What is peer-to-peer (P2P) trading?
Peer-to-peer (P2P) trading is a type of cryptocurrency exchange method that allows traders to trade directly with one another without the need for a centralized third party to facilitate the transactions.
Unlike traditional Bitcoin (BTC) exchanges, which typically have strict regulations and require users to go through a verification process before they can access and use the platform, P2P trading platforms tend to be much more relaxed in terms of their requirements.
In P2P trading, you can select your preferred offer and trade directly with a counterparty rather than using an automated engine to execute your transactions. This means you have more freedom to pick the best rate and payment method for your needs—and with lower costs. You can also better safeguard your privacy because you’re dealing directly with a counterparty.
Related: A beginner’s guide to cryptocurrency trading strategies
These factors make P2P trading appealing to users looking for a more simple and straightforward way to trade cryptocurrencies.
How does P2P crypto trading work?
P2P trading platforms work by matching buyers and sellers together to facilitate a trade. The platform will typically take a small fee for each trade conducted, and also require users to store their funds in a separate digital wallet controlled by the platform.
Because P2P exchanges link crypto purchasers and sellers, they’re sometimes compared to marketplaces like Craigslist or Facebook Marketplace. Typically, buyers and sellers can also browse crypto advertisements or create their own.
Most P2P exchanges use a feedback or rating system to protect all participants in the transaction, providing a layer of protection for everyone involved. For example, if you meet someone on social media interested in buying Bitcoin and you’d like to sell, you can’t do so on social media as it wouldn’t be secure.
It’s difficult to establish trust on platforms such as Facebook Marketplace or Twitter, for…
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