HodlHodl is a global peer-to-peer bitcoin exchange that does not hold funds. Currently, the company has plans to make its software available free of charge to anyone in any part of the world so they can launch their own version of the P2P bitcoin exchange seamlessly. With the recent interest among African, Asian and Latin American, it is evident that emerging markets are embracing this fascinating process.
HodlHodl is a rare breed of crypto which fundamentally focuses on Bitcoin, that is the only crypto which the founders trust. According to the CTO of the company, HodlHodl is averse to holding very sensitive information which is personal to the customers. Unfortunately, it is mandatory for financial institutions to collect such information from customers under required regulations. In times past, however, sensitive information and personal details uploaded to these exchanges have been stolen and used for criminal activities.
HodlHodl has no interest in specific customer identification because the P2P exchange platform does not necessarily take custody of customers’ funds. Instead, what it does is to list offers to buy or sell bitcoin and provide an escrow service where the seller locks some bitcoins until the buyer sends them fiat. To release the bitcoin, 2 or 3 of the signatures which belong to the seller, buyer and HodlHodl are required. According to FATF, P2P platforms are also found to be subject to such regulations, especially in cases where the platform facilitates the exchange. Therefore, the escrow service of HodlHodl doesn’t clearly count as facilitating.
Subsequently, the support and upgrade of the code might be the next thing in line. That way, people can use the code to pay for e-commerce and the technology will soon be made plug-and-play to afford non-proficient coders to easily deploy the code in their online store and accept bitcoin.
LocalBitcoins.com vs Hodl Hodl P2P Platform
At LocalBitcoins.com, only about 1000 EUR worth of bitcoins can be purchased per year. This is without verification. Meanwhile, there is no way you can create offers and sell bitcoins without verifying. On the other hand, HodlHodl- a global P2P Bitcoin exchange needs no KYC/AML requirement before you can trade. Some basic points that distinguish LocalBitcoins.com and HodlHodl are:
For HodlHodl, all you have to do is provide your email address to complete the registration. Once you get a confirmation of your email, you are good to go. For LocalBitcoins.com, you need to provide your email, name, surname, mobile phone number and country of residence to complete registration. Until you have submitted these details, you cannot use the platform.
- Offer Creation
Having completed registration, you can now create your own offer. You do not need anything to do this other than your account. No verification. No deposits. Nothing else needed to create offers on HodlHodl. With LocalBitcoins.com, you cannot create your own offer after registration until you pass the verification process, and even at that, you must deposit funds into the wallet to buy and sell offers.
- Create Contract
Right after registration, HodlHodl P2P platform gives users an opportunity to accept existing offer. Nothing is required to do this as well. No verification or deposits are required before you can create contract. Once you are done with the contract creation, the seller is the only one who can deposit bitcoins into escrow. Contrarily, for LocalBitcoins.com, right after registration, you can only create a contract to buy and this is only possible through an existing offer. You cannot sell immediately after registration. Besides, you have a limit of contract amount of 1000 EUR. Having reached this limit, you must verify yourself to sell and at the same time, you must deposit funds in the platform’s wallet before contract creation.
On other platforms, you can only create a few contracts or so. Once you reach a volume limit, you must complete their verification process to proceed. Interestingly, with HodlHodl, you will not be asked to verify. It’s only provided as an optional feature. The only exception is if a dispute exists in your contract. Here, the HodlHodl website could request for some details like your identity to resolve the dispute. For LocalBitcoins.com and other P2P exchange platforms, you must reveal your identity to the platform if you want to create your own offer, want to sell bitcoins through an existing offer, and want to buy bitcoins through an existing offer but have exceeded the 1000 EUR limit per year.
- Funds Storage
As earlier mentioned, HodlHodl does not store users’ funds- not in the form of fiat or bitcoins. It is possible to achieve this because of the multisig addresses the exchange generates for each contract, which is where the funds are stored for the contract’s lifetime. Other platforms, however, do not store your fiat funds. Instead, they store bitcoins. That is, when you buy, you must receive bitcoins to the platform’s wallet first before you will be able to send them to your own wallet. Also, when you sell, you have to deposit funds before you can create the offer or contract to sell.
- Methods of Payment
On the HodlHodl exchange, there are more than 215 payment methods. You can even propose a new payment method to the administrators of the site, as a user. In essence, there are no restrictions with your payment methods on HodlHodl. For others, if you are a user and you create advertisement, you are charged a 1% fee at the completion of every trade, which is deducted from the trade amount.
As against other platforms, the fee per trade at HodlHodl is capped at a maximum of 0.6% of the contract sum (0.3% per user). HodlHodl has different fee rates, and they are equally divided among the buyer and seller. For instance, a 0.6% fee for every registered user means 0.3% per user while a 0.55% fee for every user registered with a referral code translates to a 0.275% per user.For 0.5% fee for every user that passed verification, it means 0.25% per user. Basically, the deduction of the fee is made from the deposit (upon release and until the contract is completed). Additionally, a network transaction fee is required when sending to and from escrow for each contract.
The services of HodlHodl are available in all countries of the world, except the U.S.
Again, the basic concept is to recognize HodlHodl business model’s vulnerability to possible regulatory crackdowns. Having come to the realization that, from history, a government can shut you down if it wants to, HodlHodl is introducing the concept of open-sourcing the code for its smart contracts in a way to deal with this threat. Imagine if the domain gets blocked, some persons can just harvest the code from Github, fork it and launch a new thing. Interestingly, one can prevent this from happening. The reasons are not far-fetched. It saves customers the stress of KYC checks with no particular plans to start. Also, the KYC and anti-money laundering regulations, AML, will expose law-abiding users to fraudsters and criminals. In other words, they do more harm than good.
In addition, these requirements actually do little to prevent money laundering and criminals from executing their activities. As a matter of fact, regulators are putting so much pressure on the industry to identify the parties involved in the transactions. A notable regulator here is the Financial Action Task Force, FATF, an intergovernmental body which has directed its member countries to get information about who their customers trade with.
To sum it up, HodlHodl P2P exchange differs from other prominent platforms on the basis of fees, requirements, verification procedures and other things. In addition, the platform makes it easy to trade for cash, and enjoy trade workflow in all sense. With HodlHodl, you can now deal on a platform which does not hold funds, and doesn’t expose sensitive information to the public. Meanwhile, it is important that users take note of, and understand the regulations that bind trading with Bitcoin.