LocalBitcoins is the most popular peer-to-peer Bitcoin exchange. According to the company, customers may purchase and sell Bitcoins and the other cryptocurrencies with whatever means of payment they want, including bank cards and money, held on a mobile phone SIM card. Today, we’ll talk about how LocalBitcoins.com works and how to build up your own Bitcoin exchange in the style of this site.

Step 1: Business Model and Niche

Bitcoin buyers and sellers may meet and work out the transaction details using the LocalBitcoins clone script, a website that functions as an intermediary. Using the website’s built-in automatic exchange services or any other means is OK, as long as the transaction is completed (except for cash settlement). For example, the platform doesn’t have a fixed exchange rate, and it doesn’t limit payment methods or transaction times. Ideally, all of this would be done in a confidential setting between the two parties.

It is possible to buy and sell cryptocurrencies for those who have successfully passed the site’s verification procedure. Trade volume dictates the following identity verification requirements:

Tier 0: compensation of up to 1000 euros per year. First and last name, email address, phone number, and country must be provided. The reservation will need to be confirmed by phone and email.

Tier 1: Tier 1 has sums between $1,000 and 20,000 euros. To apply, you must submit Form No. 1 of the application, including your full name, email address, and phone number. The address and identity of a person must be verified using an identification card (such as a driver’s license or passport).

Tier 2: A salary and benefits package of between €20,000 and €200,000 annually. Form 2 must be sent together with your full name, email address, and phone number. Verifying the applicant’s identity and thoroughly investigating their place of residence are essential steps.

Tier 3: Transactions or bargains may be made infinitely in Tier 3. In addition to completing Form No. 3, you must also include your full name, email address, and phone number. Get all of your facts straight and pass a viability test before going any further.

The site’s reputation and review system is meant to filter out dishonest traders and scammers. Conflicts may be resolved via the sites’ Terms of Service and Arbitration Service. Through commissions and internet advertising, the platform makes money. There is a smartphone app.

People who want to buy or sell Bitcoins profitably are the target audience for this website. It doesn’t have a regional or specialty market even though it is a European firm (having its headquarters in Helsinki, Finland). People who want to pay in cash are the only ones excluded from the site’s target audience. In July of this year, this feature was removed from the app.

To create a peer-to-peer cryptocurrency exchange, it is required to set up a platform like LocalBitcoins clone, where buyers and sellers of Bitcoin may meet, agree on the transaction terms, and execute it using built-in tools.

Step 2: Platform Architecture and Features

Trading engine

Backend software includes the order book, match system (which compares buy/sell orders), automatic exchange tools on the site, and other services that are connected through APIs.

A LocalBitcoins exchanger will also need the following:

The parties must be able to communicate in real-time to achieve an agreement on the terms of the transaction, which may include the exchange rate, payment method, currency, and other elements. Your platform should include a built-in chat, but third-party services like Whatsapp, Telegram, Viber, or Facebook Messenger may be connected to it.

The system includes payment gateways.

This instance requires a connection to blockchains and payment channels like PayPal, Amazon Pay, Stripe, and Authorize.net. The target audience’s preferences should guide the selection of payment solution providers. The more of them there are, the better it is. Comparing the payment methods accepted by LocalBitcoins and Paxful shows that the former has more than 50, while the latter has over 300.

The user’s place of residence

The match system must suggest counterparties that are near to the originator of the request when recommending counterparties for the purchase and sale of Bitcoins. Because people who live close to each other are more likely to speak the same language, use the same currency, and utilize the same payment methods, there is a greater chance of a successful transaction.

User-to-user communication

The design of your website should be appealing to the eye, easy to use, and informative. It would be great if any user, independent of past Bitcoin trading knowledge or experience, could visit the site and immediately comprehend what and how to do it without any more instructions. To do this, the following functions must be implemented:

• The following sections detail how to sign up using an email address or a phone number.
• If your website requires user identity, you may use social media to incorporate registration.
• Deposits and withdrawals of money take place.
• Armory, Exodus, Coinbase, and BitGo are among the third-party cryptocurrency wallets that may be linked to the site’s deposit.

Submitting a request for assistance online

Create an announcement for the sale of Bitcoins or other cryptocurrencies, including the amount being sold, the exchange rate being utilized, and the means of payment being used.

If you’re looking to buy or sell cryptocurrencies, here is the place to go. You can search for certain phrases, locations, ratings, and payment methods.

In terms of technological support

Access to resources such as help-seeking information and referrals to community resources.

Step 3: Analyze previous transactions with a particular user.

A place to keep your Bitcoin safe

Each member of the LocalBitcoins community receives an individual Bitcoin wallet as soon as they sign up for an account on the website. Smart contracts allow for the secure trading of cryptocurrencies on the platform, which is its most prominent feature. Such a wallet is quite similar to an online Bitcoin wallet most of the time.

Adding a wallet to a website may be done in two ways:

A “shared wallet” refers to a wallet that is accessible by all users of the site (pool). To increase liquidity, centralized exchanges often use this method.

If the money is stored in many wallets, the platform administrator does not have access to it.

Peer-to-peer Bitcoin exchanges don’t always provide internal wallets, though. This improves efficiency while also defending against potential problems like hacking and money theft in the future. But you can’t earn from trading commissions if you use this approach. Bitcoin exchanges make the bulk of their money from this.

A panel of administrators Responsibility includes site management, process monitoring, business analytics, conflict resolution, and user help. Administration panels aren’t nearly as crucial as user interfaces in terms of design. It’s time to put your money where your mouth is.

