Cryptocurrency analyst. Founder and editor at btcpeers.com
During the chaos caused by the global pandemic, P2P, or peer-to-peer, transformed into a growing worldwide movement can no longer be left in shadow. Some experts even regard it as a way to save the global economy from an all-embracive post-pandemic crash. P2P already proved to be advantageous against a traditional exchange model in a number of ways – not least because it allows higher inclusion and can freely function even in countries that do not define cryptocurrency under their jurisdictions. Take an example of India – it is about to embark on the biggest bull rally of all time, and P2P exchanges are the engine behind it. Besides, P2P may be a lifeline for SMEs hit by the economic crash most severely – in conditions where they do not qualify for the bank credit support, P2P may become the only way to bail out.
What also makes P2P so incredibly attractive is the possibility to fetch a price premium, which goes way beyond any other equal opportunity on a centralized exchange. The widening bid-ask spread, especially after the crash of Bitcoin in 2017, allowed many traders to capitalize on a rising price difference in the past. However, there is always a hurdle that draws traders back – and the biggest inconvenience of P2P exchanges may become its technical deficiency. On most exchanges, the price can only be defined when settling the bid, which eliminates the possibility of a price correction at a later stage. That, in essence, means that once anyone sells crypto at a fixed price and the Bitcoin price soars at a later point, the trader is left to cover losses.
The inability to constructively define the price of crypto is another setback. Each centralized exchange quoted on P2P puts forward a different price bid for Bitcoin, which often makes it impossible to draw out its real value. This final price output set by a crypto exchange is heavily reliant on demand and supply of cryptocurrency on a given platform, which brings an element of price discrepancy even between the most reputable exchanges. Besides, at centralized exchanges, it’s not rare that the price gets manipulated, which reportedly was the cause of the 2017 and 2018 price spikes. This practice of “wash trading” is often initiated by one major player who acquires cryptocurrency to artificially boost volume, this way creating an arbitrage opportunity he can take advantage of.
Bitcoin Global exchange came up with a solution to this problem. It introduced a special pricing mechanism that allows to derive an objective price quote when settling a buy or sell order. Through its algorithm, Bitcoin Global allows to compile prices from the entire range of reliable crypto exchanges and takes the mean of the whole. By doing this, it obtains the output standing to reality as close as possible – so even if the price on one of the exchanges gets manipulated, the price quote will not be much affected.
I was lucky enough to talk to Yuri Nesterov, the CEO of Bitcoin Global, what helped me to find out where we stand in the P2P world and what would be the further steps, especially in the face of the global pandemic.
Andrey Sergeenkov: To begin with, I’d like to ask you some general questions about the P2P sector. How do you see its future, especially in the face of an escalating rivalry with centralized exchanges?
Yuri Nesterov: P2P networks have emerged as formidable components of the crypto industry because they offer unique market dynamics absent in traditional platforms. Unlike the conventional counterparts, P2P exchange platforms provide traders with a simple and yet successful trading model that not only foster the community-based structure of the landscape but also allows them to retain some level of control over the entire process. Unsurprisingly, this hands-on approach to trading has flourished in several regions, regardless of the popularity of centralized exchanges. And if the remarkable growth registered in the last 6 months is anything to go by, it is safe to say that the P2P sector will continue to expand in tandem with the increase in demand for cryptocurrency especially in developing regions.
Yuri Nesterov: As you said, the P2P sector is what it is today because the steps involved are straightforward and transparent. Similarly, the model creates opportunities for traders to sell or buy crypto assets profitably. While this very much depends on the liquidity and trading volumes of the exchange, the possibility to sell or purchase assets below or above the spot prices on centralized exchanges is compelling enough to attract newbies. Hence, the spike in P2P volumes in countries identified as hotbeds for crypto growth.
Andrey Sergeenkov: I think we have all seen how P2P already managed to build a more inclusive environment, even in countries where the regulatory system goes against crypto. In your opinion, will the authorities become more favorable towards cryptocurrency and make an effort to stimulate crypto loans and exchanges in their local economies?
