- Venezuela-based crypto service LocalBitcoins has shut down due to the challenges of the crypto bear market
- LocalBitcoins was one of the first companies to prove the real use case of Bitcoin as a P2P cash system without centralization
- Reports say the company made a series of poor choices and faced strong competition against Binance, leading to its demise on February 9
Venezuela was one of the first countries to adopt Bitcoin (BTC), especially in the early 2010s when it faced one of the most challenging times in its history. A crypto service provider called LocalBitcoins shed light on the citizens during the country’s inflation struggles. In 2012, it proved to the world that BTC could be used as a peer-to-peer (P2P) transaction without the control of a centralized bank or state. It pioneered blockchain adoption in Latin America, persuading others to follow in its footsteps.
Now, LocalBitcoins has announced its shutdown.
As of February 9, the crypto service discontinued its services after it failed to stand up against the 2022 crypto winter.
In a PSA tweet, LocalBitcoins said, “We are sad to share that regardless of our efforts to overcome various challenges during the ongoing, very cold crypto-winter, during which our volumes and market share have continued to decline, we’ve regretfully concluded that LocalBitcoins can no longer provide a Bitcoin trading service.”
Ernesto Contreras, co-founder of the Caracas Blockchain Summit and Head of Business Development for Dash, said the service helped Venezuelans in transactions with BTC. From 2017 to 2019, Venezuela was one of the countries with the highest trading volumes in cryptocurrency.
When the United States sanctioned the Venezuelan government from remitting money abroad, the citizens took the initiative to use the best alternative: Bitcoin. During this period, central banks prohibited wire-transferred fiat money from services such as MoneyGram and Wise. However, they were not able to do so with Bitcoin. At the time, BTC was loosely regulated, and the money still flowed, but without the eyes of institutions.
LocalBitcoins helped bring that relief to its people. It had its share of flaws, but it was the best second option for Venezuelans to bring in the money from abroad.
Without LocalBitcoins, Now What
LocalBitcoins peaked in 2018 with a volume of 2487 BTC. In 2022, its average weekly exchange only revolved around 30 BTC.
Ironically, its only option of just Bitcoin as a transaction was one of the main reasons the service fell. When Binance entered the country, it had everything that LocalBitcoins did not: a wide range of cryptocurrencies and multiple ways to liquidate the funds into fiat.
Unfortunately, LocalBitcoins felt outdated compared to Binance. Sure, it impacted in 2012, but crypto has become more mainstream since then, and Venezuelans prefer the multiple choices of altcoins other than BTC.
The service refused to adopt adding more choices other than BTC, making citizens transfer to Binance instead.
When the bear market plunged a lot of crypto firms, it brought LocalBitcoins with it.
In recent years, Venezuelans did fine without LocalBitcoins. Even after its recent announcement of its closure, the locals still have Binance, along with obscure exchanges such as Bisq, Petro, and HodlHodl.
