In crypto jargon, P2P is short for peer-to-peer or person-to-person and usually refers to a way of purchasing cryptocurrency.
If you purchase crypto in a P2P way, you do that directly with a counterparty; without the participation of a service provider such an exchange platform. You may have used a platform to find that counterparty, but your transaction happens between your cryptocurrency wallet and the wallet of your counterparty.
P2P Crypto Markets: Not Always More Private
To people who are new or just onramping to crypto, the term P2P often sounds synonymous with private, anonymous or untraceable.
That is not true.
A case in point is the P2P market LBC which was forced to submit traders’ identities to government forces due to the marketplace’s code structure which was way too simple.
Why You Should Not Use Localbitcoins
LBC, and many other P2P trading platforms, are basically an online forum where people post offers for others to look up. To sell cryptocurrency, you need to fund a wallet that belongs to LBC from your own wallet. To buy a cryptocurrency, you need to withdraw your crypto from a wallet that belongs to LBC to your own wallet.
In addition to that, LBC still has access to all the direct messages between counterparties. It is very common that a seller of cryptocurrency will require you to DM a scan of your document to see if your bank account or Paypal matches it.
To government agencies, this provides a direct link between your cryptocurrency wallet and your bank account.
P2P and Private: Look For Zero Knowledge
Platform called LocalCryptos is where it’s at in 2020.
- LocalCryptos are not related to LocalBitcoins.
The LocalCryptos platform is a dApp running on Ethereum smart contracts and Bitcoin scripts.
You get your private key on sign up, which you must back up because the marketplace is fully zero-knowledge and fully non-custodial. The platform is not a counterparty to any transaction and they do not have access to DMs communicated between traders as these are end to end encrypted.
The founder of LocalCryptos has strong political opinions and is not shy to share them.