Topic: Does Localbitcoins make sense in an electronic world? probably for an odd 1 or 2 (Read 1517 times)

Thanks for that reply

24 weighted average isn't always the best. For instance when you had the crash recently the weighted price was over $200 while the spot price was $100 - 110.

I use localbitcoins.com and have done a transaction. I personally think it fulfills a vital role in the community. If you need to liquidate your bitcoins rapidly for some reason it's one of your only real options. As to the variance from current traded price and what they are charging, that has to be there to protect the parties to the sale from the volatility of the market. I can't speak for everyone, but I buy bitcoins based on the 24 weighted price. Think about it, when they place an order on the site the price is locked at whatever my formula says it should be at time of sale. Then it could take hours or even a day or two to finalize the sale in person. Meanwhile, I've taken cash from my account and carried it with me (along with my 10mil) to some coffee shop to make the trade. Going the other way I use current price + a hefty percentage because we all know the way this market goes by the time I get my cash the price is likely to be above what I'm being paid for them.

No I wouldn't say they are popular. Probably only a handful of people know about them.

There is no law about them.

Are bit coins becomming popular in Pakistan ?

Is there any law regarding this or is it too early ?

I bought my first bitcoins locally in Pakistan.

A lot of the assumptions you make are incorrect. Mind you I have made only one trade so far but this is what I learned:

• The price and quantity you see on localbitcoins is rarely the one at which the final trade will occur.
• People don't want to learn how to use the localbitcoins transactions service.
• A lot of the recommended best practices for local transactions don't work here. For instance wifi is not widely available so you can't do a transaction at a restaurant or public place. And the law and order situation is pretty bad so no buyer is going to go around carrying large amounts of money.

Also you can set your price on localbitcoins relative to the current rate or the weighted average at Mt. Gox.

Good point that one

Localbitcoins is less about the prices advertised and more about the contacts you get.

In places like the UK it is really popular, probably because there is no GBP exchange.

You get someones number from the first trade and then continue to trade at Gox prices with them in person.

Once again ...thanks...

I agree we are evolving

I agree that price discovery would be better with more players

Probably we get more exchanges as well !!! ;-)

But back to local bit coins

Even at the zip you mentioned it is NOT that well priced ..I'd fell

More screen shots here http://mintaway.wordpress.com/2013/04/13/local-bit-coins-at-california-chronicling-the-journey-april-12-2013/

All with a view to learn and exchange and NOT challenge anyone



Regards

I just read your blog post (guiltily, I didn't read it initially). You definitely have a point about inconsistent prices in certain areas. It seems to me, though, that this has a lot to do with the immaturity of the market especially in areas with less adoption.  Below is a link to SF Bay area where there is a fairly high level (in comparison) of adoption. While some sellers are priced high, there are as many selling at mtgox close or lower. Like any market, price discovery is more accurate with more participants.

https://localbitcoins.com/zipcode/US/95112/

Localbitcoins is a very "raw" over-the-counter market, akin to a physical open market where you can walk from merchant to merchant and see a variety of prices for the same thing. OTC trading is great, some think essential, capability of bitcoin. What ripple is doing with decentralizing exchange is in the same space and also potentially very positive for bitcoin.  Check out this old post that discusses the importance of otc trading.

http://shadowlife.cc/2012/11/necessary-conditions-for-the-long-term-success-of-bitcoin/

thanks for the reply

by the way have you seen the screen shots I posted on the blog link in my original message ?



I see

Volatility - localbitcoins by default uses a simple script to peg your prices to mtgox close. So the volatility you experience is be default the same you would experience at mtgox. Users have the ability to manually enter prices or adjust the script to other variables. In markets that are more developed such as mine, most sellers close to mtgox prices.

Scammers - Yes, but if you have the common sense enough to use Craigslist, you can use localbitcoins.

Spreads - If you don't like the spreads, try negotiating with the sellers.

that's a good idea actually !!

For most countries outside the USA (85% of the world) it's pretty impossible to buy bitcoins. For these places Localbitcoins is the cheapest and easiest way to get bitcoins (no month long wait to get verified eg. mt.gox)

Also if you're unhappy with the rates to buy bitcoins at then just set up an advert that people can sell bitcoins to for whatever price you think is reasonable.

agree - volatility is probably killing them too


agree again



yeah ...someday .... not now It seems

Well hopefully the price won't always be so volatile, but maybe the localbitcoins site serves a secondary purpose of helping to establish a "real world" bitcoin community. I haven't used it though; I'm wary of scammers and there are easier ways to get the coins, but maybe someday.

I'm generally amazed at this phenomenon of bitcoins

From obscure cryptographic stuff, today bitcoins are something spoken by dozens of press, regulated by the US FINCEN and used / traded by 100s of 1000s

Bitcoins have quite a way to go before any meaningfull acceptance at the local market or grocery store

One hurdle is local availability (there are many other hurdles, but availability could be one local hurdle)

This set me thinking IF the website Localbitcoins made any sense in the electronic world ?

My conclusion AT THIS POINT, probably it does for an odd one or two bitcoins , but for any meaningful number, it might turnout to be costly

Lets see the status now - April 11 2013, PDT 10 p.m. approx

Take localbitcoins locations outside of USA

see the PRICE DIFF between the price of bitcoins on bitstamp or any recognised exchange and the local guy (localbitcoins)

you will faint !

I just checked some NON US locations


First location Singapore / just chosen at Random
------------------------------------------------------

At Singapore, as on 11 April 2013, approx 9.45 PDT, Bitcoins are being sold for anything between SGD 116 to SGD 295

Let us assume I go to cheapest guy, the SGD 116 guy

even that is approx USD 93 ~ 94

the current price on Bitstamp is some $ 60 ~ $ 70 !!

how can physical holding of bitcoins ever replace electronic exchanges in such a volatile market ?

I have added screen shots below

If you take other centers like India,
----------------------------------------

the spreads and price differences are even worse … atrocious spreads as well

Screen shots of India are also given below

All screen shots taken about the same time as this blog is posted … (say minus 5 to 10 minutes to type this blog)

blog of details + screenshots at : http://bit.ly/10XJqhq