Cryptocurrencies emerged as an alternative to traditional banking and finance, but like digital money(wallet payment, etc) they also ended up depending on banks for most of their activities. Exchanges needed banks to transfer money to their client’s account, companies began to hire consultancy firms to issue ICOs and many started seeing crypto as another investment opportunity. Banks have also started to get into this field. Peer to peer(P2P) trading is one of the purest forms of cryptocurrency usage cutting down all middlemen, especially banks, and no commissions involved in the trade. With the rise in the crackdown around the world, especially in those countries where the ban is almost completely implemented like in India, P2P transactions are gaining popularity.
In the case of most cryptocurrencies, there are three ways to acquire these currencies. Buy, trade or mine them. Buying cryptocurrencies from an exchange is the easiest way, but one can also get cryptocurrencies directly from someone else, this is known as P2P (Peer to Peer). Here, the buyer pays the seller in cash or through deposits in bank, sometimes even in exchange for service. Once the seller receives what he/she has asked for, the transfer of cryptocurrencies happen, this excludes all middlemen. Although there exist decentralized cryptocurrency exchanges which help buyers and sellers meet, they don’t act as middlemen in the strictest sense.
Sanctions imposed by the United States governments do not affect under-regulated industries such as crypto, but despite the Russian government’s crackdown, interest in cryptocurrency remains stable in Russia. Binance, the largest exchange in the world by daily trading volume, has not banned its platform for Russian users, despite shutting down traders from other countries under U.S. sanctions such as Belarus and Iran. The companies special representative recently stated that the Russian Federation and the CIS(Commonwealth of Independence) countries are some of the most important and largest markets for Binance with great potential for future growth. Sanctions along with government crackdowns have forced Russian users to rely on P2P exchanges, and this has seen a surge in users and volume recently.
Africa and South America
Africa and South America have real problems that can be solved using cryptocurrency. The most pressing is the lack of banking infrastructure and trading crypto only requires an internet connection and a mobile phone. Also, many African banks limit the amount that can be deposited and withdrawn, which is a problem for many. Remittance is a huge part in many African’s life and cryptocurrencies can cut down the commissions paid for remittance. The lack of proper banking infrastructure has forced many to depend on P2P transactions. Paxful reports over 17,000 daily peer-to-peer trades in Africa. In South America, the situation is different as it was the fall in the value of the local currency that has made crypto a safe haven, especially in countries like Venezuela.
Indian cryptocurrency exchanges that offer P2P services are experiencing rapid growth in trading volumes despite the cryptocurrency banking ban by the country’s central bank, the Reserve Bank of India (RBI). The ban by the RBI meant that banks cannot provide services to cryptocurrency exchanges which meant a complete halt in trading in India and because of this P2P has flourished. The annual report from RBI emphasizes the need to monitor crypto development in anticipation that some trading may shift from exchanges to Peer-to-Peer(P2P) mode. Most exchanges now offer escrowed transactions which add a layer of protection against fraud.
Cryptocurrencies had taken a hit in 2018 but P2P has grown substantially both in terms of volume and number of users. One of the reasons being that they are providing many advantages over traditional financial products such as government bonds or stocks or even crypto exchanges. P2P transactions are more unregulated and hence do not have to fear crackdowns. They are also a good way to circumvent sanctions and other financial regulation. In short, they are capable of achieving the original goals of crypto, and this has made it attractive to many, especially in the developing countries where access to banking facilities is limited. P2P is not without its limitations but now it seems that it is the most resilient of all other activities in the crypto world.
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