- P2P (peer-to-peer) trading in crypto refers to a type of trading where individuals can buy and sell cryptocurrencies directly with each other without an intermediary.
- A P2P marketplace, or P2P exchange, is a platform that connects buyers and sellers of cryptocurrencies to make P2P trading happen.
- P2P exchanges are able to effectively mitigate the risk of fraud by providing a safe environment of vetted trading partners and promoting the use of secure payment methods, all the while safeguarding the user’s control over their cryptocurrencies.
P2P crypto marketplaces have gained popularity in recent years, leaving many curious about what it exactly entails. Read this article to learn the basics of P2P exchanges and to understand this innovative approach to cryptocurrency trading.
What is P2P Trading in Crypto?
P2P (peer-to-peer) trading in crypto refers to a type of trading where individuals can buy and sell cryptocurrencies directly with each other. Unlike traditional exchanges, P2P trading does not need the involvement of a middleman such as a traditional centralised exchange.
The Basic Idea
Picture this scenario: You want to buy Bitcoin but want to avoid using centralised exchanges due to their high fees. So, you could connect with someone who already owns Bitcoin and wants to sell it. You negotiate with a potential seller offline or online, agree on a price, a payment method and then the transaction takes place directly between the two of you. The main benefit of P2P trading is that it gives individuals a maximum of control and autonomy over their funds.
Two Main Challenges
With this greater amount of control and freedom over your assets come two challenges:
- How do I find the right counterparty?
- What happens if I get scammed by the counterparty?
The first challenge is to find the right counterparty to trade with, as you need to trust the other person to follow through on the agreed terms of the trade. The second is about the risk of getting scammed by a counterparty.
This is where P2P exchanges come in to combine the best of two worlds. This is how: Centralised P2P exchanges are able to effectively mitigate the risk of fraud by providing a safe environment of vetted trading partners and promoting the use of secure payment methods, all the while safeguarding the user’s control over their cryptocurrencies.
What is a P2P Marketplace or a P2P Exchange?
In general, a P2P marketplace, or P2P exchange, is a platform that connects buyers and sellers of cryptocurrencies to make P2P trading happen. The role of the exchange is to provide a number of services to make P2P trading easy, safe and more convenient:
Convenient: Connecting Buyers and Sellers
Finding someone who is willing to buy or sell a cryptocurrency without a marketplace can be difficult, even for popular cryptocurrencies such as Bitcoin. It becomes even more challenging to find a suitable trading partner if you do not know where to look. P2P marketplaces are designed to solve this challenge and help you find a trading partner who is willing to trade cryptocurrency with you at exactly the amount you desire using the payment method you are most comfortable with.
Safe: User Vetting
As mentioned before, P2P exchanges also play an important role in ensuring that your counterparty can be trusted.
Platforms do not only source trustworthy merchants to trade with by making them go through an extra application and review process, but they also provide users with additional tools such as the ability to rate, report and block each other and to look up the order completion rate of any given user. These measures and tools further help building trust and reducing the risk of fraud.
Secure: Escrow System
One of the key security features implemented by many P2P exchanges is the use of an escrow system. An escrow system traditionally entrusts a neutral third party with holding the funds of either the buyer or the seller during a transaction. On a high-level, this is how it works: First, the buyer makes the (fiat) payment to the seller. At this point, the seller's funds are held in escrow. This ensures that the buyer does not have access to the funds without making the payment and the seller cannot keep the funds despite the payment being made. Only once the seller confirms that the payment has been made, the P2P platform immediately releases the crypto to the buyer. This is how the escrow system substantially increases the level of security and protection for both parties involved in the trade.
[To ensure that the escrow system works as intended, you need to make sure no transfer is made by anyone other than you and the counterparty. To find out on how to prevent this, click here.]
Convenient: 24/7 customer support
Moreover, many P2P exchanges such as Pexpay often offer 24/7 customer support, providing a reliable safety net for users. This applies to all users who encounter any issues before, during or after a trade. These P2P exchanges often also have appeal management systems in place to resolve disputes between buyers and sellers in a fair and efficient manner.
How are P2P Exchanges Different from Conventional Ones?
P2P exchanges and traditional exchanges are two different platforms for buying and selling cryptocurrencies, though superficially, they may seem similar. There are several fundamental differences that distinguish P2P exchanges from conventional ones.
