In the world of cryptocurrencies, peer-to-peer marketplaces are becoming increasingly popular. Exchanges such as LocalBitcoins and LocalMonero allow users to speculate in bitcoin (BTC) and monero (XMR) respectively. Ethereum is now going the same route with the establishment of a decentralized peer-to-peer exchange known as LocalEthereum.
Using Smart Contracts to Bridge Trust
LocalEthereum is a peer-to-peer marketplace that allows over-the-counter trading of fiat currencies to ether between individual traders. The platform which is similar to its bitcoin counterpart went live on October 21 and is gaining traction due to an increase in demand for ETH globally. However, unlike Localbitcoins which acts an escrow between transacting parties, LocalEthereum is a fully decentralised exchange where users retain control over their transactions.
This is achieved through the deployment of Ethereum smart contracts that are integrated into the in-built escrow service to bridge trust between transacting parties. This means none of the LocalEthereum team can read your messages or access your funds unless with the express permission of both parties and only when a dispute occurs. The use of smart contracts and an in-browser cryptography makes it easy to convert ether for fiat currencies rather than depend on doubtful intermediaries.
A Suitable Option for Ethereum Enthusiasts in Africa
LocalEthereum has the potential to become the go-to platform for ether (ETH) trading in Africa. The platform charges sellers 0.25% on the entire transaction as fees while buyers pay 0.75%. This is below exchanges like Coinbase and others and serves to incentivise traders to post more ad listings.
When funds are deposited onto the service they are transferred to a client-side encrypted wallet. Platform operators have no control over the wallet since it resides in the browser. Communication between buyers and sellers are secure due to end-to-end encryption features that guarantee privacy.
Currently, users can purchase ether in over 80 fiat currencies and take advantage of 800 offers available on the platform. Already, 100 trades have been closed since going live with a total value of approximately $60,000.
Surprisingly, figures from the Localethereum team show that out of the 100 trades, almost half of them were settled by bank transfer, 20 settled through China’s Alipay service, and the rest using Paypal and in-person cash trades. Demand for the service continues to rise with many users on digital currency forums requesting for a LocalBitcoins solution for Ethereum. In a company blog post the LocalEthereum team states,
“We’re sick of the dangerous misplaced trust in centralised exchanges which continue to lose hundreds of millions of dollars of our money. Traders have been getting the raw end of the deal for far too long now, so we’ve changed the game.”
While it is too early to predict how the exchange will fare in the coming months it will create opportunities for Ethereum users in Africa and across the globe. It will also herald a shift of cryptocurrency speculators, from centralised exchanges to peer-to-peer marketplaces that embrace a decentralised model, free from oversight and control.