What are the current Bitcoin OTC trading methods and platforms? The Internet Finance Security Committee gives the answer

Phoenix.com WEMONEY News: On October 27, the National Internet Financial Security Technology Expert Committee (hereinafter referred to as the "Expert Committee") released the "National Internet Financial Sunshine Plan" Week 19 - Bitcoin OTC Trading Monitoring Report (hereinafter referred to as the "Report"). The report analyzes three aspects: OTC trading methods, OTC trading platforms, and OTC trading scale. In addition, the Expert Committee monitored the recent Bitcoin OTC trading situation through the National Internet Financial Risk Analysis Technology Platform (hereinafter referred to as the "Technical Platform").

According to the report, there are three main forms of Bitcoin OTC transactions, namely online P2P transactions, online B2C transactions and offline transactions.

Specifically, online P2P transactions are generally conducted through over-the-counter trading platforms such as LocalBitcoins and CoinCola. Such platforms provide a place for Bitcoin buyers and sellers to publish information. The transaction model is similar to the "Taobao" model, where buyers and sellers conduct one-to-one transactions based on the published information.

In online B2C transactions, users can buy or sell Bitcoin directly from the platform, and the price is set by the platform. After receiving the user's payment, the platform will directly release Bitcoin to the buyer user, or after receiving Bitcoin, release the funds to the seller user. The funds or Bitcoin on the B side are owned by the platform or come from cooperative merchants.

Offline transactions refer to transactions between buyers and sellers online or offline, through online chat tools such as QQ groups, WeChat groups, Telegram groups, Slack groups, or face-to-face transactions in a purely offline manner.

It is worth noting that the technology platform monitoring found that with the introduction of regulatory policies in September, domestic Bitcoin OTC trading platforms such as Bikan and BitHub gradually withdrew. Currently, there are four Bitcoin OTC trading platforms commonly used by domestic users, all of which are overseas, namely LocalBitcoins, Paxful, CoinCola and BitcoinWorld. It is understood that OTC transactions are often not restricted by national borders, and related platforms can provide services to the world.

From the perspective of the RMB payment methods used in BTC-CNY OTC transactions, the monitoring results of the technical platform show that since 2017, among the BTC-CNY OTC transactions completed through Paxful, 96.3% of the transaction orders completed RMB transfers through Alipay, 2.7% of the orders completed RMB transfers through WeChat Pay, followed by Itunes gift cards, accounting for 0.56%.

In LocalBitcoins’ trading ads, the technology platform sampled and monitored and found that 57% of the selling ads chose Alipay as the payment method, followed by bank transfer, accounting for 28%. In CoinCola’s trading ads, the technology platform sampled and monitored and found that 85% of the selling ads chose Alipay as the payment method, followed by bank transfer, accounting for 12%.

In addition, the report also shows the trend of BTC-CNY OTC transaction scale. As shown in Figure 1 (Note: using transaction data from LocalBitcoin and Paxful), before February 2017, BTC-CNY OTC transaction volume was relatively small. With the ban on withdrawals from major domestic Bitcoin trading platforms in early February, the transaction scale has exploded. Since the major domestic trading platforms opened withdrawals in June 2017, the transaction scale has decreased significantly. With the cleanup of domestic ICO and Bitcoin transactions in early September, OTC transactions have prospered again. Judging from the transaction data from LocalBitcoin and Paxful, the share of BTC-CNY OTC transactions in the total Bitcoin OTC transactions has increased from about 5% to about 20%, as shown in Figure 2.

Figure 1 BTC-CNY OTC daily trading volume trend

Figure 2 BTC-CNY OTC trading share trend

Phoenix.com WEMONEY noticed that the trend is exactly the opposite to that of BTC-CNY on-exchange transactions. As shown in Figure 3, February to May was the low point of on-exchange transaction volume, and the on-exchange transaction volume increased significantly from June to August, and has continued to decline since September. From the perspective of transaction volume comparison, the current average daily off-exchange transaction amount of BTC-CNY in the P2P model is only about 1/100 of the previous on-exchange transaction amount.

Figure 3 BTC-CNY on-site transaction volume trend

The technical platform analyzed the BTC-CNY transaction data of LocalBitcoins, Paxful, and CoinCola in the past two weeks. From the perspective of transaction scale, the three platforms had a total transaction volume of 680 million yuan, among which the transaction volume of Hong Kong's CoinCola platform increased significantly, accounting for 70% of the three platforms. The comparison of the transaction volume of the three platforms in the past two weeks is shown in Figure 4.

Figure 4: Transaction volume trends and distribution

From the order scale of the three platforms, the number of orders with a single transaction amount of less than 10,000 yuan accounted for 67%, and the total order amount accounted for 14%; the number of orders with a single transaction amount of 10,000-100,000 yuan accounted for 31%, and the total order amount accounted for 60%; the number of orders with a single transaction amount of more than 100,000 yuan accounted for 2%, and the total order amount accounted for 26%. The specific distribution is shown in Figure 5.

Figure 5 BTC-CNY OTC order amount distribution

In addition, the report pointed out that in the ecological chain of encrypted digital currencies such as Bitcoin, the exchange of Bitcoin and legal currency is an important link. Generally speaking, it can be divided into on-site transactions and over-the-counter transactions. The emergence of Bitcoin over-the-counter transactions predates on-site transactions. OTC transactions usually do not have a fixed venue, prescribed membership, and strict rules and regulations. They are mainly one-to-one transactions between counterparties through private negotiations. With the in-depth development of Bitcoin, the activity of over-the-counter transactions is increasing. The anonymity of both parties in over-the-counter transactions is strong, there are many transaction payment channels, and there may be risks of fraudulent transactions. (WEMONEY Qin Wei/Editor)