Peer-To-Peer Bitcoin Exchange To Launch in 70 Countries

Though bitcoin might be the “currency of the future,” buying and selling bitcoins still leaves much to be desired. In the West exchanges offer a nice and easy trading experience, but these are mostly third parties that could be hacked and require a lot of identification, something many privacy conscious bitcoin enthusiasts are not fans of.

LocalBitcoins has been able to meet some of the demand for a peer-to-peer alternative, by connecting buyers and sellers in local markets through its website. But the startup’s user experience is rough compared to a full blown exchange. LocalBitcoins does not hold any money during the experience, because doing so would incur costly regulatory compliance, and  require an exchange.

Coinffeine, a P2P exchange, hopes to offer the same local buying service, but with a smoother design. The exchange is simply a protocol. It is decentralized, so no companies hold the money, and the founders hope it avoids being subject to regulations or user hacks.

“In LocalBitcoins or BitSquare you can’t do trading efficiently because you can’t keep orders in the market that run automatically. In these markets, when a user opens an order that corresponds to yours, you must intervene. Some platforms incorporate persons acting as an arbitrator in a dispute, which makes the process a little safer, but much slower and expensive.”
— – Alberto Gómez Toribio, Coinffeine CEO

Full Trading Experience

LocalBitcoins can be very hit and miss when it comes to fulfilling an order. Users post ads, for either buying or selling, and interested parties response to them. It’s easy to think of it is being the CraigsList of bitcoin, not the most efficient or smooth experience. Unlike an exchange, LocalBitcoins orders don’t sit on the market until someone comes to fill the order, but with Coinffeine they will.

A user on Coinffeine would place an order, and the exchange’s protocol will connect with a matching counterparty. When a match is found, the buyer will use online fiat wallet OKPay to pay for the bitcoins. After the buyer has confirmed receipt of the fiat, the bitcoins will be released. While the order is looking to be matched the bitcoins are locked in a multi-signature wallet, so the buyer knows the seller does in fact have the bitcoins.

This eliminates the need to rely on a third party, but there is a risk that the buyer will not send the fiat, or lie that the seller never sent the bitcoins. Unlike LocalBitcoins there is no third party to mediate a disputed transaction. Coinffeine hasn’t shared how they plan on solving this problem, but one possible solution could be a reputation system.

Currently the exchange only works with OKPay, on the fiat side of things, but theoretically the open source project could be integrated with any digital wallet, as long as they have an open API to work with. Coinffeine works as a desktop wallet and OKPay will be directly accessible from the wallet, making the experience similar to a traditional exchange.

Coinffeine will be limited to working in countries that OKPay is operational in, which is currently 70 countries, including China where 20 percent of the wallet’s users are. OKPay operates in various markets in Latin America, Europe, the Middle East and Southeast Asia, including Russia, Indonesia, Germany, and Brazil. OKPay already allows users to deposit bitcoin, litecoin, and dogecoin.

Launching later this year

The project was first announced in May 2014, and has been in development since. Coinffeine released a technical review of the project a few weeks ago, giving interested developers their first peek at the project. The review also allowed people to make some of the first transactions on the exchange.

Coinffeine is now in beta, and will be until it launches in late summer. No specific launch date been given. When the service does launch, it will be able avaliable in all 70 countries. Coinffeine has said that the decentralized exchange could also be a great way for banks and businesses to enter the business of buying and selling bitcoin, but has not announced any financial institutions would use the platform.