Seeing that our last weeks article on bitcoins did not give LocalBitCoins the attention that it deserved, we felt another article on one of Finland’ s major bitcoin scene players, LocalBitcoins, was in place.
So we set out to amend that and had an interview with CEO and founder of LocalBitCoins – Jeremias Kangas and boy were we impressed. The company was started by Kangas in 2012 and for a year he was bleeding money and kept it afloat using his personal savings.
Bit by bit, quite literally, the company was growing and eventually hit profitability. At which point it made sense to start recruiting and now the company has grown to an impressive daily volume of 1400 – 3000 bitcoins per day. That is EUR 1.35M – 2.43M at todays bitcoin value.
Today, they also have around 110 000 active traders, are the leading decentralized bitcoin exchange worldwide and the market leader in the UK.
As I mentioned in the previous article, LocalBitcoins provides another form of bitcoin exchange service, it focuses solely on person to person, or p2p, exchanges. Unlike company led exchange sites, LocalBitCoins stays faithful to the bitcoin concept of decentralisation, though they do have a central server that keeps things together for now.
In a nutshell, LocalBitcoins works as a global forum where individual traders offer to either sell or buy bitcoins. Prices at which these coins change owners are set by the traders themselves, so hypothetically you could potentially fish a very lucrative deal, provided the partner-in-trade shows the green light, or then again, you can be painfully ripped off unless you keep a steady eye on the currency value charts.
That isn’t quite the point of the LocalBitcoin community though, as its main purpose of existing lays in the more respectable idea of spreading bitcoin popularity across the globe, especially in 3rd world countries. In such places, bitcoin communities can bring more secure forms of payment with the single necessary requirement of an internet access.
What makes LocalBitcoin unique and appealing is the spread-out localization of the sales channels, or persons, and the velocity at which the bitcoins reach their destination. Higher levels of anonymity are possible through face to face transactions, meaning a user does not necessarily need a bank account to trade bitcoins.
Obviously, if you are buying bitcoins with, say, €10000 euros, I wouldn’t recommend meeting in an abandoned warehouse where the local Hell’s Angels headquarters are rumoured to be at. Actually, I wouldn’t recommend meeting there altogether. So try avoiding abandoned warehouses. Instead, push for a meeting in a nice central coffee shop over a cup of coffee.
That should keep things civilized and comfortable, and who knows, maybe you’ll like each other. But its all up to you to decide.
This form of exchanging bitcoins brings a whole new level of intimacy and trust while spreading the LocalBitcoins community in the area. The people who trade can exchange contact information on top of coins, and they will have a face to associate the traders username with. In short, it brings people together through a currency system that was designed to keep its users as anonymous as possible. Pretty neat if you ask me.
Of course you can still make transactions through a bank, or a variety of other payment methods.
The company also stays true to their concept and does not touch real-world currency whenever it can. All of the transactions are in bitcoins, which includes employee salaries.
To keep up the trust, there is a reputation meter and an escrow service provided by LocalBitCoins, which ensures that everything goes smoothly. If something does go wrong, the bitcoins remain locked until the support goes through the problem. They take 1% service fee for the successful transactions, all of it in bitcoins.
In terms of the current market trends, Kangas told ArcticStartup that bitcoin companies are ”… in a landgrab situation, if people find LocalBitCoins and start using it – they will not go anywhere. In the future people are going to use crypto currencies. After all, people change their banks less than their change their wives.”
And coming back to our previous story on Bittiraha, we still think that the premise was not entirely wrong, after all Kangas told us that in comparison they do 99% of their trades outside of Finland while Bittiraha does 99% of theirs inside Finland.
Overall, they are moving massive amounts of bitcoins and are definitely one of the startups that everybody in the whole world should keep an eye out. You can check their statistics here, and see for yourself.