Paxful co-founder Ray Youssef has made plans to open up a peer-to-peer trading platform following his company’s shuttering earlier this year. The company will be based outside of the United States.
P2P market
Youssef’s new initiative is called Civ Kit, and is a “blueprint for developers and entrepreneurs to build their own censorship-resistant and permissionless global marketplace”.
He calls the blueprint an “unstoppable marketplace” which will allow anyone, anywhere to trade by using the Lightning Network and the Nostr protocol, a decentralised social media.
An excerpt from the whitepaper’s abstract reads:
This design is built on top of the new Nostr protocol for its peer-to-peer order book and relies on the Bitcoin blockchain as a source of truth for its Web-of-Stakes market ranking paradigm.
Speaking to reporters, he said:
We want everyone to be trading with everyone. We want someone in Venezuela trading with someone in Russia. No barriers, no permission required
The idea comes following the shutdown of Paxful, which he founded in 2015 with Artur Shaback, who is now suing Youssef. Due to legal uncertainty in the US, Paxful decided to dissolve the company in November. Youssef called it a “nice, tidy dissolving”.
“We spent all the money on compliance to make sure that any frozen funds were released back to the users and then there wouldn’t be any creditors,” Shaback, however, “decided to sue me because he wouldn’t get his nine-figure payday if the company dissolved. So it was purely out of greed.”
Broken relationships
The two co-founders have their differences “in the business direction and governance of Paxful”, said Shaback. He said that Youssef migrated Paxful’s IP, userbase, wallet history and passwords to a new venture, Noones.com.
“He couldn’t take me with him due to me being a US resident”, Shaback told the Block.
Paxful was able and is able to function and serve billions of people worldwide and that is my goal now to restore it.
Know-your-peer
Rather than using today’s “Know-Your-Customer” standard, the Civ Kit will use “know-your-peer (KYP) oracles.”
Youssef believes “KYC is horrible”.
People want to know who they’re trading with, especially for big transactions. And that’s where we replace KYC with Swipe Your Peer … We can start attaching reputation to accounts based on the nature of people’s trading activity.
While there are a number of such marketplaces in development, Youssef leans on his expertise in building such products as a determining factor of its future success.
The difference is that Civ Kit is built by someone, designed by someone that’s already done it out in the real world and seen every possible problem in a case.
Privacy debate
Youssef’s reservations about KYC fall into discussions about financial privacy, or lack thereof.
In traditional finance, the privacy debate is framed as something money users must learn to forget about for whatever reason. The integrity and usefulness of the money people use is essentially an afterthought. Half-hearted lip service to financial privacy has given rise to accusations that regulators are building a surveillance state under a new model.
In cryptofinance circles which focus on bringing money properties back to earth, privacy is a major focus. Various reputable blockchains which put the user first have rolled out privacy-enabling technology.
For instance, Litecoin developers released MimbleWimble Extension Blocks (MWEB) in early 2022. Monero has native privacy built into the layer one blockchain. Bitcoin’s CoinJoin is another anonymisation strategy that’s fairly popular.
So far, the Civ Kit team is focused on a ‘bitcoin-only’ design.
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