Peer-to-peer Bitcoin marketplaces must become permissionless and unstoppable, says Ray Youssef of Paxful

Peer-to-peer (P2P) Bitcoin marketplaces play a vital role in enabling cross-border money transfers, but their future hinges on their ability to become permissionless and unstoppable, according to Ray Youssef, co-founder of Paxful. Youssef, along with Nicolas Gregory and Antoine Riard, is leading the development of CivKit, a P2P marketplace that will utilize Nostr technology and the Lightning network to create a decentralized platform for censorship-resistant and permissionless trading between peers.

An alpha release expected by end of 2023

During an exclusive interview at the Surfin’ Bitcoin conference in Biarittz, France, Youssef disclosed details about the forthcoming platform, stating that an alpha release is planned for the end of 2023. The whitepaper, co-authored by Youssef, Gregory, and Riard, outlines that CivKit will utilize the Nostr protocol for its P2P order book and will rely on the Bitcoin network as a source of truth for its "web-of-stakes" market ranking system. Trades will be secured through Bitcoin contracts, eliminating the need for third-party intervention in dispute resolutions, while market nodes will be incentivized through privacy-preserving service credentials backed by BTC payments.

Enabling global trade of various assets

The whitepaper describes the goal of CivKit's market system as facilitating global trade of any type of asset worldwide, including fiat currencies, goods, and services.

P2P marketplaces: a bigger part of the Bitcoin ecosystem than you might think

Youssef believes that P2P marketplaces are often overlooked within the Bitcoin ecosystem. While most cryptocurrency traders focus on spot or futures exchanges, P2P trading, or over-the-counter (OTC) trading of money using cryptocurrencies, serves as an important clearing layer. Youssef humorously remarked, "It started with guys on Bitcoin Talk trading and then LocalBitcoins came out, then Paxful came out. Then 'CZ' (Changpeng Zhao) stole my shit and launched Binance peer to peer."

He acknowledges that Binance's P2P marketplace is currently the biggest player in the ecosystem and revealed that private discussions with Binance CEO Changpeng Zhao suggest that the offering remains a top earner for the global cryptocurrency exchange, particularly as spot markets struggle to generate significant returns.

Fears of P2P platform closure spark the creation of CivKit

CivKit's creation was partially motivated by concerns over the potential shutdown of P2P platforms like Binance's. Youssef explains that the lack of an alternative for P2P users who rely on these services to transfer money across borders is a genuine concern. He describes the regulatory challenges and the risk of fraud as potential factors in what he calls "Operation Choke 2.0" – an attempt to restrict access to and from the cryptocurrency and Bitcoin markets. Youssef stresses the need to build P2P marketplaces that are "unstoppable" and "permissionless," highlighting the closure threats faced by Paxful, based in Delaware, and LocalBitcoins, registered in Finland, despite their contrasting geographical locations.

As previously explored by Cointelegraph, P2P exchanges have faced significant regulatory scrutiny and uncertainty in countries like the United States.