(Originally Posted at P2P Foundation)
(via P2P Blog)
Moneytwins.com describes itself as:
”…the first service that allows individuals and small companies to exchange their foreign currency notes directly with each other without using the services of a bank. There is a unique price for each currency at which transactions happen, the same that is used by the largest financial institutions,…”
Many people just keep foreign money as a souvenir, because it is often not worth exchanging it upon returning home. Or, sometimes, in my case I give it to friends and family travelling to the same destination.
Moneytwins.com seeks to become a way to find other people who want that currency, and trade with them at current exchange rates, and without fees. (Moneytwins has started out offering the service for free to attract users. Eventually, they plan on charging a small listing fee of about .05%, similar to what ebay is doing, see this interview). The money is then exchanged at a pre-arranged location, or via shipping through delivery services like UPS or DHL. Security is based around ReputationSystems?, where users rate past transactions.Moneytiwns also wants to facilitate remittance of money between immigrants and their families back home.
This is a great idea. Although the Moneytwins application still has some bugs to work out of their system, based upon my experience of registering there and looking around.
Another consideration with P2P currency exchanges, and P2P banking functions in general, is that international organized crime could seek to use these systems as a way to launder money. The Moneytiwns model is moving in the right direction by employing reputation systems. However, if people wanted to launder money through a system like this, they could easily set up hundreds of ID’s. They would be motivated to maintain good reputations, because their incentive is to find an easy way to transform and hide currencies, and not to stand out in the system. A P2P currency exchange could help organized crime achieve at least one money laundering function. Reputation alone would would not be enough of a deterrent. In this case, reputation would have to be combined with some sort of accurate identity verification.
There are similar security considerations for exchanging money to and from VirtualWorlds?, like SecondLife, and game worlds like Ultima Online. These virtual and game worlds are beginning to feature money exchanges from real world money to VirtualMoney. Or, in some cases, we see a market of people selling VirtualMoney for real currency in online auction sites like ebay. These systems could also be targets for money launderers, because they potentially allow people to disguise or fake identity.