How does localbitcoins work? | Bitcointalksearch.org

CryptopreneurBrainboss

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Quote from: lixer on September 13, 2019, 02:11:29 PM

The operation of local bitcoin is more like a local exchange if I may be right, I have never really used local bitcoin before, but I believe that they all operate same way. I have been using luno as my local exchange,

Luno started as just a centralized exchanges were you just send your bitcoin to them, then they send you your local currency in equivalent to the bitcoin value you sent. Not until further upgrade, luno added the direct exchange option where you can trade directly with other customers through their Peer2peer option using the platform as escrow. Localbitcoin on the other hand has always been a peer2peer exchange meaning, Mr Trump advertise to sell his bitcoin at a particular price, Mr KIM agrees to buy the bitcoin then the platform serve as an escrow and that's all.

Transaction done using Local bitcoin are not reversible that's why we have high rate of scam report associated with the exchange meanwhile hardly before you hear a report of users getting scammed on Luno mostly because of their high level of security verification clearance needed to use the App. And yes Luno buys most of the sells order at the lowest price possible and profit by sending it to other customers. Notice that when i tried exchanging directly from my wallet without visiting the exchange platform.

lixer

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Quote from: cocopopcorn on September 10, 2019, 01:52:01 AM

So Mr seller sells btc to Miss Buyer. Seller has btc loaded into his account via his wallet address. Trade Request by Miss Buyer locks the amount of sellers btc. This is the part i'm curious about. Once the trade is complete what is the route of the bitcoins do they go directly from Seller to Buyer or does localbitcoins take the coins to a 3rd party account and they give send to the buyer?

The operation of local bitcoin is more like a local exchange if I may be right, I have never really used local bitcoin before, but I believe that they all operate same way. I have been using luno as my local exchange, and what I do is to transfer bitcoin to the wallet address that is being given to me, then, I send a withdrawal notice using the application form, notifying them of the amount of money I wish to sell, there would have been pending buyers already who would buy it and then if the price is ok, I get my order executed immediately.

I think those one that gets executed immediately is being bought by the local exchange directly because they would make their gain from it, well that is for my own local exchange, I don't know if they have similar operational way.

cocopopcorn

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Thanks. Cleared things up for me. I'm not trying to mix so no worries there just trying to get my head around the backend of things. Used LBC for years without giving it much thought ( like a typical end user Tongue

)

Findingnemo

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Quote from: cocopopcorn on September 11, 2019, 08:09:22 AM

If they do take it to their own pile .. isn't this kind of mixing coins since all on going trades will be in one big pot?

Just now I traced few of my transactions into localbitcoin and also withdrawal from local bitcoin,you are right all of them going into huge pot which might not be possible to trace your funds but localbitcoin does know all these things and they can report the details to government if there is any complaint against you for laundering or other reasons,and also they will block your account with all of your remaining funds for violating their terms.

aundroid

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Quote from: cocopopcorn on September 11, 2019, 08:09:22 AM

I think I over complicated my question basically all I want to know is does btc travel directly from Buyer to seller so

seller > escrow > (everythings good) seller > buyer

Or does the actual bitcoin travel through the 3rd part

seller > escrow > (everything good) > seller

Neither.
The correct scenario would be: seller > escrow > buyer

The escrow will release the funds only after the buyer has paid and you as the seller have confirmed the payment.

Quote from: cocopopcorn on September 11, 2019, 08:09:22 AM

If they do take it to their own pile .. isn't this kind of mixing coins since all on going trades will be in one big pot?

Using it as a mixer could theoretically also work. But nobody will be able to assure you that the btc cannot be traced after all.
If you just want to mix btc I would use a mixing service (e.g. chipmixer) or alternatively the Wasabi wallet with coinjoin.

cocopopcorn

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I think I over complicated my question basically all I want to know is does btc travel directly from Buyer to seller so

seller > escrow > (everythings good) seller > buyer

Or does the actual bitcoin travel through the 3rd part

seller > escrow > (everything good) > seller

Reason I ask is because if they actually took the bitcoin from the sellers wallet to their own 3rd party wouldn't it take at least 1 confirmation before the trade could continue? Also as soon as a trade is complete buyer can send it straight away elsewhere

Or do LBC "take the risk" (no risk because they have full control and give the illusion bitcoins have moved from your wallet etc?

