The P2P cryptocurrency trading service platform LocalBitcoins has completely stopped all physical cash transactions on its network. Several traders reported that their orders were cancelled, forcing them to switch to electronic transfer transactions.
For a long time, Bitcoin enthusiasts have long believed that LocalBitcoins is a safe haven for decentralized bitcoin transactions. But now it seems that the company is losing this advantage.
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This change in LocalBitcoins is basically unnoticed, no press releases, no official news. However, just like everything in the world of cryptocurrencies, nothing is a permanent secret. A Reddit user noticed that the service was removed and a series of alternatives soon appeared:
Recently, LocalBitcoins has been attacked by the cryptocurrency community since it introduced the KYC mechanism on its platform. The so-called anti-money laundering (AML) function is believed to be a crackdown on fraud, and the authorities claim that cryptocurrencies can easily constitute fraud.
Finland and other European countries are currently open to the development of cryptocurrencies. However, KYC is a strict one-way system that essentially allows the government to monitor its citizens. In March of this year, the Finnish parliament approved a new bill for “virtual money service providers”, and the Helsinki-based exchange seems to have no choice.
The main channel of LocalBitcoins is its over-the-counter trading service, which allows parties to directly trade each other in cash. As the world quickly turns to the e-service model, icy banknotes are still one of the few truly anonymous ways of exchanging value.
But for LocalBitcoins, this choice is not correct. Infrastructure in developing countries remains flawed and requires heavy reliance on cash transactions. Ray Youssef, CEO of Paxful, a P2P trading platform, said that his competitors should now be renamed:
"LocalBitcoins are now Remote Bitcoins (remote corresponds to local, in order to show that the platform is no longer grounded). They canceled all cash options, refugees are pouring into Paxful… Cash is still king in the emerging world!"
Paxful's harvest is clearly a loss of LocalBitcoins. This is true, but Paxful users also need to do KYC, and for traders, there are fewer and fewer truly anonymous trading options.