P2P International Currency Exchange

By SamuelRose, published at 10 May 2007 - 8:12pm, last updated 11 years 18 weeks ago.

[Originally Posted at P2P Foundation]

[bliki | what is a bliki?]

[via P2P Blog]

Moneytwins.com describes itself as:

"..the first service that allows individuals and
small companies to exchange their foreign currency notes directly with
each other without using the services of a bank. There is a unique
price for each currency at which transactions happen, the same that is
used by the largest financial institutions,..."

Many people just keep foreign money as a souvenir, because it is
often not worth exchanging it upon returning home. Or, sometimes, in my
case I give it to friends and family travelling to the same destination.

Moneytwins.com seeks to become a way to find other people who want
that currency, and trade with them at current exchange rates, and
without fees. (Moneytwins has started out offering the service for free
to attract users. Eventually, they plan on charging a small listing fee
of about .05%, similar to what ebay is doing, see this interview).
The money is then exchanged at a pre-arranged location, or via shipping
through delivery services like UPS or DHL. Security is based around a
reputation system, where users rate past transactions.Moneytiwns also
wants to facilitate remittance of money between immigrants and their
families back home.
This is a great idea. Although the Moneytwins application still has
some bugs to work out of their system, based upon my experience of
registering there and looking around.

Securing A P2P Currency Exchange

Another consideration with P2P currency exchanges, and P2P banking
functions in general, is that international organized crime could seek
to use these systems as a way to launder money. The Moneytiwns model is
moving in the right direction by employing reputation systems. However,
if people wanted to launder money through a system like this, they
could easily set up hundreds of ID's. They would be motivated to
maintain good reputations, because their incentive is to find an easy
way to transform and hide currencies, and not to stand out in the
system. A P2P currency exchange could help organized crime achieve at
least one money laundering function. Reputation alone would would not
be enough of a deterrent. In this case, reputation would have to be
combined with some sort of accurate identity verification.

There are similar security considerations for exchanging money to and from virtual worlds, like Second Life, and game worlds like Ultima Online.
These virtual and game worlds are beginning to feature money exchanges
from real world money to virtual currency. Or, in some cases, we see a
market of people selling virtual currency for real currency in online
auction sites like ebay. These systems could also be targets for money
launderers, because they potentially allow people to disguise or fake
identity.