// Cryptocurrency

Localbitcoins Clone Script - How to Make Cryptocurrency Exchange Like Localbitcoins

Table of Contents

#1. Step 1: Business Model and Niche
#2. Step 2: Platform Architecture and Features
#3. Step 3: Methods for Monetizing the Platform
#4. Step 4: Marketing Campaign
#5. Step 5: Development Approaches

LocalBitcoins is the most famous peer-to-peer cryptocurrency exchange. Its users can conduct the purchase and sale operations of bitcoins and other cryptocurrencies using any payment method - from bank cards to money on a SIM card. Today we’ll talk about how this trading platform works and how to create your own cryptocurrency exchange like LocalBitcoins.

Step 1: Business Model and Niche

The LocalBitcoins business model is an intermediary website where cryptocurrency buyers and sellers can meet and agree on the terms of the exchange. The transaction can be conducted on the site using the built-in automatic exchange tools, or in any other way (except for cash settlement). The platform does not establish a single exchange rate, does not limit the choice of payment method or transaction time. Parties can agree on all this privately.

Anyone can buy and sell cryptocurrency on the site, having passed the verification procedure. Identity verification conditions depend on trading volumes:

  1. Tier 0 - up to 1000 euros per year. You must specify the first and last name, email, phone number and country. Phone and email confirmation will be required.
  2. Tier 1 - from 1,000 to 20,000 euros. You must specify the full name, email and phone number, as well as fill out form No. 1. It is necessary to confirm the address and identity using an identity card (driver’s license, passport).
  3. Tier 2 - from 20,000 to 200,000 euros per year. You must provide your full name, email and phone number, as well as fill out form No. 2. It is required to confirm the identity and undergo a thorough verification of the place of residence.
  4. Tier 3 - unlimited volume of deals or transactions. You must provide your full name, email and phone number, as well as fill out form No. 3. You will need to confirm all information and pass a viability check.
To filter out fraudsters and dishonest counterparties, the system of reputation and reviews works on the site. To resolve disputes, there are the Terms of Use of the sites and the arbitration service. The platform makes money through commissions and advertising. There is a mobile application.

The target audience of the site is people who want to buy or sell bitcoins as profitably as possible. Although it is a European startup (headquartered in Helsinki, Finland), it does not have a geographical and niche location. Only those who want to use cash are not included in the target audience of the site. This feature was removed in July 2019.

Do you want to build a project?

Contact us and we will help you.

Contact us

Thus, in order to create a peer-to-peer cryptocurrency exchange like LocalBitcoins, you need to develop a site where cryptocurrency buyers and sellers can meet, agree on the terms of the transaction and conduct the transaction using the built-in tools.

Step 2: Platform Architecture and Features

Trading engine. The software that is responsible for the order book, the match system (compares orders for the purchase / sale of currency) and automatic exchange tools on the site or other services connected via API.

In addition, an exchanger like LocalBitcoins will also need:

  1. The ability to exchange messages in real time is needed so that the parties can agree on the terms of the transaction: exchange rate, payment method, currency, etc. It’s best if the chat is built into your platform, but integration with Telegram, WhatsApp, Viber or Facebook Messenger is also possible.
  2. Integration with payment gateways. It's about connecting to cryptocurrency blockchains and payment gateways PayPal, Amazon Pay, Stripe, Authorize and others. Select payment solution providers based on the preferences of the target audience. The more of them, the better. For example, LocalBitcoins supports more than 50 payment methods, Paxful - 300.
  3. User geolocation. It is necessary for the match system to recommend counterparties that are located closest to the initiator of the request for the purchase and sale of bitcoins. This increases the likelihood of a successful transaction, as people living close to each other are likely to speak the same language, use the same currency and payment methods.
User interface. The appearance of your site should be pleasant, easy to learn and functional. Ideally, the design should be such that any user, regardless of his cryptocurrency trading experience, can go to the site and immediately understand what and how to do. To do this, you need to implement the functions:
  1. The process of creating an account using an email address or phone. If your site will require confirmation of identity, then you can also implement registration through social networks.
  2. Deposit / withdrawal of funds. The ability to transfer fiat and cryptocurrency money to the site’s deposit or a mechanism for connecting to a third-party cryptocurrency wallet account, for example, Exodus, Armory, Coinbase and BitGo.
  3. Posting a request. Creating an announcement on the sale of bitcoins or other cryptocurrencies with an indication of the amount, rate and method of payment.
  4. View all current cryptocurrency purchase and sale announcements with the ability to search by keywords, location, rating, payment method and other important parameters.
  5. Technical support. Access to help information and support services.
  6. View user transaction history.
Cryptocurrency wallet. After registering on the LocalBitcoins website, each user automatically receives a cryptocurrency bitcoin wallet. Its main feature is the ability to use a smart contract for the secure exchange of cryptocurrency inside the site. Otherwise, such a wallet is not much different from a regular online cryptocurrency wallet.

There are two ways to implement a wallet on a site:

  1. When money is stored on the platform’s shared wallet (pool). Typically, this approach is used by centralized exchanges to increase liquidity.
  2. When money is stored in separate wallets and the platform administration does not have access to it.
Some peer-to-peer cryptocurrency exchanges do not have internal wallets. This simplifies development and protects against problems associated with hacking and theft of money. But this approach does not allow you to earn on trading commissions. and this is the main revenue item of cryptocurrency exchanges.

Admin panel. Needed for site management, process tracking, business analytics, dispute resolution and user support. The appearance of the admin panel is not as important as for the user panel. Bet on functionality and convenience.

