Coinbase vs. LocalBitcoins
One of the biggest concerns of the members of the crypto community that possess holdings of any digital currency is security. Due to the multiple security breaches experienced by crypto heavyweights such as Bitcoin and Ethereum alike, both of which resulted in community-dividing hard forks, people are concerned about how secure their holdings are.
With platforms such as Coinbase, users are given unparalleled ease of access to buying, sending, and holding Bitcoin, Ethereum, and Litecoin. With features such as low fees, an included wallet, and an easy to use interface, Coinbase has become a popular choice to newcomers.
Although it is very user-friendly, it comes with drawbacks due to it being a centralized third party. This characteristic makes Coinbase more prone to security breaches and hacks, as there are frequent reports of users losing access to accounts and holdings they own inside the Coinbase platform.
LocalBitcoins, on the other hand, is more inline with the decentralized manifesto that the crypto community at large adheres to. The platform is secure and private because it facilitates P2P deals and does not have a centralized store of information related to wallets or holdings. Instead, users can set up in-person deals where the seller sets the premium of the deal (which averages out to be about 6-15%).
This allows for instantaneous transactions, whereas coinbase crypto purchases can come with a delay. While this process is a favorite for die-hards, others criticize it as being too naive. The experience you have with a deal directly relates to the person you are dealing with, and the premiums have proven for some to be too much of a nuisance.
Privacy & Security at LocalBitcoins and Coinbase
Privacy and security are the main motivators that drive the debate between using different cryptocurrency exchange platforms. Loyalists stick to their decentralized ideals, suggesting there should be no such centralized entity such as Coinbase in charge of so much sensitive information and personal assets. This feeling is not without evidence, as Coinbase has been subject to multiple hacks, reports of lost accounts, and reports of lost crypto holdings.
LocalBitcoins has been called out for its issues as well, with people stating that the premiums are consistently too high and not worth the hassle that comes with dealing with the P2P deals it hosts. In addition, some individuals have reported that there are no reasonably priced premiums in their area, making it unuseable. When choosing between these two platforms, users must choose between a better end user experience with Coinbase, or a more secure and possibly annoying process with LocalBitcoins.
One of the most widely used exchange/wallet services available, Coinbase provides its users with an easy-to-use platform that allows them to buy Bitcoin, Ethereum, and Litecoin. In addition, users can also send and receive money from the included wallet service, check the going rates for each digital currency, and instantly send and pay for services/products with any of the available currencies.
The biggest concern with Coinbase, as mentioned, is its security. There are consistent reports of people simply losing access to their accounts and crypto holdings, with no hope for a solution. Since Coinbase is a singular, centralized entity, your holdings are held within a single ledger, rather than an open ledger that is present across an entire blockchain. This clashes with many people’s beliefs in the blockchain and crypto, and its mission for society. In addition to this, many users that reside outside the US have reported that the platform is not friendly to them, with the rate of locked accounts and stolen funds increasing almost three times in countries such as Australia.
LocalBitcoins is a popular recommendation for crypto enthusiasts due to its private, secure nature, along with its decentralized, community-focused mentality that allows for P2P deals and user-set premiums. Once a deal is completed between the buyer and seller, there is no delay in receiving your Bitcoin. Given that you’re dealing with locals with local bank accounts, the entire process can take place very quickly.
While LocalBitcoins is not the well-rounded platform that Coinbase is, not including a wallet or availability of any other currency except Bitcoin, it still keeps its die-hard fans due to its respectable mission. Keeping local communities of Bitcoin trading alive is a noble cause, and it protects its users from hacks and security breaches. LocalBitcoins has yet to experience the problems Coinbase has faced such as account lockouts or lost funds.
The main complaint for LocalBitcoins is the trustworthiness of the people you are dealing with. Since users set premiums, it is out of your control if there is anyone in your area with a premium rate below 30%, which some Reddit users have reported. Each person’s LocalBitcoins experience can differ, and this is why its reputation and value is so hotly debated.
Which Exchange Should You Choose?
While both platforms offer their unique benefits, which one you choose depends on your goals, location, and opinions about the crypto community and safe practices. For those who are relatively new to crypto trading that are located in the US, Coinbase (in combination with a hardware wallet) is the easiest way to obtain Bitcoin, Ethereum, or Litecoin.
There are those who prefer the P2P, secure nature of LocalBitcoins, despite the uncertainty of rates in your area. At the end of the day, choosing between these two platforms comes down to convenience, the same way you would justify buying a product from your local 711 instead of driving to WalMart.
With that being said, always practice security when buying and selling digital assets. It is our recommendation to use a hardware wallet, such as the Ledger Nano, to safely and securely store your private keys. This removes any possibility that your holdings could be hacked or accessed by a third party, and ensures peace of mind.
Whichever platform you choose to work with in the end, participating in the cryptocurrency community only adds to its capability of reaching mainstream adoption, so get involved today!