If they do take it to their own pile .. isn't this kind of mixing coins since all on going trades will be in one big pot?

Findingnemo

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Quote from: BitHodler on September 11, 2019, 04:06:40 AM

Quote from: magneto on September 10, 2019, 06:47:57 PM

In most of the cases, LBC actually doesn't do anything as the trade flows smoothly. They would only really actively intervene if someone disputes the transaction.

I have seen quite some reports about accounts that were put on a block because of suspicious activity, which means that the user either conducted a transaction larger than usual or a lot of smaller transactions in a single day.

In other words, if your trading behavior doesn't correspond with your trading behavior of the last couple of months or even years (not exactly sure how long they go back), you're pretty much guaranteed to get your account blocked.

I get why they are trying to be alert on suspicious activity due to regulations they have to comply with, but they are so trigger happy that it makes people using LBC actually change behavior and trade less naturally.

I don't think accounts will get blocked due to increase in trade limit of sudden but this may happen if they are withdrawing huge amount of bitcoins.

But account will be blocked in case of dispute and also violating their terms.

BitHodler

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Quote from: magneto on September 10, 2019, 06:47:57 PM

In most of the cases, LBC actually doesn't do anything as the trade flows smoothly. They would only really actively intervene if someone disputes the transaction.

I have seen quite some reports about accounts that were put on a block because of suspicious activity, which means that the user either conducted a transaction larger than usual or a lot of smaller transactions in a single day.

In other words, if your trading behavior doesn't correspond with your trading behavior of the last couple of months or even years (not exactly sure how long they go back), you're pretty much guaranteed to get your account blocked.

I get why they are trying to be alert on suspicious activity due to regulations they have to comply with, but they are so trigger happy that it makes people using LBC actually change behavior and trade less naturally.

hugeblack

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All that occurs is an update of the data in the site as follows:

- When you deposit, the site generates an address to receive those coins.
- After your address enough confirmation, your account database is updated with the transaction value.
- When you want to buy or sell the database is updated with new values. The site can also control the currency by updating escrow database values.
- The whole process is automated and the support team can intervene to resolve the tendencies.
- When you want to withdraw the database is updated and send currency from localbitcoin wallet.

Findingnemo

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Quote from: magneto on September 10, 2019, 06:47:57 PM

In most of the cases, LBC actually doesn't do anything as the trade flows smoothly. They would only really actively intervene if someone disputes the transaction.

And one more thing I would like to add,if there is a dispute transaction of yours you will be on forced holiday which means temporary ban at that time you can trade with others or withdraw your funds as well.

magneto

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Quote from: cocopopcorn on September 10, 2019, 01:52:01 AM

So Mr seller sells btc to Miss Buyer. Seller has btc loaded into his account via his wallet address. Trade Request by Miss Buyer locks the amount of sellers btc. This is the part i'm curious about. Once the trade is complete what is the route of the bitcoins do they go directly from Seller to Buyer or does localbitcoins take the coins to a 3rd party account and they give send to the buyer?

The coins never actually exchange hands on the blockchain.

Everything is done on the localbitcoins escrow platform, as in once the trade is released, the seller is automatically credited the amount that is outstanding from the trade into his LBC account. He can then withdraw that amount if he wishes. There is no "third party" account involved other than the localbitcoins platform itself.

In most of the cases, LBC actually doesn't do anything as the trade flows smoothly. They would only really actively intervene if someone disputes the transaction.

iamsheikhadil

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Localbitcoins is basically a popular escrow, and when a trade locks the funds, it goes into the escrow in which if there's any dispute, the moderation can check all proofs and decide whether to release the funds or not. It's there to protect both parties. I don't think any third party address is involved, just that the payment from sellers address is locked and sent directly to the receiver upon payment confirmation.

Findingnemo

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Quote from: cocopopcorn on September 10, 2019, 01:52:01 AM

So Mr seller sells btc to Miss Buyer. Seller has btc loaded into his account via his wallet address. Trade Request by Miss Buyer locks the amount of sellers btc. This is the part i'm curious about. Once the trade is complete what is the route of the bitcoins do they go directly from Seller to Buyer or does localbitcoins take the coins to a 3rd party account and they give send to the buyer?

