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Kc  · 09/01/22

[CLOSED] LocalCryptos Review: Always no-KYC, Zero-Knowledge P2P exchange for big cryptos

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Update January 2023: LocalCryptos is shutting down within the next few month due to uncertain regulatory future, imminent bear market and personal reasons.

LocalCryptos is a decentralized marketplace for Bitcoin, Ethereum, Dash, Litecoin and Bitcoin Cash.

It is a much improved iteration on LocalBitcoins (not developed by the same people).

Wise, Paypal, Advcash, Skrill, Webmoney or Venmo are all supported at LocalCryptos, along with dozens other payment methods.

Message board, but with high tech on the inside

As far as the user is concerned, on the surface LocalCryptos look like just another “message board” exchange that’s really similar to LocalMonero or LocalBitcoins.

On the inside, LocalCryptos is fully decentralized though.

Compared to that, the OG marketplace LocalBitcoins was and is in fact just a message board on a server that stores all your private messaging history with your vendors, including the media files you send when a vendor asks to see your identity card. On the old style message board P2P markets, all that data is accessible to the administrators who run the platform, or potentially to an ISP and and anyone else, including hackers.

LocalCryptos is Zero-Knowledge

Unlike the original message board P2P markets, LocalCryptos encrypts all your conversations end to end.

End-to-end encryption (E2EE) is a communication system that allows only the communicating users to read the messages. E2EE prevents your Internet service providers, the law and even the owner of the service from accessing the decryption keys needed to read the conversation.

Tutanota is a well-known email service provider that supports E2EE within its own servers - as long as you are emailing with someone who is also using Tutanota, your emails are private. Not even Tutanota server administrators can access them.

LocalCryptos implements E2EE which means you’re in control of your conversations. No one else can listen in, not even the owners of the platform themselves, nobody - with the unlikely exception of secret agents.

LocalCryptos is a dApp

And being a dApp, you can find it on dappradar in the section for exchanges. It is now drowned in the sea of DeFi swaps which also count as decentralized exchanges.

As of October 2022, LocalCryptos support 5 cryptocurrencies - Bitcoin and 4 dino alts: Ethereum, Litecoin, DASH and Bitcoin Cash.

All these cryptocurrencies support at least a rudimentary kind of smart contracts. Ethereum is obviously the most advanced of them, but Bitcoin scripts can code an on-chain version of a simple escrow too. Litecoin, DASH and Bitcoin Cash have similar capability.

So, here’s a practical application of a decentralized application: An exchange platform with automated decentralized escrow system.

LocalCryptos do have a customer support in case of disputes. The help desk people have enough access to the escrow to release the money either to the vendor or to the buyer, but they cannot redirect the money to another address nor confiscate it. According to the platform, less than 1% of trades end up in a dispute.

New altcoins are probably not going to get listed any time soon, possibly after we see what survives after the looming thousand year bear market. Whenever new coins about to be listed, there is a public vote though, so you might want to follow LocalCryptos on Twitter.

LocalCryptos is Non-Custodial

The platform was launched in the first wave of non-custodial exchanges, characteristically in the first alt season of 2017.

The non-custodial storage still applies and still runs in the same way as it did back then: You need to send your crypto into a dedicated address to participate in the smart contract setup of the dApp, but the exchange shows you the wallet seed.

To log into LocalCryptos, you can use a browser-based crypto wallet like MetaMask.

Here’s a 2-minute walkthrough of making a trade by LocalCryptos team themselves:

The review: Are LocalCryptos legit?

Yes. They have good reputation since back when they were LocalEthereum. The company is incorporated in Australia under the same ABN since early 2018. The platform was initially launched in late 2017 as, let’s say, a startup run from a basement.

The LocalCryptos founder, Michael Foster, is a cryptocurrency OG since 2010 who has been particularly vocal about the use of cryptocurrency in countries with failed monetary systems. Here is the founder of LocalCryptos in late 2018 speculating that the currency failure in Venezuela could have been just the first domino piece.

Sign up at LocalCryptos

LocalCryptos Fees

On LocalCryptos, all transactions are settled on-chain because it’s a peer-to-peer exchange. That means you will pay the additional transaction fee on top of anything the exchange charges. In ETH that might get pricy.

The escrow fees are 0.25% if you post an offer or 0.75% if you respond to one. That means that LocalCryptos take the total of 1% of every transaction on the platform.

LocalCryptos Pros and Cons

There is one thing that all P2P marketplaces have in common: Vendors who trade on them sell crypto with prices over the market.

