Paxful co-founder emphasizes the necessity for P2P marketplaces to be unrestrained and open-access.

Peer-to-peer (P2P) Bitcoin (BTC) marketplaces continue to play a crucial role in facilitating cross-border transactions, but their future hinges on becoming permissionless and unceasing, as stated by Paxful’s Ray Youssef.

Youssef, along with Nicolas Gregory and Antoine Riard, is spearheading the development of Civ Kit, a P2P marketplace that will utilize the Nostr technology and the Lightning Network to create a decentralized platform that enables censorship resistance and permissionless trading among users.

In an exclusive interview with Cointelegraph’s Joe Hall at the Surfin’ Bitcoin conference in Biarritz, France, Youssef discussed the ongoing project, which aims for an alpha release by the end of 2023.

The white paper co-authored by Youssef, Gregory, and Riard indicates that the Civ Kit system will implement the Nostr protocol for its P2P order book and depend on the Bitcoin network as a reliable source for its “web-of-stakes” market ranking model.

Related: Tether signs MoU with Georgia to develop Bitcoin P2P infrastructure

Transactions will be secured under Bitcoin contracts to eliminate the need for third-party dispute resolution, while market nodes will be motivated by privacy-preserving service credentials supported by BTC payments.

The white paper details the objective of its market system to facilitate global trade of various items worldwide, including fiat currencies, goods, and services.

Youssef noted that while P2P marketplaces are well-liked, they are often viewed as niche within the Bitcoin ecosystem. He explained that while most cryptocurrency users consider spot or futures exchanges when thinking about trading, P2P trading—or over-the-counter (OTC) trading of money using cryptocurrencies as a clearing layer—is more significant than many realize:

“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.”

Youssef acknowledged that Binance’s P2P marketplace has become the largest player in the ecosystem, mentioning that private discussions with Binance founder Changpeng “CZ” Zhao indicate that this offering remains a major revenue source for the global cryptocurrency exchange, especially as spot markets face challenges in generating substantial returns.

The motivation behind the creation of Civ Kit partly stems from concerns regarding the potential shutdown of P2P platforms like Binance’s. Youssef expressed that there is a genuine worry about the absence of alternatives for P2P users who rely on these services for cross-border money transfers.

“It’s not about trading; it’s not speculative. They’re literally trying to make the money flow and use their money in ways they couldn’t use before. Peer-to-peer is the only avenue for that.”

Youssef referenced the closure of LocalBitcoins in February 2023 and the regulatory challenges in 2023 that resulted in the temporary suspension of Paxful’s services in April 2023, with the marketplace being relaunched over a month later.

“Fraud is a tremendous concern; regulation is a tremendous concern, and the risks are huge. It’s ‘Operation Choke 2.0.’ They’re trying to shut down all the on-ramps and off-ramps into crypto, into Bitcoin.”

Youssef emphasized the necessity for P2P marketplaces to be constructed in a manner that renders them “unstoppable” and “permissionless,” pointing out that both Paxful, based in Delaware, and LocalBitcoins, registered in Finland, encountered shutdowns despite their significantly different locations.

As Cointelegraph previously examined in a detailed follow-up, P2P exchanges have encountered considerable regulatory scrutiny and ambiguity in nations such as the United States.

Magazine: Should we ban ransomware payments? It’s an attractive but dangerous idea