We believe the prime advantage of cryptocurrency over fiat is the elimination of middlemen. Instead of relying on a central institution to keep record of your balance, blockchains use a distributed ledger of transactions verified by a gigantic network of computers.
This decentralized network makes it impossible for anybody to access your digital wallet without control of your private key, no matter what. As long as your wallet’s private key is kept private, your crypto is truly yours.
But when you deposit or buy cryptocurrency on a custodial exchange, you no longer control your crypto. Instead, you trust the centralized exchange, in the same way that you trust a 100-year-old bank, to hold onto your money and keep an accurate balance of what they owe.
On a centralized exchange, you lose the unconfiscatable property of crypto, and your pseudo-cryptocurrency now risks being lost or stolen. Because of the inherently insecure properties of centralized exchanges, billions of dollars have been stolen, lost, and destroyed.
Centralized exchanges have copied the vulnerable systems of Wall Street stock exchanges and banks — the same systems that motivated the invention of Bitcoin in the first place.
LocalCryptos takes a different approach.
We use in-browser cryptography technology to provide a non-custodial escrow service where LocalCryptos has no control over your funds. Using a non-custodial platform keeps you in control at all times.
By careful design, LocalCryptos deliberately grants itself only the minimum privileges necessary to give you a safe P2P trading environment.
We don’t ask you to trust us to hold on to your balance, because we know custodial exchanges have a terrible track record, plus we don’t want to carry the burden of safeguarding hundreds of thousands of peoples’ wealth.
The principle of least privilege would guide our development at every turn.— LocalCryptos (@LocalCryptosEN) May 25, 2020
We'd use cryptography to grant ourselves only the minimal privileges needed to provide a safe P2P trading environment.
We use smart contracts to make it technically impossible for us to move your escrowed crypto to our pockets. And by the same token, we prevent potential hackers from doing the same.
We use end-to-end encryption technology to make it impossible for us to read your messages, unless you volunteer them to us during a payment dispute. By doing that, your sensitive personal information is safeguarded.
We use non-custodial web wallets to make it impossible for us to touch the crypto in your LocalCryptos wallet.
We accomplish this using in-browser cryptography via the Web Crypto API. Nearly every aspect of LocalCryptos is powered by cryptographic wizardry.
For a centralized exchange, adding a new crypto is simple. Virtually all they need to is spin up a node and flick a few switches.
Because LocalCryptos is a non-custodial platform, the process is more complicated.
We first need to spend time studying the protocol and mastering its scripting language. We’ll begin by reading all the papers and technical documentation, and reaching out to the developer community. Next, we look at existing on-chain escrow solutions and ideas, if they exist, and learn their flaws.
Then we spin up our node infrastructure and sync to the network. This is the easy and boring part.
Next up, we design and develop a non-custodial escrow mechanism suitable for peer-to-peer trading. With Ethereum, we built a purpose-built smart contract coded in Solidity. On Bitcoin and Litecoin, we took advantage of the stack-based Script language to create an P2SH escrow contract using an on-chain commit-and-reveal scheme.
With Dash on the way, our escrow solution is likely going to make use of Dash’s unique InstantSend and ChainLocks features to make peer-to-peer trading nearly instantaneous. More technical details will be announced with the launch, as all our escrow scripts are open source.
Once the escrow mechanism is ready, it’s put into action. But first we need to build a new self-custodial web wallet to let you send and receive crypto with ease, while maintaining complete control over your private keys at every turn.
Finally and most importantly, lots of testing takes place before the marketplace goes live.
LocalCryptos is a peer-to-peer crypto marketplace with more than 100,000 users worldwide with traders in 100+ countries (Venezuela being #1). It’s the most popular non-custodial fiat on/off-ramp.
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