Back in the heyday of LocalBitcoins, people didn’t have that much issue with that. Crypto exchanges were few, generally run by amateurs and vulnerable to hacks - MtGox was still in vivid memory. On top of that, your average crypto investor was “not in it for the money” and all that. People didn’t really mind paying a little extra for the convenience when Bitcoin traded at 100 bucks.

  • LocalCryptos is more expensive than exchanges

That brings me to a clear drawback of LocalCryptos: You will be able to purchase crypto much cheaper on any custodial exchange.

Let’s look at a cost comparison.

Here’s a good and very active LocalCryptos vendor with 99% positive review of about 1000 trades: Look for NZ_gwailou. This vendor services Hong Kong, Australia and New Zealand since 2017 and was last seen 11 hours prior.

This vendor sells ETH with the markup of 2.6% over market and BTC at 3.5% over market.

NZ_gwailou on localcryptos

If you decide to buy Bitcoin from this vendor, you will be paying 3.5% markup, 0.75% escrow fee and any current bitcoin transaction fees.

At the time of writing, the average fee to send 500 USD worth of bitcoin is 1.11 USD and the current exchange rate at FTX is 21570 USD. Which gives the following:

  • Buying 500 USD worth of BTC on would cost you 0.1 USD in trading fees for limit order or 0.5 USD for instant market order and about 9 USD in withdrawal fees.

    The total would be about 9.5 USD.

  • Since this is an Aussie and APAC vendor, let’s compare also with Independent Reserve. Buying 500 USD worth of BTC on there would cost 2.5 USD in trading fees (market or limit) and about 10 USD in withdrawal fees.

    That’s a total of 12.5 USD.

  • Buying 500 USD worth of BTC via LocalCryptos would cost 21.25 USD in markup and escrow costs and 1.11 USD in transaction fees.

    That is total of about 22.35 USD.

Bottom line is that you probably won’t find yourself using LocalCryptos unless you really want to make your transactions without KYC, such as because you live in a non-US and non-EU location and most big crypto exchanges will not want to have you.

  • LocalCryptos is non-KYC, but have your ID ready

Speaking of which, you will probably need to provide your ID to your vendor.

People want to see that your ID matches the name on the Paypal or whatever payment method you’re using. This is normal and encouraged on all P2P exchanges - LocalMonero even has it in their user guide as a recommended step.

People will mostly compare LocalCryptos with LocalBitcoins, so let’s just make the difference crystal clear: On LocalBitcoins, you need to pass KYC site-wide, as in, the platform holds a copy of your documents. On LocalCryptos, this doesn’t happen and will never happen, because the platform is zero-knowledge.

On LocalCryptos you only ever get to send your ID scan to your vendor, but since your communication with them is end-to-end encrypted, that media file won’t get out, unless you’re doing business with undercover LE.

  • In some countries, you won’t find any active vendors at all

This goes hand in hand with the high fees and at this point, frankly, lack of demand for P2P exchanges in most countries: You need to shop around a lot before you land on a good P2P vendor.

The good thing is that LocalCryptos supports about 50 payment methods including wire transfers via Wise which are cheap around the globe, so you are not restricted to your country of origin. You will find a good vendor when you look hard enough, but I can’t imagine you’d do it unless you absolutely can’t use an exchange.

Some of the top countries in terms of trading activity on LocalCryptos are Venezuela and Russia, which is not surprising. The first ever non-english Telegram channel that LocalCryptos launched was in Spanish to service all the customers in Venezuela.

If you browse through Venezuelan vendors’ offers, you will see it is not uncommon to see traders with 4-5 digits of transactions recorded. Argentina is similarly well taken care of, but in contrast to that there are only a handful of traders in Brazil and their average markup is at 25% over market. Rest of the region is apparently not aware of LocalCryptos at all.

There is a surprising amount of activity from Australia and New Zealand (or maybe not so surprising) and a fair amount of traders in Hong Kong. You will find a few high-reputation traders in the UK. Mainland Europe is largely unserviced on LocalCryptos. That makes sense, the only people there who want to use LocalCryptos are really just privacy enthusiasts.

So, as you see it can be a hit or miss.

Sign up at LocalCryptos

Bottom Line

LocalCryptos is a decentralized, zero knowledge, non-custodial P2P marketplace for large cap cryptocurrencies. It is expensive and ridiculously time consuming and you won’t use it unless you need it. But for those who do need it, it is there, reliable, with great track record and solid backend system.

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