Biometric-based OTC markets

Purchasing cryptocurrencies from a cryptocurrency exchange is a simple process. However, these markets frequently contain restrictions on how much you may buy in order to avoid disrupting market equilibrium, charging greater transaction charges, having limited supply, and other difficulties. As a result, large-volume orders on traditional centralised or decentralised market venues are difficult to execute for investors with larger capital, aka "whales", and also those without access to the banking rails and would need to use a peer-to-peer service.

OTC Trading Desks

OTC (over-the-counter) trading desks are for those who want to trade larger amounts. Leading exchanges, trade venues, and niche-specific service providers frequently provide these services. High-caliber investors meet at crypto OTC desks to make large-volume orders without affecting the price on established exchanges, cut transaction costs, and receive the best rates.

There were only a few OTC crypto brokers before the 2017 bitcoin bull run. The idea has recently gained traction, with several well-known cryptocurrency exchanges opening their own OTC platforms. Coinbase, Binance, Bittrex, Bithumb, and Poloniex are among these exchanges. To make trades, the investors must contact an OTC broker. The broker will then locate a counterparty who meets your criteria. Once the broker has located both a buyer and a seller, the broker will sit back and wait for the buyer and seller to discuss the transaction's quantity and price. After the buyer and seller agree on the price and quantity, the money and asset custody must be transferred through a broker.

OTC Peer-to-Peer (P2P)

During the 2017 bitcoin bull run, the global P2P volume reached an all-time high. Since then, it has remained stable at roughly $80 million in weekly volume. The challenge with peer-to-peer transactions is with risk management. When transacting on P2P or OTC platforms like localbitcoins.com or localcryptos.com, it is advisable to always look at this information to obtain a sense of who your trading partner is. Typically this includes, todouble-check that his account's genuine name matches the name on his payment. Also to verify that the user's IP address originates from the same country as the payment. In the future, a person’s identity can be private with encryption technology, while still building up a pseudonymous profile with reputation score.

How Humanode solves issues in the OTC markets

Humanode combines state-of-the-art liveness detection, multimodal biometric processing, and continual proof-of-existence to develop a robust Sybil-resistance solution that protects the system from bad actors' spoofs and bypasses. The Humanode network delivers zero-knowledge liveness verification and identity check back to the OTC platforms without revealing the user's identity, showing the user is the same genuine human being without utilising any personally identifiable information (PII). During one of our Fireside chat, one community member Jony commented: “ I see a secondary market in DeFi in terms of a person having an awesome credit score can vouch for another person, so that the other persons gets more insurance or less collateral to receive loans.”

Humanode enables OTC platforms to enforce “honest” behavior and determine transaction “validity” without compromising the sensitive details. While it is important to preserve one’s identity, at the same time, we can establish a reputation for the counterparty, especially for escrow holders. This is done with private biometrics and zero-knowledge proofs (ZKPs). With the promise of better security, ZKP can provide the optimal platform for the transfer of sensitive information such as authentication information.These proofs can aid in the creation of a secure channel that allows users to use their information without fear of being exposed. As a result, ZKPs can significantly aid in minimising data leakage concerns in worst-case scenarios.