Yuri Nesterov: I believe that crypto will eventually replace current monetary infrastructures. Therefore, whether it is convenient or not, authorities will have no other choice than to incorporate digital assets into their financial systems. In other words, I believe that it is only a matter of time and the implementation of the right regulations.
Andrey Sergeenkov: Some of the countries like Algeria and North Macedonia are quite radically-tuned against cryptocurrency and all public exchanges operating within their jurisdiction. What’s the probability that restraining regulations will touch P2P trading platforms too?
Yuri Nesterov: Although P2P exchanges are a tad more flexible than centralized platforms, it does not necessarily mean that they do not have infrastructures to eliminate the risks of becoming the breeding grounds for illicit activities. Compliance is one of the measures to preserve the image of cryptocurrency. Besides, I believe that the reason why P2P has thrived in regions, which are difficult for centralized exchanges to penetrate, is that we help users focus more on the transfer and trading of digital assets and less on the speculative aspect of the crypto market.
Andrey Sergeenkov: Driven by the spread of COVID-19, cryptocurrency and blockchain adoption speeded up to an extent unseen before. Do you think there’s a chance cryptocurrency will come to be accepted as a part of our daily routine anytime soon?
Yuri Nesterov: Crypto and blockchain are building blocks for the future economy. Even though there is still a long journey ahead, both concepts will undoubtedly become more prominent in our daily lives. For instance, cryptocurrency fits seamlessly into the domain of the ongoing campaign for a cashless policy. As stated earlier, it is only a matter of time.
Andrey Sergeenkov: One thing is pretty clear – as the stock market slumps deeper, cryptocurrency becomes a more popular way to make meaningful returns. What dynamics do you think the crypto adoption will take in the months and years to follow?
Yuri Nesterov: There are several opportunities brewing in the crypto landscape that can launch it into mainstream status. For one, it is looking more likely that banks-backed digital assets will become a trend. Then there is DeFi’s recent explosion, which connotes the innovative edge that blockchain brings into the financial sector. Similarly, tokenization holds so much promise that it is perhaps the most compelling use case of crypto and blockchain technology. In the short and long term, all – or at least one of – these applications will launch cryptocurrency to mainstream success.
Andrey Sergeenkov: As the CEO of Bitcoin Global, what motivated you to get involved within a crypto sector? Would you define it as an attractive opportunity for others or the opposite, one of those that involve more challenges than gains?
Yuri Nesterov: Cryptocurrency presents unique solutions to recurring problems in a wide array of industries. Most importantly, what motivates me is the fact that it provides individuals with the systems they need to have some level of control over their finances and access to a wide array of financial instruments. This technology transcends crossborder barriers inherent in traditional monetary systems. Therefore, it offers a myriad of opportunities as opposed to the rigid conventional approach to money.
Andrey Sergeenkov: I think you would agree that the COVID-19 pandemic influenced the lives of us all, both in negative and positive directions. Which effect did you feel the most in your business?
Yuri Nesterov: One of the prevailing trends induced by the Covid-19 pandemic is digitalization. Since digital assets encapsulate elements of this concept, they have attracted more interest in the last few months. As such, it has given the Bitcoin Global team more reasons to double down on the goal to enable a viable crypto gateway. Now more than ever, we are at a vital junction in the crypto journey, and we have positioned ourselves at the forefront of the ever-evolving crypto dynamics.
Andrey Sergeenkov: While P2P exchanges seem more advantageous in terms of privacy, they are still drawn back by an unequal security level. What is Bitcoin Global doing to ensure the safety of all bids posted on a marketplace?
Yuri Nesterov: Our team includes strong security experts. Hence, we've managed seamless combining of multiple security infrastructure to ensure that our systems are impervious to attacks. Bitcoin Global provides escrow protection for all trades activated on the platform. This protection allows users to confirm payments before transferring the ownership of digital assets. In situations where the buyer and seller find it impossible to meet specified conditions, we immediately implement a swift dispute process that helps us determine the party that breached the terms of the transaction and how to resolve the issue.