One of the most noticeable distinctions between P2P and traditional exchanges is the way the price of a cryptocurrency is determined. In traditional exchanges the crypto prices are set by the market. In P2P exchanges, the crypto prices are set by buyers and sellers posting their trade offers. One would traditionally find many more varied prices for a particular asset on a P2P exchange, making it more flexible.
Since P2P exchanges have no intermediary between the buyer and the seller, the total fees for trades and withdrawals usually turn out to be lower than those of conventional exchanges.
[Pro tip: Pexpay charges no fees at all for P2P trading.]
Trade Execution & Order Matching
In terms of automation and control, P2P exchanges are usually less automated and more manual in comparison to traditional exchanges. Since transactions are carried out manually, prices must be compared manually to locate the most advantageous deal. This means that P2P exchanges are optimal for those who prefer a more hands-on approach to buying and selling cryptocurrencies with maximum control as opposed to those seeking automated efforts.
Choice of Payment Methods
P2P exchanges offer many different payment options, such as cash and bank transfers, as well as alternative payment methods like PayPal and Sberbank, which increases the accessibility to a wider user-base. Even those without a bank account are able to trade crypto this way, unlike traditional exchanges that generally have limited payment options and require a bank account to be used.
With flexible prices, minimal charges, a personalised approach and various payment methods, P2P exchanges provide a more effortless and convenient method for trading digital currencies, offering a more adaptable, economical, and accessible solution compared to conventional exchanges when it comes to trading cryptocurrencies.
How to choose the right P2P Exchange?
Choosing the right platform for trading cryptocurrencies has become an increasingly important decision for users as a range of P2P exchanges became available, each having their own strengths and weaknesses.
Our advice is to compare the different P2P exchanges with respect to the following most important factors:
First, security should be the primary consideration when selecting a P2P exchange. The exchange should have robust security measures in place, including KYC identity verification to prevent fraudulent activity, as well as an escrow system to ensure that transactions are secure and the funds are protected. Read on here how you can protect your account from scams and how Pexpay keeps your assets safe here.
Moreover, the supported fiat currencies are an important factor to consider when choosing a P2P exchange. The exchange should support the fiat currency that the user intends to trade in, as it greatly simplifies the process of buying and selling cryptocurrencies.
Low transaction fees are another key consideration, as they can have a significant impact on the overall cost of trading cryptocurrencies. P2P exchanges generally offer lower fees than traditional exchanges, however it can still pay off to compare total fees between different P2P exchanges to find the most cost-efficient option. Transaction fees is not something you need to worry about when trading on Pexpay as it offers 0 fees for every user, regardless if they are makers or takers.
[Learn about the Cheapest way to Buy Bitcoin]
A user-friendly interface is also crucial for most, as it can greatly simplify the trading process and increase the overall experience of using the exchange. An intuitive interface that is easy to use can save time and effort and enhance your crypto journey.
Finally, customer support is an essential aspect to consider when choosing a P2P exchange. The exchange should have a reliable and responsive customer support that is available 24/7 to assist with any questions or issues that may arise.
P2P crypto marketplaces provide a better alternative to traditional exchanges by offering greater flexibility, lower fees, and more payment options for cryptocurrency traders. The key to a fulfilling experience with P2P trading is choosing an exchange which prioritizes security, supports the desired fiat currency, offers low transaction fees, has a user-friendly interface and has reliable customer support.
Pexpay is one of the exchanges offering P2P, here are its features: Supporting over 150 payment methods, 40+ currencies and over 15 tokens, it manages to offer the best price on the market. The best part? Absolutely 0 fees for everyone. Start your P2P Trading journey today.
Beginners’ Guide to Pexpay P2P:
- All You Need To Know About P2P Trading on Pexpay
- How to Buy Cryptocurrency via P2P Trading on Pexpay App
- How to Sell Cryptocurrency via P2P Trading on Pexpay App
- How to Post Trade Advertisements on Pexpay P2P (App)
- How to Become a Pexpay P2P Merchant
- Pexpay P2P Trading FAQs
Disclaimer: Your use of the Pexpay P2P services and all information and other content (including that of third parties) included in or accessible from the Pexpay P2P services is at your sole risk. Our only responsibility is to handle crypto transactions. All payments are final upon completion unless otherwise required by law. Pexpay P2P platform has neither the rights nor the obligations to resolve any disputes arising from a completed payment. Neither Pexpay P2P platform nor merchants shall be responsible for your loss in a completed payment.