Peer-to-peer Bitcoin (P2P) marketplaces have played a crucial role in facilitating cross-border money transfers. However, the future of these platforms depends on their ability to become permissionless and unstoppable. According to Ray Youssef, the co-founder of Paxful, the development of CivKit, a P2P marketplace leveraging Nostr technology and the Lightning network, aims to create a decentralized platform that enables censorship resistance and permissionless trading between peers.
In an exclusive interview with Cointelegraph’s Joe Hall at the Surfin’ Bitcoin conference in Biarittz, France, Youssef discussed the upcoming release of CivKit, which is expected to launch its alpha version by the end of 2023. The whitepaper co-authored by Youssef, Nicolas Gregory, and Antoine Riard outlines the use of the Nostr protocol for the marketplace’s P2P order book, with the Bitcoin network serving as the source of truth for its “web-of-stakes” market ranking system.
One of the key features of CivKit is the use of Bitcoin contracts to lock trades, eliminating the need for third-party dispute arbitration. To incentivize market nodes, privacy-preserving service credentials backed by BTC payments will be provided. The ultimate goal of CivKit’s market system is to facilitate global trade of various items, including fiat currencies, goods, and services.
Youssef emphasized that P2P marketplaces are not just niche platforms within the Bitcoin ecosystem. While many cryptocurrency users primarily think of spot or futures exchanges, P2P trading, or over-the-counter (OTC) trading using cryptocurrencies, serves as a significant clearing layer. Youssef humorously mentioned the emergence of P2P trading on Bitcoin Talk, followed by platforms like LocalBitcoins and Paxful. He also mentioned how Binance’s P2P marketplace has become the largest player in the ecosystem, as confirmed in private conversations with the exchange’s founder, Changpeng Zhao (CZ).
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The creation of CivKit was driven in part by concerns about potential closures of P2P platforms like Binance’s. Youssef highlighted the need for alternative options for P2P users who rely on these services for cross-border fund transfers. He stressed that P2P trading is not about speculation but rather enabling people to use their money in ways that were previously inaccessible. Youssef mentioned the closure of LocalBitcoins in February 2023 and the temporary suspension of Paxful’s services in April 2023 due to regulatory challenges. These incidents raised concerns about fraud and regulatory risks and prompted Youssef to compare the situation to “Operation Choke 2.0,” suggesting a concerted effort to impede access to crypto and Bitcoin.
Youssef emphasized the importance of building P2P marketplaces that are unstoppable and permissionless. He pointed out that both Paxful, based in Delaware, and LocalBitcoins, registered in Finland, faced potential closure despite their different geographical locations. This highlights the need for P2P platforms to overcome regulatory scrutiny and uncertainty, as demonstrated in previous cases in the United States.
In conclusion, the development of CivKit presents an exciting opportunity to create a decentralized P2P marketplace that leverages the Nostr protocol and Lightning network. By focusing on censorship resistance and permissionless trading, CivKit aims to address the challenges faced by existing P2P platforms and provide a robust solution for cross-border money transfers. The success of CivKit and similar projects will be instrumental in ensuring the continued growth and dominance of P2P marketplaces in the evolving landscape of digital currencies.
