Ever since the first bitcoin trades, the so-called Peer to Peer (P2P) market has been important to the liquidity of bitcoin and other cryptocurrencies. The P2P market is typically coordinated on platforms where individuals post advertisements to buy and sell cryptocurrencies and then execute the trades bilaterally, sometimes with escrow services provided by the platforms.
Over the years the P2P market has seen growing competition. Large centralized exchanges have emerged, and the OTC market has exploded. Lately, DeFi-exchanges, operating on platforms like Ethereum have also seen substantial growth.
Nevertheless, the P2P market is still going strong, with Paxful and LocalBitcoins as the two largest players, and with a slew of smaller and often local players serving different niches.
Over the years, the P2P market has seen three geographical expansion waves.
Initially it was mainly utilized in the developed economies as a way to get access to bitcoin.
Then, during the speculative mania of 2017, relatively more participants from the emerging markets jumped onto the P2P platforms.
Now, we see most of the growth in frontier markets. This can both be linked to weaker competition form centralized exchanges and to the usage of P2P platforms to conduct remittances.