More people than ever are trading bitcoin over-the-counter (OTC) thanks to the withdrawal freeze placed on Chinese exchanges.
The Move to Over the Counter: Can’t Stop Bitcoin
Earlier this year, the People’s Bank of China (PBoC) asked major Chinese bitcoin exchanges OKCoin, BTCC and Huobi to freeze withdrawals until they completed technical upgrades required by the central bank. When the exchanges announced the freezes, people expected the bitcoin price to tumble, since the largest amount of bitcoin trading volume comes from China.
That was not the case, though. In fact, the price continued to soar, leading up to the highs of $1800 achieved on certain exchanges at press time. So why didn’t the price crash when the PBoC rendered China’s major exchanges essentially useless?
It looks like OTC trading picked up the slack tremendously. And while OTC trading doesn’t necessarily affect the exchange price directly, it certainly could have shored up the Chinese market, preventing panic selling elsewhere.
BitKan — a China-based OTC app provider — told Bitsonline that their service has seen an explosion of new users. Since the exchange freeze, BitKan said, they have received 150 thousand new users per month. This marks a nearly tenfold increase over the company’s historical data.
Furthermore, BitKan’s new traders explicitly told the company that they found the app while looking for trading alternatives to work around the exchange freeze.
BitKan operating director Sandy Liang said that interviews with users revealed that “after these Chinese exchanges banned withdrawing, [traders] found BitKan provided a safe and easy way to trade bitcoin.”
“Especially, traders on BitKan accept Alipay and WeChat Pay. It’s much easier than traditional exchanges.”
OTC Trading Explained
BitKan users can access the OTC feature from both the mobile app and website. After making a trading account and getting it approved by the company, users can look for other traders.
Once a trader has found someone else they’d like to transact with, they can arrange a trade within the app or web exchange. The process is almost totally peer-to-peer, with the BitKan exchange service as the only third-party involved.
Is OTC the Way of the Future?
The influx of new users to the BitKan trading service might be indicative of a larger future trend. Bitcoin exchanges around the world have had a notorious reputation for experiencing technical issues and hack attacks, and Bitcoiners have long searched for safer alternatives.
Peer-to-Peer services, such as LocalBitcoins, have been around for a while, and their regular users swear by their superiority over centralized exchanges. What has stopped them from overtaking those exchanges, however, has been the sheer convenience offered by centralized platforms.
But now, with China seemingly cracking down, and the threat of hackers ever-present, we just might see a shift in how people buy and sell bitcoin.
Have you ever used an OTC bitcoin trading platform? Share your experiences down below.
Images via Pixabay, BitKan