P2P platforms allow users to exchange cryptocurrency quickly and on best terms. Their secure and decentralized - transactions cannot be interfered with by individuals or organizations.
Why do we need P2P platforms?
Such exchangers derive their name from the phrase “Peer to Peer”, meaning “person to person” - from equal to equal. These designations indicate that P2P platforms are designed to quickly exchange cryptocurrency between two users without the intermediaries. Meaning, the buyer transfers funds directly to the seller's wallet and vice versa. Assets do not go through additional accounts.
Special software was developed to automate the procedure for transferring digital assets from one wallet to another. It completely eliminates the need for a third party to participate in the exchange. As a result, the participants in the transaction do not need to wait for someone to confirm the transaction.
Usually, users do not pay a commission for using the platform. But there are sites that can charge a small percentage for their services.
The idea to create a P2P platform was born due to shortcomings in conventional digital money transactions:
- Intermediaries charge high commission.
- With frequent transactions, such problems became too noticeable.
In the P2P platform, all these inefficiencies are eliminated thanks to the automation of the process and totally simplified process of the exchange of assets. A transaction on conventional services can last from several minutes to several hours. On automated platforms, transactions are confirmed almost instantly; only the users themselves can delay the exchange process.
However, for the duration of the transaction, the cryptocurrency is frozen on a special “escrow” account. And in case of any illegal activity of the buyer or seller, the other user may refuse to carry out the exchange. Then the service specialists can check the details of the financial transaction and make a decision in favor of one of the parties.
Advantages of P2P trading
In addition to significant time savings, P2P services have other advantages:
1. There is no intermediary to rely. If problems begin with a conventional cryptocurrency exchange platform, all pending operations will be stopped. Transactions will be frozen. When using P2P services, this problem is eliminated, since there is no intermediary.
2. There is no centralized control. All transactions on P2P platforms are decentralized. No one can interfere with the exchange process. Including government agencies cannot influence the flow of transactions.
3. Security. All transactions are fully protected. Attackers will not be able to steal funds because the parties to the transaction do not transfer private keys to a third party. Only the technology of special escrow accounts is used, which hold funds until the moment when the transaction is completed. And there are no cryptocurrency reserves on the platform itself, so scammers are not interested in trying to hack it.
4. Anonymity. Unlike conventional exchangers, P2P services do not collect user data. No need to pass an AML (anti-money) / KYC (know your customer) check. This allows the parties to the transaction to maintain their privacy.
5. User rating. P2P platforms have the function of evaluating the seller after the completion of the transaction. You can view the volume and number of transactions, the level of trust and numbers of disputes. The rating allows you to choose the most reliable users.
6. No commission. Exchangers operating in P2P mode do not charge for the transaction. Sellers pay the minimum fee. Its size usually does not exceed 1%.
7. Best value for coins. P2P sites do not set the price. This means that the buyer can find the most competitive price.
8. Convenient payment terms. You can deposit or withdraw funds without using bank accounts and payment cards. P2P platforms often have additional payment methods: international transfers, gift cards, phone top-ups, etc.
Thanks to all these advantages, P2P platforms are one of the best options for those who need to buy or sell crypto assets. They are safe, convenient and do not delay the exchange process.
How to choose a P2P platform
There are several key characteristics to watch out for:
- Longevity of the operation. The longer the service runs, the less likely the software will crash. On platforms that have been operating for more than 2 years, all processes have been debugged and refined.
- Reputation. The technology of the decentralized network itself is reliable, but the reviews are still worth reading. If there are any "failures" leading to the loss of funds for the buyer or seller, it is better to know about this in advance.
- Security. It is necessary to learn about the terms for the return of coins involved in some illegal processes. Preferably if the exchange has a tool to deal with such situations.
- Commission. This is the minimum payment on the part of the seller. Its size may vary on different platforms (0.5-1%).
- Payment Methods. You need to make sure that the desired transaction option is connected on the selected platform.Interface. If you plan on using P2P exchange constantly, then you need to test the dashboard. It should be user-friendly.
It's good if the platform has a freeze deposit function. It is needed to increase the level of security. The essence of this mechanism boils down to the fact that at the time of the transaction, the seller transfers the agreed amount in cryptocurrency to a third-party account. If the exchange is successful, the buyer receives it automatically. If difficulties arise, an arbitrator is involved who understands the situation. As a result, the prevailing party will get its own funds back, and the at fault user will lose the rating.