The Admin Control Panel (or “Admin Panel”) Functionality:

This information is needed to keep track of purchases and sales and monitor user behavior and other essential site functions.

You’ll need the following tools to verify accounts, adjust spreads and trading fees, handle disputes, and manage transactions after being reviewed for KYC or other compliance needs.

See who’s out there by taking a peek at their bios

Information about individual users is shown, including their name, nickname, phone number, email address, wallet balance, transaction data, account verification status, and supporting documents.

On the Buy-Sell tab, you’ll see the Buy-Sell button

You may see the following details on all of your transactions: the parties involved, the amount, the exchange rate, and the date and time they took place (if applicable).

You may look up the statistics of the site

The platform’s data are updated as soon as a transaction occurs, covering anything from how many negative reviews are posted to the number of transactions. Graphs, charts, and tables are frequent visual representations of data.

The support team handles user queries.

Feature sets that are not listed here. Security, social media integration, and the introduction of a rating system are all critical considerations for the site’s success. Until this is completed, the website will be unable to compete.

The following details how LocalBitcoins’ security measures are put in place:

Security for logging in

The browser is tested upon logging in. You must send an email to the user to confirm his or her identification if it differs from the prior ones. If it does.

There is a history of IP addresses

To guarantee that the IP address supplied matches the one currently in use, an email is sent to the user immediately requesting him or her to confirm the new IP address. This is done at each login.

Two-factor authentication is a secure authentication method

You must enter your email address and password to get access to your account, but you must also input a pin number that you will receive through SMS or email to validate your identity. Functionality like this can be implemented using services like Authy and Google Authenticator.

You’ll get rewarded for finding flaws in the site’s source code.

Profiting from the Platform: Various Strategies (Second Stage)

We have to pay a certain amount in commissions and fees. There may be a commission or a fixed charge for each transaction and additional fees for input and output activities and some additional services, depending on the conditions. On LocalBitcoins script, the exchange rates are as follows:

This fund receives 1% of all trading transactions

The commission is paid by the person who made the announcement of the purchase or sale of Bitcoins. The opposite side has nothing to lose by signing the agreement.

This fund receives 5% of every transaction

Additional fees of 5% are levied if the invoice is paid via an outside transaction in return for using site maintenance services to bill the consumer.

The hourly cost is €200

Fees are paid to assist company employees with particular responsibilities, such as opening retail locations or looking into external problems.

Publication fees apply

The cryptocurrency exchange may charge a fee for advertising a request to buy or sell Bitcoins on its platform; this cost is paid regardless of whether or not the transaction is completed. The LocalBitcoins clone script does not charge a publishing fee, unlike other exchanges.

Advertisements

There are several ways the site may incorporate sponsored advertising on its site, such as by putting them at the top of its list, highlighting them with special design, and so on. Additionally, you can place banners and contextual advertising on the screen.

A web-based approach to data extraction (browser mining)

The computing power of site users’ devices is used in cryptocurrency mining. Although the profitability of this kind of mining is low, if the location is well-known, the profit potential is excellent. On the other hand, this commercialization may be considered illegal by authorities if users don’t like it (Tidbit precedent in the USA).

Step 4: Marketing Campaign

Natural search results

A cryptocurrency exchange website can rank well in search engine results for phrases like “buy Bitcoin,” “sell Bitcoin,” “cryptocurrency exchange,” and other closely related terms when these terms are included in SEO-optimized content. Between $100 to several thousand dollars may be needed to run a month-to-month advertising campaign of this kind.

An excellent example of this is Bitcointalk and other social networking sites. You may find reviews, comments, and links to popular cryptocurrency and blockchain websites, including Fork Log, Bitcointalk, Coindesk, CryptMarketCap, BitcoinWisdom, CoinWarz, and BTC China, on these pages. You can also access these sites using the links provided in the reviews. The cost of advertising on themed forums ranges from $50 per month up depending on how many accounts are used.

Using social media to promote your business

For example, advertising and activity on social media sites such as Facebook and Twitter may attract many new users. This is particularly true if you put your bets on themed forums that are relevant to Bitcoin and well-known journalists. Social media advertising begins at $ 200 a month and rises from there.

Ads that occur in the context of something else

Using Google Ads and other services to increase your brand’s visibility and draw more people to your website is another smart strategy. Television advertising is the most expensive, but it also has the most impact. Prices begin at $500.

Step 5: Approaches to Growth

Beginning with a clean slate

Your Bitcoin exchange software development should be outsourced to a third-party company. This will take a lot of effort, money, and time, but it is the most profitable strategy in the long run. The software product you have created is yours, and you may use it to establish your own White Label solution, for example.

Software that is freely accessible to the public is known as open-source software

LocalBitcoins and other peer-to-peer Bitcoin exchange script clones may be found in GitHub repositories and other places. It is pretty uncommon for such software to be provided free of charge with no limits on its modification or commercial use, although this is not always the case. Keep in mind that there is no guarantee that a script clone like LocalBitcoins will be safe and working at all times if you choose to use open-source software. Your money and personal user data may be stolen without your knowledge if your system is vulnerable to hacking efforts, has flaws, or has harmful code.

Software that contains source code is generally outdated, lacks technical support, and does not provide high-quality documentation.

Setting up the script, integrating it into your website, and making any future updates will need the assistance of pros.

Solutions that have their own brand

Bitcoin trading platforms like Coinbase and LocalBitcoins are available from various companies. To start a marketing campaign, all that has to be done is to buy a pre-made solution, modify the design, and connect payment methods. There are certain drawbacks, such as a lack of flexibility and lower revenue, but it’s far easier than starting from scratch.