Peer-to-peer (P2P) trading refers to the direct exchange of cryptocurrencies between users without the involvement of middlemen. Through escrow services, feedback/rating systems, and dispute resolution, P2P exchanges link buyers and sellers while also adding an extra degree of security.
Global accessibility, a variety of payment alternatives, no transaction fees, and tailored offers are some benefits of peer-to-peer trading. The disadvantages include lesser liquidity and slower trading speeds compared to centralised exchanges (CEXs).
Introduction
Peer-to-peer (P2P) trading refers to the direct exchange of cryptocurrencies between users without the involvement of middlemen. Through escrow services, feedback/rating systems, and dispute resolution, P2P exchanges link buyers and sellers while also adding an extra degree of security.
Global accessibility, a variety of payment alternatives, no transaction fees, and tailored offers are some benefits of peer-to-peer trading. The disadvantages include lesser liquidity and slower trading speeds compared to centralised exchanges (CEXs).
What Is P2P Trading?
P2P cryptocurrency trading describes the direct exchange of cryptocurrencies between users without the involvement of a middleman or third party. This contrasts with utilising a CEX to purchase and sell cryptocurrencies, where you are unable to conduct business with counterparties directly.
A CEX would assess current market values and choose the best moment to purchase, sell, or hold your cryptocurrency using charts and market order aggregators. When you're ready to purchase or sell, you place your order with the exchange, which then handles the transaction on your behalf.
You might not obtain the precise price you desire depending on the sort of order you place because of impacts like slippage. On the other side, P2P trading allows you complete control over price, settlement time.
How Does a P2P Exchange Work?
P2P exchanges are comparable to Facebook Marketplace in that they both link buyers and sellers. Think of them both in these terms. However, because the counterparties are strangers and it can be challenging to build confidence, buying or selling something on Facebook Marketplace might be challenging.
What happens if the vendor accepts payment but then decides to ban the customer and refuses to provide them the item they ordered? In this case, fraud causes the customer to lose money.
P2P exchanges seek to safeguard consumers and sellers by protecting transactions and lowering the likelihood of fraud in addition to bringing them together. Thanks to feedback and rating systems, buyers and sellers may browse cryptocurrency advertisements and submit their own ads while still being protected.
Additionally, the P2P exchange employs escrow to protect the cryptocurrency being purchased and traded until the transaction has been approved by both parties. For instance, Binance will escrow your Bitcoin if you are selling it for fiat currency (BTC). Once you've received the fiat money, you may confirm the transaction, at which point the buyer's wallet will get the BTC.
Both parties have the option of contacting Binance Customer Support or filing an appeal with the counterparty if they are unhappy with the transaction. However, keep in mind that the appeal must be submitted while the order is still being processed, so do it now.