Goodbye LocalBitcoins: The Rise and Fall of a Bitcoin Pioneer

The closure of LocalBitcoins, one of the first P2P bitcoin exchanges, elicits mixed emotions from the Latin American bitcoin community as they bid farewell to a platform that was instrumental in their introduction to the cryptocurrency world.

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LocalBitcoins was one of the first platforms for exchanging bitcoins (BTC). Launched in 2012, it managed to stay in business for 10 years, until the recent announcement of its closure due to the downturn in cryptocurrency markets experienced since 2022, as reported by the company, today, February 9.

The company, founded in Finland by brothers Jeremiah and Nicholas Kangas, went on to become a market favorite, reaching weekly transaction volumes hovering around USD 100 million in 2017.

One of the regions that benefited the most from LocalBitcoins was Latin America, a place where the use of bitcoin to protect money from the ravages of inflation has increased.

Precisely, several of its users and members of the Latin American bitcoiner community have made their point of view known after the news of LocalBitcoins’ cessation of operations.

Some sent messages in a sad tone, such as the CEO of exchange, Guillermo Torrealba. “We lose an OG. May LocalBitcoins rest in peace. You were fundamental, your contribution will not be forgotten,” he expressed from his personal Twitter account.

LocalBitcoins went from having weekly transaction volumes of USD 100 million in 2017 to having USD 5 million so far this year.

While from the official Twitter account of the Chilean exchange, it was indicated that it was a “key tool in the early years of Bitcoin”, which helped “millions of people to join the biggest financial revolution in history, in its most vulnerable and incipient moments“.

Anibal Garrido, a Venezuelan consultant, educator and cryptocurrency miner, commented that he is not afraid to admit that he got his start in Bitcoin with LocalBitcoins. “I regret his departure, but I celebrate his contribution to the community,” he said.

LocalBitcoins put the noose around its neck

On the other hand, there are members of the community who blame LocalBitcoins itself for its dismal fate.

One of those was Venezuelan Kevin Hernandez, Bitcoin evangelist and entrepreneur in the cryptocurrency sector. On his Twitter account @KevinNegocios he indicated that the fall of LocalBitcoins, in part, was influenced by the emergence of the Binance exchange and the fact that its P2P (peer-to-peer) market flooded the region.

Liquidity is abundant for countries such as Colombia, Venezuela, Argentina, Spain, almost regardless of the cryptocurrency to buy or sell.

However, Hernandez believes the damage was done by LocalBitcoins itself, as it invested “very little” in offering a good user experience and user interface (UX/UI).

“Its support was usually a nightmare, and clearly the competition ate it up without chewing, there was zero reason to prefer LocalBitcoins, and this is the result,” he added.

For economist and blogger John Paul Koning, the closure of LocalBitcoins responds to the fact that the company was reflected as one of the main counterparties of the Bitzlato exchange, recently sanctioned and closed by the US authorities for allegedly laundering money with cryptoassets.

To that, Koning adds the fact that the Finnish company was also “a major counterparty to Hydra’s dark net marketplace,” similarly sanctioned by the U.S. in 2022.

“This is a risky business to be in. For most people, I doubt it’s worth it,” the economist sentenced.

Thus, some with regret and others with little or no guilt, say goodbye to the Finnish platform, in a Latin American market that is increasingly narrowing for P2P bitcoin exchanges, a crisis exploited by exchanges such as Binance.

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