When someone send trade request to buy btc the bitcoin of requested amount will automatically goes to reserved state which can be released by the seller itself when transactions completed.

Only LBC support staff will release the btc if the seller didn't release the coins even after the payment made.

But when requesting to sell your btc to and add the escrow work in the opposite direction,you can release coins when user paid you.

CryptoGM

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Quote from: cocopopcorn on September 10, 2019, 01:52:01 AM

So Mr seller sells btc to Miss Buyer. Seller has btc loaded into his account via his wallet address. Trade Request by Miss Buyer locks the amount of sellers btc. This is the part i'm curious about. Once the trade is complete what is the route of the bitcoins do they go directly from Seller to Buyer or does localbitcoins take the coins to a 3rd party account and they give send to the buyer?

If you are the one selling BTC for FIAT your BTC goes into an escrow, buyer of BTC pays into your preferred method of payment. After confirmation of payment on your end, you OK localbitcoins to release escrowed BTC to the buyer of BTC on the other side. The opposite just works the same. However, be keen there are traders I dont know how they are able to circumvent the escrow part and still have trading ads, so if you are in a hurry can release BTC unknowingly. In most cases these traders will appear attractive due to high conversion rates between FIAT and Crypto. Just be keen when trading. Happy trading!

aundroid

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As Sharon121212 stated correctly, an escrow is simply used here.

Also on their website the process is described:

Quote

Overview of the trading process

A typical trade on LocalBitcoins works like this, the example is an online sell trade where you're selling Bitcoins to a buyer. The process is similar when you are buying Bitcoins online, but for this example we're focusing on selling Bitcoins, as that's the most common type of trade.

First you need to create a sell Bitcoins online advertisement (called an online sell advertisement). When making the advertisement you choose a payment method, set your pricing, your limits and write your terms of the trade as a free form message.
Then you need to fund your LocalBitcoins.com wallet with Bitcoin. You need to have Bitcoin in your LocalBitcoins wallet in order for customers to be able to open trade requests from your advertisements.
When a buyer opens a trade with you, Bitcoin for the full amount of the trade is automatically taken from your wallet into escrow. Give the buyer payment instructions and guide the buyer through paying for the trade. You will receive email and SMS notifications when someone replies to your advertisement.
Once the buyer has paid and pressed the I have paid button you will receive a notification via e-mail, SMS and on the website that a trade has been paid for.
When you've confirmed that you have received the payment it's time for you to release the Bitcoins. This moves the Bitcoins from escrow to the buyers LocalBitcoins wallet.
The final step is to Leave feedback for the buyer and encourage the buyer to do the same for you. Feedback is important in order to gain reputation and make more trades.

[source: https://localbitcoins.com/guides/how-to-sell-bitcoins-online]

Murat

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Not just that. To avoid scammers there are some cool features.

1. When you create ads, Mark -

* Trust people only
* Verified users.

2. When you sell/buy from an advertisement.

* Check the recent Feedbacks (Make sure to check dates)
* Only trade with people with tons of positive feedbacks.
* Trade with people who trades regularly. (Pro Traders)

I am using local bitcoin for the last 3-4 years, Without any single issue. Always do proper research before doing anything in this space/life.

Sharon121212

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It's really not that hard. Let us use your terms for better understanding, when Mr seller place a notice of selling bitcoin and then gets contacted by miss buyer the bitcoin in Mr sellers wallet goes to an escrow(third party, this is to assure a transparent deal and to ensure the deal goes through). As soon as it can be assured that miss buyer has paid for the bitcoin to Mr buyer. She then gets her bitcoin from the escrow.

cocopopcorn

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So Mr seller sells btc to Miss Buyer. Seller has btc loaded into his account via his wallet address. Trade Request by Miss Buyer locks the amount of sellers btc. This is the part i'm curious about. Once the trade is complete what is the route of the bitcoins do they go directly from Seller to Buyer or does localbitcoins take the coins to a 3rd party account and they give send to the buyer?

Topic: How does localbitcoins work? (Read 178 times)