Why are some prices on localbitcoins.com more than exchanges?

[StevenS]

Someone looking to sell bitcoins on localbitcoins.com will see prices less than major exchanges for in-person cash purchases. I guess that makes sense, because the seller is willing to accept less cash when he gets it instantly, in person.

However, the prices for for online trades are quite a bit higher than major exchanges. The current Bitstamp rate is US$250/BTC, while one trader on localbitcoins.com is offering US$339/BTC (paid using PayPal). Why is this trader willing to pay so much more than he would if he pays an exchange?

[jbrnt]

The seller is only offering, he can offer any price as he wishes. Would anyone wants to buy from him? Maybe. Seller could be in a city where it is difficult to buy bitcoins and those who wants them will have to pay a premium.

[randy8777]

people who have no other option might buy at such prices. seller makes a good profit if he is able to find newbies willing to pay a premium.

[BTCjust]

that's a voluntary act

in fact, localbitcoins is not a real exchange, but a flea market.   the price ordered by sellers.

[Bit_Happy]

Someone looking to sell bitcoins on localbitcoins.com will see prices less than major exchanges for in-person cash purchases. I guess that makes sense, because the seller is willing to accept less cash when he gets it instantly, in person.

However, the prices for for online trades are quite a bit higher than major exchanges. The current Bitstamp rate is US$250/BTC, while one trader on localbitcoins.com is offering US$339/BTC (paid using PayPal). Why is this trader willing to pay so much more than he would if he pays an exchange?

Using PayPal is a huge risk, the premium for cash should often be much lower.

[koshgel]

The seller is offering prices to meet demands. There is usually a premium/mark-up depending on the risk the seller is taking. Higher risk payment methods will have higher premiums to negate losses.

[sherbyspark]

Someone looking to sell bitcoins on localbitcoins.com will see prices less than major exchanges for in-person cash purchases. I guess that makes sense, because the seller is willing to accept less cash when he gets it instantly, in person.

However, the prices for for online trades are quite a bit higher than major exchanges. The current Bitstamp rate is US$250/BTC, while one trader on localbitcoins.com is offering US$339/BTC (paid using PayPal). Why is this trader willing to pay so much more than he would if he pays an exchange?

As for Paypal the prices are always higher while buying bitcoins with it , because of the risk of charge back. Along with that , most of the times you are also supposed to provide identification documents in order to provide proof.

As for other trading, most of the sellers just buy and sell on there and thats the mark up they charge. They also have to risk and wait the trading time and have to pay by hoping the price doesn't fluctuate much in that time. I am a seller on the site and have had to wait upto 2 days because once the transaction was reversed right after the trade.

[Amph]

because localbitcoin, is more conventional(more practical/immediate)) for someone, the seller now it, thus rising the price

many don't want to deal with exchange/verification and so on ...they will buy at higher price because of that

[fancy_pants]

If you sign up for coinbase, it takes a week or two to receive your first bitcoins because you must wire up your bank account and go through a 4 day hold on your coins after purchase.  You can get coins from localbitcoins in about an hour.

[Bejkn]

interesting, localbitcoins is not a marketplace. i'll advice you just sign up at lakebtc, it's a pretty site for simple trading with buy and sell.

[StevenS]

My original post was a little misleading. The higher prices I mentioned (using PayPal) is from a buyer, not a seller. He is willing to pay anyone over $300/BTC, when the exchange price is currently $250. See https://localbitcoins.com/ad/141440/cash-out-your-bitcoins-paypal.

Why wouldn't you buy 2BTC or so from BTC-E and sell them to this guy at a profit? Is it because the risk of accepting payment using PayPal?

[cooldgamer]

My original post was a little misleading. The higher prices I mentioned (using PayPal) is from a buyer, not a seller. He is willing to pay anyone over $300/BTC, when the exchange price is currently $250. See https://localbitcoins.com/ad/141440/cash-out-your-bitcoins-paypal.

Why wouldn't you buy 2BTC or so from BTC-E and sell them to this guy at a profit? Is it because the risk of accepting payment using PayPal?

The fact that he's only using Paypal for that rate is a huge red flag.  With the fact that his only other payment method is at market rate, I'd say he's either setting up for a big scam, or using stolen accounts.