Business 19 April 2018Erik Gibbs
LocalBitcoins users decry mandatory IDs for large transactions
LocalBitcoins, an over-the-counter trading platform for SegWit-Coin BTC (also referred to as Bitcoin legacy or Core), has been a popular solution for users around the world. It enables individuals to anonymously buy and sell SegWit-Coin BTC on their own, indicating the amount, the exchange rate and the payment method desired. It’s an easy, quick way to move coins, and allows for transactions to and from anywhere around the world. The platform, however, has made a move that isn’t sitting too well with a lot of the users, compelling a number of complaints on popular social media platforms such as Reddit.
A Reddit user, “yellowcuda,” posted a screenshot showing that certain users are being forced to show identification before being allowed to conduct any transactions. The message reads that the user must produce a personal ID due to what LocalBitcoins deems as a high amount of trading over the course of the past year. The message states, ““Error! Your trade volume has been significant in the past 12 months. Please, verify your ID to continue trading.”
As was to be expected, the reaction to the new policy hasn’t been great. One user posted, “RIP localbitcoins. Hi, another centralized exchange.” Many users have threatened to jump ship, opting for alternative platforms such as hodlhodl.com or the bisq.network. Others chimed in with suggestions such as Paxful or Open Bazaar. The general consensus, however, was that the LocalBitcoins decision was going to be extremely detrimental to the company’s future.
Localbitcoins, founded in Finland in 2012, has—until now—been one of the most popular SegWit-Coin BTC trading platforms. It began raising and introducing fees in 2017 as a result of changes in the cryptocurrency’s network costs, but many users stuck around due to its reliable performance. The latest decision, however, could be a death sentence for the platform.
Russia attempted to block the service two years ago, but the cryptocurrency community proved to be more resilient than it anticipated. A mirror site, localbitcoins.net, was created to bypass the wall, and the service continued to operate, almost never skipping a beat.
Information regarding the new policy is scarce. Localbitcoins made no announcement of the change, nor has it addressed the issue since it was raised. There has been no word on what the platform considers to be a significant amount, or who is verifying the users’ identification. It’s unfortunate that the company so inappropriately mismanaged the policy implementation, but it’s safe to say that it won’t be the last to make this change.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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