update 14 October 2021

BlockSettle Exchange Review – A P2P Exchange with a Bright Future

Every crypto trader’s worst nightmare is losing his assets in an exchange hack. Cryptocurrency exchanges lose money in cyber attacks recurrently. Many times, they lose the people’s assets that they were keeping in custody. And just as often, they suspend withdrawals leaving everyone high and dry.

Fortunately, secure peer-to-peer trading alternatives enable users to transfer assets without the exchange ever sniffing them. One of them is BlockSettle Exchange, a crypto/Forex exchange platform that lets you trade directly from your wallet, tokenize assets, and swap fiat currencies, all on the same platform.

BlockSettle aims to become an industry-leading P2P exchange. But does it have what it takes? We wanted to find out and took it for a spin. You can find out all about it below, in this BlockSettle Exchange Review!

What is BlockSettle?

BlockSettle is a peer-to-peer crypto exchange that enables users to trade cryptocurrencies directly from their wallets.

The developers behind BlockSettle built the exchange on Armory, one of the first crypto wallets supporting Bitcoin. Besides sharing the same high level of security as Armory, BlockSettle also practices its philosophy, which states that crypto owners should keep custody of their digital assets at all times.

BlockSettle stands out from other cryptocurrency exchanges in the industry by refusing the traditional role of intermediary and keeping custody only over fiat currencies.

On BlockSettle, users can create their secure Bitcoin-friendly wallets without having to register on the platform. Additionally, the exchange permits them to import other wallets and integrate them into the trading, whether they are software or hardware types.

BlockSettle Exchange also doubles as a Forex trading platform. So, crypto users with a knack for trading over-the-counter fiat currencies can do it without leaving BlockSettle.

Some of the services that BlockSettle offers include bespoke asset receiving and sending, support for SegWit Addresses, and Bitcoin node integration.

Who founded BlockSettle Exchange?

BlockSettle saw the light of day in 2016 after receiving funding of over $2.5 million. However, most of the starting capital came from its founders, Albert Janson and Scott Millar. The two are also in charge of the Malmo-based BlockSettle AB Company, which supports the BlockSettle Exchange.

Janson has an impressive CV showcasing several years as an associate at Goldman Sachs and co-founding credits for one of the most popular dating apps in Asia, Tantan. Millar has several years of experience in derivatives trading.

The two BlockSettle founders also created Auth eID, a mobile app that traders can use to provide KYC when registering on BlockSettle. Janson and Millar based the project on Sweden’s electronic identification system for bank clients, called BankID.

How Safe Is BlockSettle?

Before we dive into BlockSettle’s working process, we take the time to address one of the most recurrent questions on the internet about this crypto exchange: “Is BlockSettle safe?

The short answer is yes. The long answer goes something like this:

BlockSettle has a real-world license from Sweden’s financial regulator, Finansinspektionenin, which shows that its operations are under strict regulations. The developers are bondable by law to ensure the safety of the platform.

Additionally, BlockSettle has achieved full compliance with Europe’s Anti Money Laundering Directives. The platform double-checks and registers to Know Your Customer (KYC) details from every user who creates a trading account.

For crypto owners, BlockSettle is a safe trading way because their crypto assets never reach the platform. The exchange only holds custody of their fiat currencies in a separate bank account from the company’s operational accounts. Therefore, if the exchange crashes overnight, your fiat funds will remain safe.

BlockSettle Trading Requirements

Anyone can hop on BlockSettle, create a wallet and take control of all their wallets, hot or cold ones. However, to engage in trading, crypto holders have to provide KYC. Some users, including residents from the US and other high-risk countries, do not have access to the platform at all.

BlockSettle functions on a strict, crystal-clear user policy that prevents any company member from seeing the users’ crypto wallet balances. The platform can also not freeze one or all of the users’ assets, as some centralized exchanges have done in the past.

One of the trading restrictions on BlockSettle regards “tainted Bitcoin,” which refers to BTC that blockchain research companies have identified as part of transactions with illicit purposes.

How does BlockSettle Work?

The first thing that impresses most users when accessing BlockSettle for the first time is the ease of use and seamless navigation on the platform. The smooth functionality is due to the BlockSettle Terminal, an open-source desktop terminal that anyone can freely download and use on most computer operating systems.

