Coinffeine, an open source, peer-to-peer bitcoin exchange platform, enables users to buy and sell bitcoins securely and anonymously without having to rely on a centralized exchange like MtGox or Bitstamp. It’s like BitTorrent for bitcoins. Coinffeine’s beta P2P exchange, hopes to offer the same local buying service as LocalBitcoins, but with a smoother design. The Coinffeine exchange is simply a protocol, decentralized, so no companies hold the money; the founders hope it avoids being subject to regulations or user hacks, reported Mario Cotillard in BraveNewCoin.
“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, commented Alberto Gómez Toribio, Coinffeine CEO.
Coinffeine users 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, according to Cotillard.
Coinffeine will be limited to working in countries where OKPay is operational –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.
“On the eve of the launch of the Beta version, we are pleased to announce that Coinffeine will be available from the first day in more than 70 countries. This is possible because Coinffeine uses local payment processors -companies as OKPay– to manage the fiat money, and the users will manage the bitcoins using the desktop application as a wallet. Coinffeine doesn’t require identification of the users, or to do a complex legal feasibility study for each of the countries where it will be operating, as our company does not manage money deposits or customer’s bitcoins,” according to Coinffeine’s blog.
The Coinffeine project has been in development since May 2014. 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, reported Cotillard. Coinffeine is now in beta, and will be launched and avaliable in all 70 countries in late summer. Coinffeine has said that the decentralized exchange could also provide a way for banks and businesses to enter the business of buying and selling bitcoin, but has not yet announced any financial institutions on board to use the platform.