Disclaimer: Opinions expressed in this article do not constitute investment advice from Bitcoin Reserve.

Since 2014, peer-to-peer (P2P) exchanges have been a popular method of trading bitcoin. Similarly to bitcoin itself, these semi-decentralized exchanges do away with intermediaries. Instead of funds being held in escrow by a fee taking third party, as in centralized exchanges, transactions via P2P exchanges are—as the name suggests—undertaken on a peer-to-peer basis.

P2P trading tends to find heavier usage in developing countries. Their decentralized nature and elimination of mediators means these exchanges can operate in countries where centralized exchanges otherwise struggle to operate. And recently, the volume of popular P2P markets such as LocalBitcoins and Paxful has been off the charts.

In fact, combined volumetric data from trading analytics site UsefulTulips indicates that P2P trading on both Paxful and LocalBitcoins struck all-time highs this week in several developing countries.

Nigeria currently cites the highest trading volume at around $10.3M; Kenya cites $2.5; South Africa stands at $2.2m; Ghana, at a record $1.9M; India at $3.8M; and the Philippines, and Argentina both boast volumes of just over $1M in traded bitcoin.

Source: Kevin Rooke / UsefulTulips

India claiming one of the highest P2P volumes of all developing countries isn't that surprising. While a longstanding ban has kept India from entering the bitcoin market for many years, a supreme court reversal on the decision back in March, led to a bitcoin renaissance in the country.

According to Ray Youssef, CEO of Paxful, monthly signups have risen by 28% since the ban was quashed, indicating that demand for bitcoin could be a growing trend in India.

Meanwhile, Nigeria, Ghana, Kenya, and South Africa's P2P trading volume zenith similarly stands as a progressive trend for the African continent. Africa has embraced bitcoin like no other. It's even outmatching Argentina—a country famed for its flight to bitcoin amid hyperinflation under an autocratic regime.

Inflation doesn't seem to be the problem for Sub-Saharan Africa, which has bared a relatively subdued inflation rate ranging between 3% and 7% over the past few years. Still, as with most parts of the world, the coronavirus has taken its toll on the continent, which slumped into recession as a result—making "uncertainty" a feasible driver of bitcoin adoption.

Like most developing countries, Africa is a prime contender for bitcoin. Unlike advanced economies, Africa's lack of traditional financial services meant that as of 2014, according to statistics from the World Bank, there were approximately 350 million unbanked—accounting for 17% of the global total.

Source: Worldbank

Fortunately, that gap is closing thanks, in part, to the rise of mobile payments as well as several blockchain initiatives. This being the case, the concept of bitcoin as a store of value—impervious to the effects of inflation or government interference—resonates even stronger on the continent.

Developing Countries Embrace Bitcoin

Research seems to back up the theory that cryptocurrencies tend to find further adoption in underdeveloped economies.

A recent experiment, undertaken by blockchain project Onfo, set out to confirm this hypothesis.

Researchers handed out ten free crypto assets to 100 individuals from several different countries, including Indonesia, Russia, the US, and Germany. Indonesia, Russia represented the undeveloped countries, and the US and Germany portrayed advanced countries.

Recipients were incentivized to spread the word and entice usage. Per the results, token proliferation was found to be much larger in developing countries. In fact, Russia and Indonesia's spread index was almost four times higher than in the US and Germany.

Source: Onfo

The results appear to indicate substantial potential for bitcoin adoption within developing countries—something which could, in turn, reduce reliance on the US dollar.

Paving the Way for a Bitcoin Reserve Currency

In a now-infamous speech at the Jackson Hole symposium last year, Mark Carney, the former Governor of the Bank of England, described how dollar dominance hinders monetary controls of the world's economies—particularly within emerging countries.

Carney argued for a synthetic hegemonic currency to displace the dollar in its de facto role as a global reserve currency, enhance global trade, and diminishing dollarization.

However, per Carney, simply forging a digital dollar wouldn't suffice:

"When change comes, it shouldn't be to swap one currency hegemon for another. Any unipolar system is unsuited to a multi-polar world. We would do well to think through every opportunity, including those presented by new technologies, to create a more balanced and effective system."

While it's unlikely he was insinuating that bitcoin should take the mantle of the reserve currency, it's realistically the most logical course of action.

As touched upon in a previous piece, the so-called Triffin Dilemma or Triffin paradox restricts an official global reserve currency from originating from a sovereign state's fiat currency. The issue is, any such fiat currency would inevitably give rise to conflicts of economic interest between national and global monetary policy.

Bitcoin, meanwhile, holds no fealty to any such country or state, and it's not bound by any centralized interference, making it a prime contender for Carney's vision of a global reserve currency.

Now, it seems, the burgeoning use of peer-to-peer bitcoin exchanges is slowly making that vision a reality.