The BlockSettle Terminal offers a broad range of features for those who only want to manage their wallets. Traders will gain access to even more options if they create a trading account and provide KYC in the Auth eID app.

The easy access tabs on the BlockSettle Terminal include:

  1. Overview – a diagnosis of your portfolio and available trading pairs
  2. Trade – access to three types of trading:
  • Spot XBT – Bitcoin against fiat currencies
  • Spot FX – fiat against fiat
  • Private Market – tokenized Bitcoin assets against Bitcoin
  1. Wallet – management of all the wallets you connect to BlockSettle
  2. Explorer – search tab for Bitcoin addresses and transactions
  3. OTC Chat – chat options with other BlockSettle users
  4. Dealing – where dealers can see active requests from traders

Besides managing their wallets, users can take two roles on the BlockSettle platform, traders and sellers. If they choose to be the former, they place requests for buying assets. The latter can complete those requests.

Users can be both traders and dealers. However, to become a dealer, a user has to hold at least 5,000 EUR. Additionally, he has to maintain an average fill to quote the ratio of 85% or higher, which means that his bids must be better than 85% of all the other bids for all the requests he attempts to fill.

The BlockSettle Exchange Trading Mechanism

BlockSettle employs an unparalleled trading system in the cryptocurrency space, called Request for Quote (RFQ).

Through RFQ, users can trade and deal assets in Spot XBT, Spot FX, and Private Market. Here is how it works:

  1. A trader sets up a Request for Quote for a particular asset in the Trade area of the BlockSettle Terminal.
  2. The active dealers receive news of the RFQ in the Dealing area of the Terminal.
  3. Every dealer taking part in a bid has only 30 seconds to win a bidding war and complete the request.
  4. A Trader makes an RFQ for a particular asset in the Trade tab of the BlockSettle Terminal.
  5. When the bidding session ends, the trader can decide whether he accepts the final bid or not.

When the trader accepts a bit, the platform automatically generates a settlement address between the two parties on the BlockSettle platform if the traded pair involves BTC. The two parties then have control over this address, and the Bitcoin used in the trade transfers instantly and directly between the two wallets.

Only if the dealer and the trader engage in a fiat exchange will BlockSettle take temporary custody of the assets.

How Much Are the Trading Fees on BlockSettle?

BlockSettle has relatively low fees in comparison with other crypto exchanges. Users only pay a small percentage for every trade they engage in, as long as they sell Bitcoin.

Buying BTC is free on the platform. The same goes for trading tokenized assets against Bitcoin. When exchanging fiat currencies, both buyers and sellers pay a tiny fraction of the total amount.

The most popular trading pairs involving Bitcoin at the time of this writing include:

  • Bitcoin (BTC)/Canadian Dollars (CAD)
  • Bitcoin (BTC)/Euro (EUR)
  • Bitcoin (BTC)/British Pound Sterling (GBP)
  • Bitcoin (BTC)/US Dollars (USD)

The fiat trading pairs on BlockSettle Exchange include EUR/CAD, EUR/GBP, EUR/USD, GBP/CAD, GBP/USD, and USD/CAD.

Tokenization on the BlockSettle Private Market

BlockSettle offers users the possibility to create tokenized assets on the Bitcoin blockchain and later trade them for Bitcoin on the BlockSettle Exchange. Users can do so by using the platform’s trademark method of tokenizing assets, called Colored Coin.

At the time of this writing, tokenizing is possible only for company shares. However, BlockSettle plans to enhance the Colored Coin purpose to tokenizing almost any type of asset, including real estate, art, and vehicles.

The Bottom Line – BlockSettle Exchange Review

BlockSettle Exchange is a fresh presence in the cryptocurrency space and innovation in the Forex ecosystem. It somehow manages to unite both worlds and reward multi-asset traders with a single platform for Bitcoin and fiat currency trading.

While it offers expert traders with excellent dealing options, the exchange does little for the neophytes. Beginner-traders in Forex, cryptocurrencies, or both will need a bit of time to navigate the platform’s pro-level services.

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In its nearly five years of history so far, BlockSettle has evolved at a slow pace, which hindered its ability to gain traction in the market. Several P2P exchanges provide stiff competition, and BlockSettle will need to simplify many of its products to appeal to a broader audience.

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