Person to person trading site with escrow

This article is updated, now the local.bitcoin.com site is integrated in localcryptos.com. Localcryptos.com also handles other coins in addition to BCH.

So let me describe the new and modern https://localcryptos.com.

It has the function of bringing people who want to trade together. For this site, there is no requirement to give any personal information. Phone number is practical, because the site sends an SMS when someone responds to your offer. They ask for e-mail when you sign up, but it can be a throwaway account (i recommend using your real e-mail account), they use the e-mail only for notifications, and an infrequent self advertisement.

Here is the modern stuff: When you sign up, you get a wallet. You need to back up this, and it is different from other wallets, you save a file to your device. The point is that it is your wallet, you have the keys, they are in the browser local storage. When a trade starts, you go into a smart contract, and the result is: The seller of coins locks the coins in escrow, which is a guarantee to the buyer, and the fees are locked in. When you release escrow, the result goes to the other wallets involved, the buyer and the site for fees. In case of dispute, there is a dispute fee to pay to the arbitrator, but as the contract is designed, he can only assign the trade amount to either of the traders, not to himself.

You can do a full circle of trade on localcryptos.com with escrow, mark paid, release escrow, and withdraw, without even one confirmation (deposit needs one or two confirmations before you can enter BCH into escrow). Even if you regard a confirmation as important, you can withdraw, you don't have to wait extra to have the inputs confirmed first, you get both transactions confirmed at the same time. This is glorious, and no other trading platform has this as far as I know.

This means it is safe for payment with any non-reversible method, for instance bank transfer or mobile money. For large trades, the buyer of coins can, if he bothers, wait for a confirmation of the trade transaction before he sends the fiat.

The fee is 0.25 % for the maker and 0.75% for the taker, total 1%. I think it is well worth it, for the safety and also for the calculation of the right amounts, if you do it manually it is easy to for instance sell for a percentage below, instead of above the market rate.

Then the spread, if there are few offerers, the price can be say 10% above, and the buying price 10% below. This improves with more traders, but you can also take advantage of it by being the maker and having one or more offers up.

Trading on the spread is just like other arbitrage, you can do a few trades to your satisfaction, and then you suddenly find yourself with only fiat or only coins. You have to rebalance, and that is effectively the same as undoing one or more of the successful trades you had. In addition, the prices could have changed in the meantime, making you suffer more. Last point with this form of trading is that the expectation of fiat losing value is greater than the expectation of coins losing value, so it is best to have an overall overweight in coins.

It is possible to trade with local currency, even if you are abroad, as long as you have internet banking and can see that fiat money has arrived in your account, or can pay to someone else from that account.

You can even be abroad, and transfer fiat to your parent, for instance, without the receiver knowing anything about coins. You sell the coins in the receiver's country, and ask the buyer to pay locally with mobile money. In this case you depend on a text message from the receiver, to confirm that the fiat money has arrived. When you do this, it is fair to tell the buyer what you are about to to and that you depend on a message from an associate, and get accept for that, before you proceed with the trade.

If there are no offers at all in your country, the traders are probably on facebook or telegram. But even so, put up an offer, then ask the traders on the other platforms to come to localcryptos.com if they are about to accept your trade, for the safety.

If the official USD rate of your local currency is not real (example Lebanon summer 2020), put up the offer with a USD price, and in the comment explain that you are ready to pay or receive payment at the blue market rate, or a rate to be negotiated in the messages.

A risk that is still present, is that you can find yourself trading with someone who use some kind of banking fraud, and the bank can take revenge on you. What I do currently, when it comes to bank and mobile money, I ask for their name to be sent in an SMS in the first trade. This info has to be revealed to the other trader anyway, and it puts off people who live in another country and therefore can not complete the trade.

Other things to remember is that quite a few people are just not serious, and do not want to go through with the trade. For that, make sure you have an agreement before you enter coins into escrow, and don't release the escrow before you have received the fiat with the agreed on irreversible method. If you are buyer, wait for coins to be escrowed before you pay, and mark as paid after you have paid.