What started out as an investment worth a few thousand dollars back in 2011 has now gone global with about 20 employees and over 4 million registered accounts. This is the story of LocalBitcoins, a peer-to-peer Bitcoin exchange platform that allows users to buy and sell Bitcoin at their own price.
Without a doubt, LocalBitcoins is one of the most long running and controversial Bitcoin exchange platforms. In fact, if Nicholaus Kangas’ s(the CEO of local Bitcoin) statement to CoinDesk is anything to go by, the company obtained 40 percent of its current users in the last 6 months alone.
The Goal of LocalBitcoins
For a company that was started with an extremely low budget, LocalBitcoins’s 27 million in revenue over 2017 is a true story of success. When it started back in 2011, the company’s CEO revealed that at the time the only viable options for buying Bitcoin was though a face-to-face meet up.
Currently, LocalBitcoins boasts of being among the big time players in a market dominated by top tier VC funded exchanges. Kangas mentioned that the goal for LocalBitcoins “is to improve the global trade possibilities, so as to serve people who have limited access to financial services”.
True to his words, Local Bitcoin has shown tremendous traction in regions that are otherwise neglected by the big exchanges. For instance, last week alone the peer-to-peer Bitcoin exchange platform made over $60 million in trades with about $55 million in trading volume coming from Venezuela, Peru and Tanzania. This is six times what the company made in trading volume in the US.
Increased Volumes Despite the Dip
What’s more, Local Bitcoin has been experiencing spikes whenever there are countries such as Tanzania and Peru that are recovering from slumps in the banking industry. In fact, LocalBitcoins has become the one solution that crypto enthusiasts in those countries have turned to whenever banks move to restrict buying of Bitcoin, such as what happened in Canada.
As a result, the value of local Bitcoin has been on the rise even as the market has experienced a bear trend over the past few months. Compared to its revenue in 2016, LocalBitcoins’s 27 million in 2017 is three times as much with a steady growth in trading volume despite the overall market dip.
Still Way Below What the Big Exchanges Make
Although the peer-to-peer marketplace is recording annual revenue that dwarfs what big time exchanges make in a day, the company’s CEO was quoted on CoinDesk saying that the company is focused on solving a much needed problems of “how to buy or sell Bitcoin for fiat currency” even though its “a small player”. Kangas acknowledged that LocalBitcoins is gaining traction in a market that is mostly neglected and overlooked by the mainstream exchange platforms.
Even though LocalBitcoins has been a success, Kangas revealed to CoinDesk that the journey has not at all been plain sailing. What began as a fascination with Bitcoin for Kangas (a Finnish programmer) later turned into a company that he started with his brother by only investing a few thousand dollars he had saved up for a server.
Then his fascination with the power behind Bitcoin led one thing to another as the company set out on a journey to serve local Finnish crypto enthusiast with an easy way of buying and selling Bitcoin.
Scammers on the Platform
One of the biggest challenges that the company has faced is the issue of scammers and hackers taking advantage of uneducated users on the platform. Basically, local Bitcoin has had to deal with various criminal cases with online testimonials indicating the far reaching extend of the menace.
However, Kangas mentions that his team is concerned about the issues and is cooperating with investigative authorities to make sure the problems are dealt with.
According to Kangas, the company plans to stay on the right side of the law and comply with any regulatory requirements. However he mentioned that the current state of regulation sphere in the crypto space is full of uncertainty, even though buyers and sellers on the platform are obliged to comply with their local laws and regulations.
It Helps to Be Local
In recent months, most crypto exchanges have come under heavy governmental scrutiny, a good example being how the Investor Protection Bureau in the US moved to put out an inquiry that was sent out to over a dozen exchanges. Of all the exchanges included in the list, LocalBitcoins was surprisingly missing presumably since it’s considered more of a P2P platform than a full-blown bank-type exchange.
What do you think about the success that LocalBitcoins has achieved? Share your thoughts with us in the comments section.