Admin Panel Functionality:

  1. It is necessary for tracking purchase and sale operations, monitoring user activity and other significant processes on the site.
  2. Tools for verifying accounts after checking KYC or other compliance requirements, editing spreads and trading fees, resolving disputes and administering transactions.
  3. View profiles. Shows information about individual users: identifier, nickname, phone, e-mail, wallet balance, transaction statistics, verification status of the account and documents.
  4. Buy-Sell tab. View information about all transactions conducted through the site: identifier, counterparties, amount, rate, time stamps.
  5. Site statistics. Actual information about the platform updated in real time - from the volume of trades in to the number of negative reviews per day. Information is usually provided in the form of graphs, charts and tables.
  6. Processing requests submitted by users to support.
Additional functions. For the site to become successful and profitable, in addition to the above, you will also need to take care of security, integration with social networks and a rating system. Without this, the site is unlikely to be competitive.

How security is implemented on LocalBitcoins:

  1. Login Guard. Checking the browser at login. If it differs from the previous ones, you need to confirm the authenticity of the user by email.
  2. History of IP addresses. The system checks the IP address at each login and, if it is not in the list of confirmed ones, an email is automatically sent to the user with the option to confirm the new IP.
  3. Two-factor authentication. To access your account, you need not only to specify the email / login and password, but also to confirm the entry using a pin code sent via sms or email. Such a function can be implemented using Authy or Google Authenticator services.
  4. Service rewards for identifying vulnerabilities in site code.

Step 3: Methods for Monetizing the Platform

Commission and fees. The platform can charge a fee for each trading operation in the form of a commission or a fixed amount, input / output operations and for some additional services. On LocalBitcoins, the rates are as follows:
  1. 1% of each trade transaction. The commission is paid by the one who created the announcement of the purchase or sale of bitcoins. For the other side, the deal is free.
  2. 5% of each transaction. It is charged for using the site maintenance services for billing, and a 5% fee is also charged on the invoice amount if paid by an external transaction.
  3. 200 Euro / hour. Fee for assisting company employees on individual orders, such as setting up retail outlets or researching external problems.
Publication fee. The cryptocurrency exchange may introduce a fee for publishing a request to buy or sell bitcoins, which will be charged regardless of whether the transaction took place or not. There is no publishing fee on LocalBitcoins, but it is on other exchanges.

Advertisements. The site can introduce the function of paid promotion of ads: put them at the beginning of the listing, highlight them with a special design, be the first to offer recommendations, put them on the main page, etc. In addition, you can allocate space on the screen for banners and contextual advertising.

Web mining (browser mining). Using the computing resources of visitors' devices for cryptocurrency mining. The effectiveness of such mining is low, but if the site is popular, then the profit will be large. But, users do not like this method of monetization, and authorities may consider it illegal (Tidbit precedent in the USA).

Step 4: Marketing Campaign

Natural search results. Using SEO-optimized content to get the site to the first positions in the search results of Google, Bing, Baidu, Yandex and Yahoo with the introduction of keywords such as “buy bitcoins”, “sell bitcoins”, “cryptocurrency exchange”, etc. Such a promotion costs from 100 to several thousand dollars a month.

Have a look at our latest project?

Cryptocurrency Exchange Platform

Case Study

Bitcointalk and other profile sites. Reviews, recommendations, comments and links on cryptocurrency and blockchain web platforms: Bitcointalk, Fork Log, CryptMarketCap, Coindesk, CoinWarz, Bitcoin Wisdom, BitInfoCharts and BTC China. Promotion price on thematic forums depends on the scale and accounts used - from $ 50 per month.

Promotion in social networks. Activity and advertising on Facebook, Twitter, Instagram, YouTube, WeChat, Youku and QQ can attract many potential users. Especially if you bet on cryptocurrencies related thematic communities and on well-known media personalities. The cost of promotion on social networks - from $ 200 per month.

Contextual advertising. Promotion with Google Ads and other services is another good way to increase brand awareness and attract people to your site. This is the most expensive form of advertising, but its effectiveness is the best. Cost - from $ 500.

Step 5: Development Approaches

Development from scratch. Gather a development team or hire a company to build your cryptocurrency exchange software. This will require a lot of effort, time and money, but in the end, this approach usually brings maximum profit. In addition, this way you retain the copyright over the created software product and can use it, for example, to launch the White Label solution.

Open source software. If you look at GitHub and other repositories, you can find many script clones of LocalBitcoins and other peer-to-peer cryptocurrency exchanges there. Typically, such software is distributed free of charge without restrictions on changes and / or use in commercial projects. If you decide to use open source software to run a site like LocalBitcoins, remember:

  1. There is no guarantee that the script clone will be safe and reliable. It may be vulnerable to hacking attempts, contain errors, or include malicious lines of code that will steal your money and / or personal user data unnoticed.
  2. Software with source code is usually not updated, does not have technical support and does not have quality documentation.
  3. You will need specialists to configure the script and integrate it into your site and its further updates.
White Label solutions. There are many companies providing cryptocurrency exchange software like LocalBitcoins. With this approach, you just need to choose and buy a ready-made solution, customize the design, connect payment tools and launch a marketing campaign. It’s a lot easier than developing from scratch, but there may be problems with flexibility and lower profits.

Localbitcoins Clone Script

How can we help you?

Full name *
Email *
Phone
Tell us about your project
 

Since 2015 we help to bring your idea to the live product.

Customer Review

Blockchain-based digital asset platform

Subscribe to our newsletter

Get more content on how to effectively build cryptocurrency platform from top experts.

By continuing to use this website, you consent to use of cookies in accordance with our Cookie Policy.
×