Tag Archives: Decentralized exchange

The risk to sell bitcoins at decentralized exchanges localbitcoins.com and bitcoinbourse.eu

If you are interested in Bitcoin, you maybe would like to buy a bit. And if you once bought some bitcoins and now want to sell them with the hope of making profit from trading. The most common way for people to trade bitcoin is exchange, such as btc-e.com, bitstamp.net and the already dead Mt.Gox. All of these exchanges are centralized ones. As we see from the bankrupted Mt.Gox, the centralized exchanges charge commissions on the one hand, and put the investors on the risk of any potential loss on the other hand.

Some people then turn to exchange www.localbitcoins.com, since it is based on person to person model, you are trading your fiat money or bitcoins with another trader. Localbitcoins.com still charges 2% commissions from the trader who posts a buy or sell advertisment.

Recently, a new exchange called Bitcoin Bourse is launched. It is similar like www.localbitcoins.com, but the biggest difference is it does not charge commission, as it claimed “decentralised market place to buy and sell Bitcoin person to person!”

Indeed, decentralised exchanges are the future of Bitcoin trading. But I have to point out that you have to be careful when selling bitcoins at localbitcoins.com and https://bitcoinbourse.eu. You may be asking: WHY?

I sold two bitcoins to a German two months ago on localbitcoins.com. After I received the SEPA transaction of the two bitcoins, I released the bitcoins to the account of the buyer. Unfortunately, the money was reversed to the sender’s bank account on the request from police. It is said the bank account of the sender was hacked thus s/he was the real buyer who purchased my bitcoins. Fortunately, I offered the proof that the money had been reversed, then localbitcoins.com help team found the two bitcoins were still in the account of the scammer, so I got my bitcoins back. Otherwise, I would lost my bitcoins as well as the money.

My story shows the money you received from any trader paying with SEPA is subject to be reversed if the transaction is fraud. As you know, the bitcoin transaction is non-reversible. Even you ask the buyer offer a proof of his/her identity, it may be an invalid document as this does happen. This would make the seller of bitcoins on localbitcoins.com at risk from trading.

The risk borne by seller at localbitcoins.com also exists at https://bitcoinbourse.eu.