The HelloTalk app works the same way. If a users chooses to share their location, it sends the raw GPS coordinates (afaik the only thing limiting them is the device's accuracy and if the user choose not to share "precise" location in iOS) to the server. Then, these get added to a sqlite database on the client and the way they get obscured is when you zoom in past a certain point on the map, their code turns off the dot that shows their position.