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LocalBitcoins a Source of Adoption in Tough Times – or is it?

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When it comes to pure Bitcoin trading, without banks, regulators, or centralized exchanges, LocalBitcoins is often the one-stop-shop. The peer-to-peer trading platform allows users to meet up and exchange Bitcoin and often tells a story of adoption out of necessity. 

However, LocalBitcoins volume, much like centralized exchange volume, does not appear to be as reliable as once thought. LocalBitcoins data, which is produced weekly for nearly 250 countries, has been used to prove many stances, but it needs further investigating. 

One area where this data has been taken as fact is in Hong Kong, where political tension is supposedly driving up the adoption of Bitcoin as a hedge against the local currency. It is presumed that the data indicating increased volume on LocalBitcoins in Hong Kong at this time is proof that Bitcoin is a hedge of financial uncertainty. 

However, a researcher, Matt Ahlborg, has noted that the peak volume in Hong Kong was actually caused by a single trader who performs about 30 transactions a significant move silently, though undisclosed, the amount of Bitcoin.

This was further perpetuated in Iran and Egypt, where backhanded practices could also be skewing the data. In Iran, according to sources, it is common for traders to mislabel their offers as coming from another country to prevent operations canceled by LocalBitcoins.

In Egypt, a businessman in Cairo, Mohamed Abdou said:

“I don’t believe in these statistics as it never reflects the real volume … Egypt is still in the gray area of crypto regulations, and it is not allowed publicly. This is why there’s no clear data or statistics about it.”

This starts to call into question other metrics around volume that is even outside of exchanges, which have been labeled as unreliable. For instance, Paxful, another peer-to-peer service, has shown data to suggest it’s Chinese Yuan trading has hot an all-time high. 

It would be right to be suspicious of this report, and not to read into it, based on presumptions of fake volume, but it is difficult given the current climate in China. China has limited access to Bitcoin, and there are others, like Binance, who are trying to enter the peer-to-peer market there. 

The increase in Chinese peer-to-peer trading volume could be an indicator that a growing number of Chinese investors are growing frustrated at the lack of exchanges for Bitcoin trading. As a result, many have turned to peer-to-peer platforms in growing numbers.

However, if the data is incorrect, it would be dangerous to start making such assumptions.

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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