide you with a paper list for your to print. It will with your public key and ninety authentication codes for you to use. Time to update security and verify account: 8 minutes.
Now I am ready to do online trade at the site, but there’s only one problem. My wallet has not BTC inside of it, so I’ll need to transfer some from one of my other wallets. LocalBitCoins.com will make three confirmations of the transfer before crediting your wallet at the site with the transferred BTC. This will take at least 30 minutes to run through the Blockchain three times, so I head to the shower and grab a bowl of cereal for breakfast. This takes me twenty-four minutes to complete both tasks, but the confirmations are just not heading to Round 2. They finish a short time later. Total time to transfer BTC to LocalBitcoins.com: 38 minutes.
A relatively new feature that worked perfectly for me is their “Quick Sell” feature. This doesn’t make you post a new listing on the site, and hope that someone stumbles upon it. You enter into the “Quick Sell” page how much you want to sell in US Dollars, and it will convert it into a BTC amount. I hit “Quick Sell” before my transfer and went through this form to find out how much to transfer from my other wallet. LocalBitcoins.com charges $5 for my $100 transaction, a fair fee, so I transferred $105 over. Your fee may be different based on the amount of the transaction, but I would expect a 5% charge, which is fair. Then it asks you how would you like you money transferred to you, by bank transfer, PayPal, Interac e-transfer, AliPay, or NetTeller.
Now that you have Bitcoin in your wallet, and have filled in the numbers for the transaction, you hit “request trade”. The site IMMEDIATELY finds someone who trades dollars for BTC in your preferred method and sends them the trade request. I get “UPenn”, who has a 100% rating, has been trading on the site for over a year, and just did something on the website within the last 30 minutes. LocalBitcoins.com doesn’t tell me if he is in my timezone, but it says, “UPenn” has 1200 minutes (20 hours) to handle this trade. I can dispute this trade/trade partner after 6 hours. Since “UPenn” has such an immaculate record here, I think nothing of it and expect something within the next couple of hours. The downside of this “QuickSell” feature is you are trusting LocalBitCoins.com to provide you with a solid buyer. You don’t get to choose form a list of buyers. From the credentials listed, I received the best I could have asked for, but will everyone get someone so respected?
There is no response from “UPenn” after eleven hours (It’s now almost 8PM. I started this at 9:06 AM). I was ok with this in general, since it was Saturday, and people are running around on Saturday. It’s understandable that he may not be available during the day on Saturday. I hit the advertisement page for my trade, just out of curiosity, and it says there he is on vacation, or is out of BTC. Why would LocalBitcoins.com send me to someone who was not available to do trades? Didn’t even send me a message regarding his status? So I hit the “Trade Dispute” button, to alert “UPenn” and the website staff that there is a problem, and I’ll need to work with someone else. It turns out that “Quick Sell” is light on the “Quick”!
This isn’t my first run-in with LocalBitcoins.com either. I looked to buy .6 BTC back in August from a local miner, which would’ve come to about $300. He said he has plenty of supply and does trades on a daily basis, but he never met up with me. Always had some issue that came up. That was certainly not LocalBitCoins.com’s fault, but the chain is only as strong as its weakest link, and this chain seems to be pretty weak overall.
Anyway, I hit the “Trade Dispute” button Sunday morning at 10:45AM CST, over 25 hours later. Problem is it was another fourteen hours before they did anything about it, by taking my BTC out of escrow, and returning my it to my wallet. This was after midnight; while I slept. So the entire weekend was wasted by LocalBitcoins.com and their mismanagement. This morning, I removed my BTC from their wallet and put them back into my own.
LocalBitcoins.com Grade: D-
The only reason the grade wasn’t an F is because I did get my Bitcoins back, and was able to transfer them to safety without further issue. I was worried about both.
So two days have been lost, and the problem remains. How do I get $100 USD for my Bitcoins online? LocalBitcoins.com is the 800-pound gorilla in this room, but their game has more holes in it than a bowl of Cheerios! So I head further down Page 1 of Google and find a site called BitQuick.co. They say right on the front page “Safer than LocalBitcoins.com.”, with over 6000 Bitcoins sold. Let’s test them out, shall we?
There is no cost to sell Bitcoins on BitQuick.co. They have a simple form to fill out for selling Bitcoins, but the form asks for a “Modification PIN”, which I don’t have as a new user, and shouldn’t have. It didn’t mention making an account of any kind and their page on how to sell BTC says to simply fill out the form to begin. So I e-mail support to find out where this “Modification Pin” is found. I get an instant autoresponder, but the actual answer will be forthcoming.
