Cancoin P2P bitcoin exchange – November 2017 review

Buy and sell bitcoin on this decentralized peer-to-peer bitcoin exchange.

Cancoin is a privacy-focused platform designed for direct, peer-to-peer exchanges of bitcoin (BTC) and fiat currency. While Cancoin employs a complex security infrastructure, its user interface is sleek and accessible for newcomers.

Thorough documentation provides clear and transparent information to help new users get comfortable with the platform.

  • Fees: 1% + miner's fee (sellers only)
  • Supported countries: USA & Canada
  • Payment methods: Cash, PayPal, Western Union & more

Pros

  • Transparent
  • Multiple payment options
  • Encrypted chat for negotiating trades
  • Reputation-based user rating system
  • Advanced tools, including custom scripting options

Cons

  • Bitcoin (BTC) only
  • Low liquidity

What is Cancoin?

A relative newcomer to the cryptocurrency exchange space, Cancoin is a decentralized, peer-to-peer platform for trading bitcoin. Rather than serving as a centralized hub, Cancoin is more of a framework that facilitates secure bitcoin exchanges between people.

With an emphasis on privacy and security, Cancoin’s unique structure and flexible toolkit set it apart from many other bitcoin exchanges.

What makes Cancoin unique?

Some of the features that allow Cancoin to stand out from other decentralized exchanges include:

  • Users have total control over private keys
  • Multi-signature transactions and escrow orders
  • Encrypted Pretty Good Privacy (PGP) chat built in
  • Advanced price scripting using Lua programming language
  • Hardware secured server signing using Ledger brand devices
  • Users can set custom alerts based on over 4,000 market variables
  • Custom alerts can be sent via SMS, email, desktop or browser
  • Voyager search tool for fast and easy blockchain exploration
  • Encrypted upload for providing payment verification documents
  • Open source code base
  • Interactive price history graphs
What is a decentralized exchange?

One of the things that many people like about bitcoin is that it is “trustless,” meaning that peer-to-peer transactions can happen securely without mediation from a third party, like a bank. While this is great in theory, many cryptocurrency exchanges ultimately do operate as third parties. Buying bitcoin on centralized exchanges typically involves both the buyer and seller sending funds to the exchange first, as a form of escrow. The exchange then dispenses them appropriately, sometimes for a fee.

Cancoin is different. Funds being transferred on Cancoin are never actually held by the exchange, but rather move directly between buyers and sellers. Transaction and pricing terms are negotiated on a peer-to-peer basis, similar to the in-person exchanges facilitated by LocalBitcoins, another decentralized exchange. Instead of having to meet in person, however, Cancoin users can chat securely through an encrypted messaging program built in to the site, in order to reach agreement on the transaction.

How much does it cost to use Cancoin?

It’s free to sign up and create an account with Cancoin. When trading on the Marketplace, sellers will incur a 1% fee on all orders, plus any transaction fees to the bitcoin network. Buyers are not subject to any fees.

Fees are shown during the order and will appear on the blockchain for complete transparency.

How do I buy bitcoin with Cancoin?

Buying bitcoin with Cancoin requires a little more legwork than other exchanges, but it’s ultimately fairly simple. The first step is to create an account, which requires only a username, email address, and password. Cancoin accounts come with a free, secure, multi-signature wallet that is used for transacting on Cancoin. Before you buy or sell bitcoin, you will need to generate your wallet.