Andrey Sergeenkov: Automated crypto pricing seems to be a novel idea in P2P exchange space, for it can eliminate one of the most obvious flaws – a lack of objectivity caused by misleading pricing. What if more exchanges start following the same model in the future? How are you planning to take the competitive edge over them?
Yuri Nesterov: We opted to introduce pricing equations that give high volume traders more control over their trades. This tool helps our users to automatically update the price they are willing to buy or sell bitcoin in tandem with the spot prices of the digital asset on reputable exchanges. Since this system is fully automated once the trader enters the right parameter into our pricing equations or creates a custom formula, advertisements automatically showcase the price rates aggregated from established centralized exchanges. More importantly, it is possible to use the data from more than one exchange to set a failsafe in case the price of bitcoin inexplicably falls on one of our supported crypto trading websites.
Andrey Sergeenkov: The idea of objectivity behind crypto pricing can help to draw skeptics into using cryptocurrency. In your opinion, can it aid in uplifting P2P crypto platforms onto the wider scale of global mainstream use?
Yuri Nesterov: Pricing is one of the core impediments and strengths of P2P exchanges. With the introduction of our pricing equation, we can finally offer accurate pricing to our community of traders. Thus, this unique solution puts us at an advantage in the very competitive crypto exchange market, and we are sure that it will improve our market visibility.
Andrey Sergeenkov: P2P is continuously expanding and becomes a definition of a modern marketplace where individuals can exchange anything from hand to hand. From your business model perspective, however, it means that you get lower profits by just connecting people with people. How do you ensure your finances stay on track?
Yuri Nesterov: It is quite simple. The more we enable a trusting relationship between our users and us, the easier it becomes to establish a financially sound business. Although we charge little or no fees for transactions executed on our platform, the P2P model we have incorporated, however, ensures that the processes involved in executing trades are not capital intensive. So, it is a win-win situation for us all the parties involved.
More than that, we ensure that people earn cryptocurrency through our referral program. This way, we attract new users and generate extra demand, which is always positively reflected on our business.
Andrey Sergeenkov: Through peer-to-peer, users can get in touch with each other directly to arrange a deal. However, that would be a very lucrative opportunity for scammers. How do you ensure that none of them sneaks through to your platform?
Yuri Nesterov: I mentioned earlier that we set up escrow protection for trades. Apart from this, we implement 2FA and carry out account verification. Furthermore, we introduced a rating model that documents the trustworthiness of users. . All of that is supported by a mechanism of auto-emails that are sent out as soon as somebody logs in to a user’s account. This allows to immediately track down the suspicious activity - if somebody is entering an account, the user will immediately get notified. With all these, it is easier to identify and truncate scam-related activities.
Andrey Sergeenkov: From your perspective, what role will Bitcoin Global take in a post-pandemic economy transformation? And how do you shape this purpose as the CEO of the project?
Yuri Nesterov: Bitcoin Global is a progressive project. And so, it will continue to evolve meeting the demands of the crypto community. As the CEO, it is my responsibility to foresee this transformation and, with the help of the team and users, reinvent Bitcoin Global. I am happy that such reinventions, with the latest our newly-introduced pricing equation, are bringing us closer to our goal.
Andrey Sergeenkov: It seems to me that Bitcoin Global already firmly sits in its own market niche. What is the company roadmap for the future?
Yuri Nesterov: First and foremost, our core objective is to simplify how to access and trade bitcoin. Therefore, we will continue to introduce new tools and ways of revamping P2P trading. While at it, we are not going to shy away from closely monitoring the growth of the crypto landscape and incorporate new business goals when the opportunity arises. Besides, we are about to launch our own mobile application, which would allow users to seamlessly manage, store and keep a track of their digital assets. With the help of our app based on a two-factor authentication process, users can be confident that their assets are stored under the best in class security layer, like in a safe.
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