Thirty-six minutes later, I get an official response saying to set it as you would any password. The response time was much better than the fourteen hours from LocalBitcoins.com, but this explanation should be on the “Sell Page”, so you don’t have to contact them for an explanation. I then finished the form, and they immediately send me an order number, asking for me to transfer the BTC to the address provided. The transfer is made, and I await confirmation by email.
The public key I received leads to my new escrow account created for me. There is no way to see the balance on the site, so I send another email and ask how I can track the sale from here. The response comes 11 minutes later and says there is a tracking link in the previous email, and I will get another email once the sale is completed. The sale order is now “live”. Sounds good. Now, all I have to do is wait for a buyer.
I go to the “Buy Bitcoins” page, and they have my sale order right at the top of the page for anyone to snap up. This was because I listed the order at the current market average price. Many other sellers are selling Bitcoins for 5-10-15% markup over the current price, which obviously slows demand. The lower the sales price, the higher the ranking for your sale order. (See image for format of how sale orders are ranked).
BitQuick doesn’t have nearly the traffic and traders that LocalBitcoins.com has, so this tells me two things. One, the trade may take longer to find a buyer (Hard to do that since I never found one all weekend at LBC due to the site not monitoring the trades). And two, the service should be better, which it clearly was.
As we progress, my fractions of a Bitcoin were not bought on Monday, but I awoke to a “Buyer Hold” at 9:23 AM on Tuesday morning. A “Buyer Hold” allows the buyer to fix the price and make a qualifying deposit for the purchase amount. They’ll need to email a deposit receipt to my account within the next three hours, at which time I can confirm the deposit has been received. If they fail to do so, the Bitcoins will return to the site’s page as available for sale. Alas, the three hours came and went without a deposit, so my Bitcoins went back to the top of the “Buy” page. The price was the lowest price listed (I specified it to be based on current average market prices).
Another buyer places a hold two hours later. And nothing happens three hours later. Bitcoins back on the website. So I decide I’m going to wait until Wednesday morning before I pull the plug on this experiment gone awry. We’re now three and a half days into it.
This “Buyer hold” dance happened a couple more times to no effect. The Bitcoins were never sold, and after 48 hours I asked for my Bitcoin to be returned to me from Escrow. The Support Team at BitQuick handled this quickly and effectively. The downside is there is a 5% fee for canceling a sell order (Maxed out at 0.02 BTC). So you can look at it as a fee for not selling Bitcoins or a processing fee for use of their website. Either way, I lost another two days and a small amount of Bitcoin for this ultimately ineffective service.
BitQuick.co Grade: D+
This service doesn’t seem to have enough traffic or buyers. It is a distant second in the market to LocalBitcoins.com in this niche, and it shows in the actual results. At least the service was a pleasure to use with generally fast and effective customer service. If you are not producing a product, but performing a service, your ability to serve customer’s needs in a timely and professional manner is very important, and at least they can do that. This was still a failure, but it didn’t use blatant misnomers like “Quick Sell” to mislead users.
So both sites failed in different ways, and the path to providence is somewhere in between. What the growing Bitcoin ecosystem needs is a service or website with the customer service and layout of BitQuick combined with the volume of users, the marketing success of LocalBitcoins.com One service leaves you hanging with little of no support. One does the same with few users to trade with.
I can’t recommend using LocalBitcoins.com, at least its “Quick Sell” feature, but with more sheer volume as a marketplace, you are more likely to actually get a transaction completed. If you used it ten times, you might get six or seven transactions done. Trusting the site to handle it doesn’t seem to be a good idea, so meeting the participant is probably your best move.
As for BitQuick, maybe it is a better place to buy BTC than to sell. They seem to need more capital investment in building their customer base. There are some holes in their game, but over time, they could be a better option than LocalBitcoin.com. This was their final email to me, showing their strong customer service bent:
We absolutely understand Evander. CO-OP orders usually sell within a week or so, sometimes even sooner depending on the price, but orders for Bank of America and Wells Fargo sell the quickest (usually the same day, depending on the price). If there is anything else that we can do for you, please let us know! We appreciate you giving our service a try!
Right now, it looks like LocalBitcoins.com wins by default, at least if you are a seller. They have more options available, a larger user base, and little actual competition. I preferred using BitQuick, but LocalBitcoins might be more effective, in the short term. Hopefully, the market will resolve that last part of the puzzle. Competition makes everyone better.
What do you think of my little 4-day online odyssey? Does this give you any Bitcoin business ideas? Comment below.
Images by LocalBitcoins.com and Shutterstock