  • Click the “Generate Wallet” button to get started. Follow the steps on the screen, including moving your mouse around. The random behavior generates a unique, secure mnemonic seed phrase that will be used as the master key to your account.
  • Write down, download or otherwise save your seed phrase. If you lose this information, you will most likely lose access to your account, so be sure to keep it somewhere safe. You may be asked to enter in some of the words to confirm that you have saved the seed phrase.
  • Once you have your wallet created, you can buy bitcoin by visiting the “Marketplace” area of the site.
  • You can browse the listings in the Marketplace by price or preferred payment type. Different listings may accept bank transfer, cash in person, or other forms of online payment.
  • Once you’ve selected the seller you want to buy from, you’ll have the option to negotiate the terms of the sale one-on-one via secure chat. Some sellers may require different levels of verification, such as SMS or ID confirmation.
  • Assuming you meet the seller’s requirements, you can proceed by entering the amount of bitcoin you want to purchase and creating an order.
  • Most Cancoin transactions have a time limit. Once you’ve placed an order, the seller will submit the bitcoin assets to a unique multi-signature wallet created just for this transaction. The wallet will show up on the blockchain, and therefore you can verify that the payment has gone through and is in the wallet.
  • Cancoin’s multi-signature wallets are at the heart of how peer-to-peer transactions work on the exchange. The wallets require 2-of-3 signatures in order to release funds. For each transaction, only the buyer, the seller and Cancoin can sign. Assuming everything goes well, the buyer and seller can both sign and the 2-of-3 requirement is met. If there is a dispute, Cancoin can act as an arbiter.
  • Once you’ve confirmed that the seller sent the bitcoin by checking the blockchain, you will need to submit your payment within a specified time window in order to complete the transaction.
  • The seller will give you the necessary details, such as the deposit information for their bank account, via Cancoin’s encrypted chat program. You will then send the payment using the method specified in the seller’s initial offer. You may need to provide confirmation details (such as transaction ID or other information) to the seller so that they can verify your payment.
  • When the seller receives confirmation of your payment, they will sign an order sending your bitcoin from the escrow wallet to your personal Cancoin wallet.
  • If everything goes smoothly, buyers and sellers have the option to leave one another a review. This helps build a reputation-based feedback system for users on the platform.

Is Cancoin secure?

Cancoin really shines when it comes to security. Strong encryption, total user control over wallets and private keys, and a reputation-based community structure contribute to making Cancoin a valuable tool for peer-to-peer bitcoin transactions. Additional security features include:

  • Cancoin’s multi-signature wallets are created from a seed phrase generated by movements of your phone or cursor during the signup process. That input is converted using BIP-39 into your binary seed, which allows for an unlimited number of deterministic wallets and addresses to be generated for users.
  • All order information is stored using AES-256 CTR file encryption.
  • During transactions, an OpenPGP chat interface is accessible directly in the browser, protected by an encrypted key tied to your mnemonic seed phrase. This enables secure communication of sensitive information between buyers and sellers.

Pros and cons

Pros

  • Transparent (escrow transactions happen on the blockchain)
  • Support for multiple payment types to send/receive fiat
  • PGP-encrypted chat for negotiating trades
  • Reputation-based user rating/review system
  • Advanced tools, including custom scripting options

Cons

  • Only supports bitcoin (BTC)
  • Low liquidity

What’s next for Cancoin?

Cancoin is a relatively new exchange at the time of writing, with several features still in beta or under development. Features that are in the works or have been announced for future adoption include:

  • Turing-complete advanced price scripting capabilities using Lua will allow users to customize buy and sell listings.
  • User community forums are coming soon to Cancoin.
  • To enhance transparency, Cancoin plans to add support for additional types of account verification, including:
    • LocalBitcoins verifications
    • Facebook verifications
    • Twitter verifications
    • Google+ verifications
    • Github verifications

Frequently asked questions

Currently Cancoin is accessible to residents in the US and Canada. Support for additional countries is coming soon, including the UK and Australia. Within the “Marketplace” area of the site, you have the option to request support for your location.
At the moment, Cancoin only supports bitcoin (BTC) transactions.
The payment system works in such a way that bitcoins are transferred to an on-blockchain escrow wallet prior to a buyer sending cash payment. You will be able to see the bitcoin in the escrow wallet before making the payment. Because the multi-signature escrow wallet requires 2- of-3 signatures to transfer the funds, if a seller attempted to fraudulently reclaim the bitcoin once they had received your cash payment, Cancoin would be able to step in.

Given proof of your payment (such as a transaction ID or receipt), Cancoin would sign for the release of the funds in the escrow wallet to your personal wallet. Along with your signature, that would meet the 2-of-3 requirement, even if the seller failed to sign. Conversely, if you sell bitcoin you don’t have to sign for their release until you have payment confirmation from the buyer.

This review of Cancoin should not be interpreted as a recommendation to invest. As an investment class, cryptocurrencies are speculative investments and investing in cryptocurrencies involves significant risks – they are highly volatile, vulnerable to hacking and capital loss and sensitive to secondary activity. Historic performance is no guarantee of future returns. Before investing you should obtain advice and decide whether the potential return outweighs the risks.

Image source: Cancoin

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