P2P – what is it in cryptocurrency

P2P – what is it in cryptocurrency

Contents of this article:

P2P platforms are chosen by those who want to trade cryptocurrencies on decentralized platforms. Such trading platforms are often compared to marketplaces; they differ from cryptocurrency exchanges and have a number of advantages. We will tell you what a P2P cryptocurrency platform is, how it works.

What is P2P cryptocurrency trading?

P2P in cryptocurrency is a platform where users post ads to buy or sell tokens. Some sites perform not just the role of a marketplace, but also wallets for storing keys to digital assets. The user can create ads or respond to existing ones by registering for one. Marketplaces used to sell Bitcoin and other popular coins tend to have several major coins to trade with.

You can withdraw it to a bank card or account having bought cryptocurrency on P2P. There are many such exchanges; some of the most popular are Binance P2P, LocalBitcoins, Hodl Hodl, Cryptolocator.

How does a P2P cryptocurrency platform work?

P2P cryptocurrency trading is a transaction on a peer-to-peer platform where users exchange digital assets. The transaction is performed automatically after the response of one user to the announcement and confirmation of the transaction by another; the platform charges a low commission, not more than 1% of the transaction amount.

Sometimes the interaction of two users of the platform may be intervened by a third party – technical support or independent arbitration. This is required in controversial situations, when one of the participants in the transaction is trying to deceive the other.

P2P differs from the cryptocurrency exchange in several ways:

  • Time of transactions. Exchanges allow you to buy or sell cryptocurrency from brokers or administration, so the operation takes a minimum of time, often performed instantly. A transaction is carried out between two users on P2P, the operation takes place after one user initiates a transaction, and the second agrees to it, so it takes more time.

  • Flexibility. The trader gets more freedom to choose the appropriate exchange rate and payment method since P2P applications are not accepted automatically, but manually (the user selects or publishes an order, selects the second participant in the transaction).

  •  Low commissions. P2P, unlike traditional cryptocurrency exchanges, offer low transaction fees.

  • Privacy. The platform does not appear in the user’s transaction history, while data on the purchase or sale of a digital asset on a traditional centralized exchange may be known to the user’s bank.

Advantages and disadvantages of P2P

One of the main advantages of P2P is ease of use. The platform provides the participants of the transaction with a high level of security, offers more flexible conditions than a regular exchange.

The security of the transaction is guaranteed by its mechanism: the cryptocurrency from the seller’s wallet goes to the escrow account after the exchange of parties is confirmed; it enters the buyer’s wallet only after the buyer sends the fiat currency, and the seller confirms its receipt. If the buyer has not transferred the payment, the crypt is returned to the seller’s account.

Other pros of P2P are:

  • quick and easy registration;

  • a reliable system for protecting transactions through an escrow account;

  • a wide range of payment options, including cash (at a personal meeting between the seller and the buyer).

P2P also has disadvantages:

  • limited functionality for earning (there are no ways of passive income, as in conventional exchanges);

  • manual mode of execution of transactions, which requires more time;

  • the need to contact the seller or buyer of cryptocurrency directly.

Join one of the most popular crypto communities in Ukraine Crypto Crew and learn how to make money on exchanges and P2P! We will tell you in more detail what a P2P cryptocurrency platform is, how to trade assets on it, how to invest and manage risks correctly. We work not only with beginners, but also with experienced traders who plan to improve their trading strategy and increase their efficiency.