A Comprehensive Guide to P2P Crypto Exchange
When most people hear about cryptocurrency exchanges, they think of numbers, figures, complex tables, charts, and trading platforms.
But have you ever thought about whether there are simpler ways to trade cryptocurrencies?
Have you ever looked for other methods to exchange digital currencies?
In this post from DigiAlpha’s blog, we want to introduce you to a very easy method that thousands of people around the world use every day to trade and earn a lot of money. This method, which is not very well-known and only a few people are familiar with, is called peer-to-peer (P2P) trading. Many people use it for their local or international cryptocurrency trading and make money from it.
If you are also interested in earning money in simple and easy ways through cryptocurrency trading, we recommend staying with us until the end of this post.
What is crypto P2P trading?
Continuing the discussion on Types of Spot Trading Crypto Exchange Platforms, we now move to the topic of what is crypto P2P trading?
Peer-to-peer cryptocurrency exchanges are platforms that allow people to transfer cryptocurrency from one account to another without needing a financial institution.
P2P trading happens when two people directly interact to buy or sell cryptocurrency.
In P2P exchanges, buyers and sellers register on the exchange or platform through a website. They create trade ads to buy or sell cryptocurrency within a specific range of prices on a set platform. Based on how these exchanges work, they are divided into two types: Escrow-based and Automated exchanges.
Escrow-based peer-to-peer trading
This type of trading works like a deposit system. For example, if you are a buyer, you need to:
- Search for suitable advertisements.
- Verify the legitimacy of the seller.
- Analyze the amount and price of the cryptocurrency.
If everything fits your needs, you send a trade request. Once the seller accepts your trade request, the transaction begins, and the seller’s cryptocurrency is locked in escrow.
Both traders can communicate to complete the transaction. After you make the payment, the locked cryptocurrency is released and deposited into your account.
Automated peer-to-peer trading
This type of trading is managed by pre-programmed software that doesn’t require human involvement. The software automatically connects buyers and sellers.
Based on the conditions set by traders, the software doesn’t immediately process the trade but first matches the buyer and seller. Similar to centralized exchanges, this system avoids involving a third party.
If there are any disputes, third parties can step in to resolve the issue. Otherwise, by default, no human involvement is needed. The software alone connects traders in a decentralized manner. All you need to do is click the “Buy” or “Sell” button!
Make sure to read: How should I trade crypto?
An example to understand peer-to-peer cryptocurrency exchanges
Peer-to-Peer (P2P) trading is like websites such as Etsy, Craigslist, or eBay. Buyers and sellers talk directly to agree on a price. But instead of goods, people trade cryptocurrencies like Bitcoin or Ethereum.
For example, imagine you want to buy Bitcoin, one of the top 10 profitable cryptocurrencies, from someone in your city. P2P platforms help you find the right person at the right time. You can easily complete the trade at a fair price using the platform’s tools.
Advantages of peer-to-peer trading
As we explained in the post What is Cryptocurrency, digital currency trading has many benefits. But there are also special advantages of Peer-to-Peer (P2P) trading:
1. Variety of Payment Methods
One payment method can’t work for all traders around the world. Luckily, many of the est P2P crypto exchanges support many different payment methods.
2. Very Low Fees
Centralized exchanges need expensive systems to keep users’ assets safe. But in P2P exchanges, many of these costs are not there, so the fees are usually lower.
3. Less Affected by Sanctions or Strict Rules
Big exchanges often have strict rules for listing new cryptocurrencies. But P2P exchanges usually have fewer rules, so you might find cryptocurrencies there that are not on centralized exchanges.
Make sure to read: What is a crypto spot market?
Features of the best peer-to-peer crypto exchanges
In the previous section, you learned about the advantages of P2P exchanges, and now you can decide if you want to use one. If you plan to use a P2P exchange or design your own exchange platform, it’s important to choose the right one to avoid risks. Here are the features to look for when choosing a P2P exchange:
1. User-Friendly Interface
A user-friendly interface is important for two reasons. First, it helps you quickly learn how to use the exchange and save time while trading. Second, the easier the platform is to use, the more users it will attract, which increases liquidity and lets you complete trades faster.
2. High Security
Protecting your money is more important than making a profit. P2P exchanges can be more vulnerable to scams because there is no middleman. Make sure the exchange you choose is reputable and has strong security features to protect users from fraud.
3. Large Number of Users
A large number of users usually means that the platform is trustworthy. More users also mean more buyers and sellers, which leads to better liquidity. This makes trading faster and cheaper. A larger user base also means you have more payment options available.
4. Support for Different Cryptocurrencies
If a P2P exchange has a good interface and security but doesn’t support the cryptocurrency you want to trade, it won’t be helpful. Choose exchanges that offer a wide range of cryptocurrencies if you’re interested in altcoins.
5. Support for Different Payment Methods
The more payment methods a P2P exchange supports, the more users it will attract. This increases liquidity. With more payment options, international trading becomes easier, and you can use an alternative method if there is a problem with one.
6. Low Fees
For short-term traders or those with smaller amounts of money, low fees are very important. Low fees attract more users, making it easier to find buyers or sellers. In the long run, lower fees help you save money and increase your profits.
7. 24/7 Customer Support
As mentioned earlier, there is a high risk of fraud in P2P exchanges, and problems can happen at any time. You may also face issues with certain payment methods. In these cases, it’s important to have reliable customer support available 24/7 to help solve any problems quickly.
Is there a platform that meets all 7 criteria?
Yes, why not? Our P2P platform is one of best P2P crypto exchanges in UAE and Russia that meets all of the above criteria. It offers a user-friendly interface, high security, a large user base, support for various cryptocurrencies, different payment methods, low fees, and 24/7 customer support.
DigiAlpha’s P2P cryptocurrency exchange design is the result of five years of dedicated development, continuous improvements, and a strong emphasis on security and performance.
Conclusion
The number of cryptocurrencies is growing every day, and it is normal to see many types of cryptocurrency exchanges. When buying cryptocurrency, you are not limited to centralized or decentralized exchanges; you can also use Peer-to-Peer (P2P) exchanges. In P2P exchanges, users can trade cryptocurrencies directly with each other, without an intermediary. These exchanges have advantages, like various payment methods, but also face challenges, such as low liquidity and high risks of fraud.
In this post, we tried to introduce you to the different aspects of P2P exchanges. We explained how they work, discussed their benefits, and showed you how to use them. Lastly, we gave tips to help you find the right exchange platform.