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The Growing Reach of Peer-to-Peer (P2P) Systems in the Digital World
- Peer-to-peer (P2P) payment systems are gaining popularity globally for sending, saving, or swapping goods and assets.
- P2P systems bring financial inclusion, freedom, and greater accessibility to individuals in both developing and developed markets.
- Paypal, Venmo, and Cash App are some of the earliest names in the P2P payments sector which are used for grassroots consumption like purchasing a product on eBay or paying for global services like consulting support.
- Institutional P2P payment platforms like Zelle have already facilitated 2.9 billion transactions totaling $806bln in transaction volume across 120 billion consumers and small-business accounts in 2023.
- P2P marketplaces like Paxful and LocalBitcoins are increasingly popular in underbanked regions like Nigeria, India, and Colombia, providing a bridge for people with few local alternatives to solve financial access issues.
- The DeFi sector is another example of P2P payments. It offers a completely decentralized and permissionless system for sophisticated financial services such as lending, insurance, and synthetic assets - all without centralized intermediaries like banks.
- In addition to P2P trading and payments, P2P lending platforms are also growing significantly, with quicker loan approvals, flexible interest rates, convenient repayment terms for borrowers, and attractive returns for investors. The global P2P lending market is expected to grow from $147.05 billion in 2023 to $190.43 billion by 2031.
- The P2P payment market was valued at $3.21 trillion in 2023 and is projected to rise at a CAGR of over 15% in the next eight years.
- As the use cases of P2P systems grow and become more widespread, more digital currencies and platforms that support them will come up.
- The increasing demand for P2P systems will bring further regulatory scrutiny and the need for enhanced security to keep user preferences evolving while ensuring trust and compliance.
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