More and more people are looking to get started in Bitcoin with every passing month. In response, companies are giving them more options to do so, including over-the-counter (OTC) trading.
Also read: OTC Trading: An Inside Look at How Whales Move Bitcoin
Thanks to increasing regulation and formal procedures required to set up an online exchange account, there has been a rise in OTC trading for regular people as well as large investors.
Services like LocalBitcoins and Mycelium‘s Local Trader have grown in popularity over the years, and now others are joining the competition.
In countries like China, these services also help to overcome restrictions on how money can be transferred digitally or moved in and out of exchanges.
One such facilitator is China’s BitKan (formerly BTCKan), which added OTC trading to its three-year-old mobile app at the end of May. Designed initially for the Chinese market, the app also has an English version available for iOS and Android on international stores.
In a month the app has now processed over 1,000 BTC in trades. That may seem small compared to investor-class OTC market, but it shows the beginnings of a burgeoning “street market” for bitcoins happening away from exchanges.
That’s not to say BitKan is a gray market for bitcoins – if you want to trade more than 3 BTC per transaction, you’ll need to provide ID and register it in the company’s database to comply with international anti-money-laundering requirements.
Small amounts, though, can be traded by anyone and that could be the cutting edge of bitcoin adoption.
Bitcoin Trading Goes P2P with OTC
BitKan calls its app “The DIDI of bitcoin” – DIDI is China’s answer to Uber – making the comparison to ride-share services that spearheaded the push for mobile technology to create P2P marketplaces in almost every area of commerce.
Operations manager Dan Li told Bitcoin.com most OTC trading is not face-to-face but online, thanks to China’s easy payment networks on platforms like AliPay and WeChat.
On the BitKan platform, users don’t have to look for local traders. Because online payment is still our primary method of payment right now. In China, online payment is very mature, so there are few needs of offline trading. Of course, in coming months, we will also support face-to-face transactions. Then, users will be able to find local traders base on location.
The app processes the bitcoin payment, but users arrange the fiat transfer themselves on the integrated messaging system.
At present, the app gives prices in CNY and USD, but there are plans to incorporate other local fiat currencies in future.
Like other OTC trading apps, BitKan needs to increase its user base to benefit from a network effect. The app’s directory lists only a handful of traders at the moment, though that is bound to increase as the service becomes more widely-known.
As well as up-to-date prices and OTC trading, BitKan’s app also includes live news, prices for litecoin and other altcoins, and mining statistics. Users can set alerts when prices on their preferred exchange rises above or falls below set levels.
“We hope that BitKan can help our global users to discover, possess, save and use bitcoin more conveniently,” Li said.
New Crackdown on Online Payments Could Benefit Bitcoin
There are, however, current concerns that Chinese customers’ access to fast and easy online payments could be under threat, with the introduction of new regulations drafted last year.
Medium-to-large payments (above ￥5000, or $750) must now go through bank accounts. Non-verified users can only transfer ￥1000 ($150) maximum per transaction. Not only that but Bank UKey or Bank Apps must be used for any online payment above ￥200 ($30).
Twitter’s @cnLedger later explained the policy move on Reddit, saying it was probably an attempt by banks to discourage people from using alternate payment systems.
That could indirectly, however, end up benefiting bitcoin.
It is clear that with this policy in effect, banks want to force people go back and use their already heavily criticized systems. But history never goes backwards. Without Alipay/Wechat-pay, Bitcoin is one of the only few promising choices left to the public. That’s why I tweeted it.
With further restrictions on using regulated channels to make CNY payments, a platform like BitKan’s will have even greater utility for moving users in and out of the bitcoin ecosystem.
And once in, they may decide it’s more convenient to stay in.
Would you like to try BitKan’s OTC trading app? Do you think apps like these are effective at introducing more newcomers to bitcoin?
Images via John Southurst, BitKan