LocalBitcoins: volumes down because of KYC
Blockchain

LocalBitcoins: volumes down because of KYC

By Marco Cavicchioli - 22 Oct 2019

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From the moment the KYC was introduced, trading volumes on LocalBitcoins have been decreasing. 

In fact, as of October 1st, it became mandatory for users of the famous P2P exchange to verify their identity. 

The drop was significant: in the week before, more than 6,000 BTC were traded, while in the following three weeks the weekly trading volume fell to around 4,500 BTC. 

The decrease is even more pronounced when expressed in US dollars: the weekly volume has gone from more than 60 million to less than 40 million. 

Moreover, in the three weeks following the mandatory introduction of KYC, volumes have always been lower than in the previous week. 

LocalBitcoin’s anti-money laundering (AML) and identity verification (KYC) controls for its users are quite strict, and are applied worldwide. 

To date, users who do not complete KYC procedures on the platform could theoretically upload purchase orders, but can not complete them because they no longer have a bitcoin address. Therefore, in order to actually operate, identity verification is absolutely necessary. 

This is inconvenient or annoying for people living in developed countries, and it could even make it impossible to operate the platform for citizens of countries where there are no precise physical addresses. 

LocalBitcoins is a company registered in Finland, so it is required to comply with AML and KYC regulations. Hence the problem will not be solved. 

So, although the platform is P2P, it is actually centralised, which means that it is impossible to operate anonymously. Moreover, since bitcoin trading takes place in fiat currency, it is difficult to imagine that they can be managed by a truly and completely decentralised platform. 

This story shows how much anonymity is appreciated by users who exchange or use cryptocurrencies. 

The fact is that if only decentralised cryptocurrencies were used, anonymity would actually be possible, but if fiat currencies are involved, this is actually impossible.

Many users prefer high levels of privacy, a feature provided both by the use of certain specific cryptocurrencies and by the use of special tools, as well as through techniques such as masking IP addresses to prevent a transaction from being associated with the device from which it was made. In the absence of privacy, there are many who prefer not to carry out transactions. 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 11 thousand subscribers.

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