We all want some measure of certainty in the future. We want some security and some degree of confidence that the coming day will be better than the last. These are basic human desires, natural and attainable. However, they become so only if we take a step outside our self-established comfort zones and take a broader look around at the world and the opportunities it provides for reaching a higher degree of lifestyle and its improvement.
The digital economy was created back in 2009 as a means of improving human life. The philosophy behind the development of blockchain was freeing human financial interaction from the interference of third parties. This noble idea was based on thorough analysis of the existing financial infrastructure and the system governing it. Banks, central banks, other financial intermediaries, regulatory authorities, and even governments, all form part of the financial system, with the holders of the money themselves actually having virtually no custody or control over their savings or assets. Very simple examples of how people do not own their own money can be found in the stories about sanctioned individuals who were foolish enough to keep their money in banks founded in countries that were initially hostile against their home countries. The result of such blunders is obvious – the banks either seized control of those individuals’ savings, essentially confiscating or stealing them, or froze access to them.
The absolute same stories and approaches can and have been applied to entire countries, as evidenced by the outright gangster-style approach adopted by western banks against the assets of sanctioned countries held in banks abroad. In light of such an obvious violation of basic human rights, financial regulation, private property, international laws, and many other concepts, the applicability of the digital blockchain-based economy and its peer-to-peer trading approach becomes rather evident.
The disadvantages of the modern financial industry are many. Among the most obvious is, of course, excessive centralization and reliance on a single point of decision making, which is often excessively politically engaged and influenced, or outright corrupt. Other disadvantages that stem from this flaw are excessive bureaucracy, an abundance of regulations and related restrictions, complete control and oversight over individuals and their holdings, as well as a myriad of other challenges that not only impede the development of the financial system as a whole, but even restrict people’s access to it.
The existence of a large number of regulations forbids people from sending funds abroad, as sanctions essentially disconnect not only individuals, but even entire states. The slew of intermediaries that charge exuberant commissions makes it unprofitable to send funds abroad or even transfer them using such channels, making personal handovers much more logical.
Another extremely important factor that has been undermining the authority of the modern financial system is the ongoing process of the global economy’s transformation. P2P Bitcoin exchange is turning into a mainstay of some economies, like those of Nigeria. The United States Dollar, which had held a dominant position in the world for over a century as the global reserve currency, is losing its dominance under the weight of its own deficiencies. New centers of political and economic might are emerging and are asserting their dominance, challenging the established global economic framework that had favored the west as the center of power. All these factors are undermining the financial system and forcing it to adapt and change to cater to new realities.
On the one hand, such transformation is positive, as it leads to the development of new opportunities in finance and gives more freedom of transacting to people who are deviating from the United States Dollar standard. On the other hand, it provides a window of opportunity for new economies to break free from the chokehold of global corporations and establish new and competitive rules for offering their financial products on the market as alternatives. This relates to the global blockchain economy, which is increasingly experiencing pressure from the SEC and other United States regulators.
It would be logical to assume that with the impending collapse of the United States Dollar’s dominance in the global financial system, the new replacement economy will cater to the blockchain-based digital asset frontier in a friendly and more adaptive manner. This could also mean that P2P Bitcoin exchange can become an accepted and more popular means of transacting and exchange than the established centralized exchange-based approach that has been dominant for the last decade or so.
P2P Bitcoin Exchange – How It Works
It is no secret to anyone anymore that the exchanges operating in cryptocurrency space are centralized. Binance, KuCoin, Bitget, and many others are all heavily regulated and will be forced to abide by any state authority requirements at the first call. The requirements can range from freezing individual user accounts to outright liquidation based on some formality or new regulatory requirement. It would not be the first time, as Binance is eager to please its United States authorities by forbidding users from sanctioned countries to conduct transactions on its platforms. Such bias is exactly why many users are migrating from centralized exchanges to their decentralized counterparts. This migration is called forth not only by the greater freedom decentralized exchanges provide, but also by the advantage they offer from other perspectives. Most importantly, decentralized exchanges provide:
- Higher security;
- Anonymity;
- Lower commissions;
- P2P trading.
Centralized exchanges maintain the private keys and assets of users on custodial wallets. These wallets provide users with a number of advantages, such as password recovery in case of loss, and the security of the protection layers applied by the exchange itself. However, the funds are in the custody of the exchange, and that means any breach of the system will lead to the loss of user funds. In addition, any external requirement for freeze will also be initiated. As such, the need for non-custodial wallets becomes vital. Giving users complete control over their assets without the interference of an intermediary. The vast majority of decentralized exchanges apply non-custodial wallets as part of their strive to maintain complete deviation from any form of centralization.
Another major drawback of centralized exchanges is their vulnerability to external and internal threats. Exchange hacks are a common occurrence that results in the loss of user funds. Billions in user funds have been lost over years, because centralized exchanges are vulnerable due to the presence of the human factor as a single point of failure. In stark contrast, decentralized exchanges have no human error factor involved, as all the operations are handled by the system without any human interference.
Lastly, centralized exchanges are intermediaries, which charge users a fee for every operation. This goes in stark contrast with the core principles of decentralization, which foresees completely P2P exchange mechanisms. Decentralized exchanges, however, apply a fully P2P approach to trading, with P2P Bitcoin exchange taking place only between the users party to the transaction. This gives decentralized exchanges a distinct advantage in terms of attracting users seeking anonymity and a reduction of commissions when conducting large trades in order books that give the ability to set individual terms.
Key Takeaways
We are living through a turbulent age of change that marks a distinct shift from a west-centered economy to a more global and multipolar one. The given changes are a major advantage for many users around the world who wish to take advantage of P2P Bitcoin exchange and use their national currencies for cashing out earnings. With the United States Dollar no longer being the main asset for exchange, users from other countries will have the chance to use their national currencies for making transactions and even conducting them in national currencies on a fairer basis. Most importantly, the digital economy will be gaining prominence in coming years as states will start launching their own digital currencies on the basis of the blockchain to popularize such assets and monitor transactions on a state level.
P2P Bitcoin exchange is the future, even despite the fact that centralized exchanges are growing in size. People around the world will always value freedom and will always seek ways to minimize their costs when the possibility of working on a peer-to-peer basis is present.
