How Peer-to-Peer (P2P) Trading Works
(Binance and All Other Major Trading Platforms)
The term ‘Peer-to-Peer’ is a phrase that has been used in so many fields, disciplines, and professions. Although each field has its distinctive meaning of the phrase, their meanings are all centered on the literal breakdown of the phrase itself. Peer-to-Peer, from one person to another, from one channel to another, from one computer to another, from one PC to another. The basic idea simply involves the transfer of an asset or connection from one end to another.
Understanding the concept of P2P in Crypto Trading
This is when crypto trading activities have taken place directly between two crypto traders without the need of an intermediary or middleman (in most cases). In cryptocurrency, trading is usually carried out using a traditional exchange to exchange crypto assets into fiat currencies. These exchanges swap cryptos in exchange for crypto assets at market prices.
Peer-to-Peer trading makes it possible to buy and sell crypto assets directly from an individual that is willing to buy or sell at rates that might be different from the market prices. P2P makes it possible for a crypto trader to buy and sell crypto assets at a time and rate that he or she wants.
How does Peer-to-Peer (P2P) work?
Say you have 10 BTC in your wallet and you would like to sell 1 BTC. You can easily get dollars deposited into your bank account by exchanging your BTC on different platforms that accept BTC after confirmation. The rate at which the BTC would be exchanged for dollars (although influenced by market price movements) would be determined by the platform. What they give you is what you’ll get.
P2P is however different. You’ll sell your BTC directly to a person who wants to buy. You’ll have an idea of exactly what you’re getting after the price has been agreed upon. Now, the buyer or seller can be your friends, family, colleagues, or even coursemates. Of course, one can just sell directly without involving a third party.
Just in case your friends, families, colleagues, and coursemates are not available to buy your crypto assets or you want to maintain anonymity for some reason. There are several credible crypto exchanges with a special section for peer-to-peer transactions.
These exchanges are filled with local and international traders ready to buy or sell cryptos at competitive rates. There is usually a wide range of payment options available. Payment options such as Skrill, PayPal, Neteller, Local Bank Transfer, Gift Cards. etc.
The exchanges also provide escrow services that ensure that the transactions carried out on their platforms are smooth.
Popular Crypto Exchanges that Offer Peer-to-Peer Transactions
The most popular crypto exchanges that in the United States and Globally are:
- Local Bitcoins
- Whales heaven
Advantages of Peer-2-Peer P2P Trading
There are numerous advantages associated with Peer-to-Peer trading. Notable ones include:
Peer-to-Peer transactions, especially on the major exchanges listed above, provide access to universal crypto traders. LocalBitcoins for instance provides access to about 300 countries. Binance currently serves more than 180 countries.
Option to choose the most preferred Payment Option
Paxful has over 300 payment methods. LocalBitcoins has over 60 payment options. Binance and LocalCoinSwap have over 180, 250 payment options respectively. There are enough payment options for a crypto trader to choose from.
No or Low Trading Fees
Carrying out Peer-to-Peer transactions is usually free on most platforms. Traditional exchanges charge a certain percent to exchange your cryptos for cash. Whales Heaven, Binance, LocalBitcoins, and LocalCoinSwap charge a 0% transaction fee.
Another reason why Peer-2-Peer (P2P) is a credible method of trading is the guarantee provided by the exchange services. Escrow protects both the buyer and the seller. The assets are being kept on hold with the escrow until the payment is being made and confirmed by the recipients. The assets will then be released.
This guarantees anti-fraud or anti-scam activities because assets will not be released without confirmation. The confirmation can be provided as screenshots.
This is one of the most secure ways of trading. One can easily sell anonymously to the other anonymous traders on exchanges.
Disadvantages of P2P Trading
Transactions can take longer
Peer-to-peer transactions can take quite longer than expected if one party fails to perform his duties. Carrying out transactions on contemporary platforms is usually instant. However, Peer-2-Peer (P2P) transactions can take longer to complete.
Transactions can be canceled halfway through and this can be very disturbing to parties involved.
P2P transactions are usually very smooth and without delay. The first step is to use a reliable exchange to carry out Peer-to-Peer transactions. A smart crypto enthusiast should also be able to take advantage of the price differences between the traditional exchange and the P2P platforms.
Having great communication skills, maintaining great ratings, and having a wide variety of accepting and making payments are also important tips for these types of transactions to run smoothly.