With the invention of the Peer-to-Peer crypto exchange, traders can now exchange assets such as digital currency via a transparent process without the need or interference of a third party such as banks. Currently, there are marked improvements that resulted in a rapid increase in options to buy varieties of cryptocurrencies on the P2P crypto exchange. In this article, we aim to define what Peer-to-Peer crypto exchange is, its importance, and also the difference from OTC Trading.
Peer-to-Peer Crypto Exchange—What is it?
Also known as P2P exchange, for short, it’s a private crypto platform that allows the exchange of cryptocurrencies without requiring processing from a third-party financial institution making it difficult to falsify or overwrite ledgers.
How does it work?
A P2P network is usually a network of users around the globe with no standing main server or a third-party admin controlling the stream of information. Information shared is usually stored in the user’s or node’s hard drive. There’s a small fee charged for each transaction.
Let’s drive home the point using this analogy. A wants to buy cryptocurrency from B. B can’t use social media handles like Facebook or Whatsapp because it’s not P2P, and he can’t trust A enough to follow through with the payment if he eventually receives the virtual currencies. This is where P2P platforms come into the picture. You could even check their reputation before committing your money or doing any transaction.
Importance of P2P Transactions
Below is a list of key factors that boosts the adoption of cryptocurrency.
Guarantees secure transaction
Security features are prominent on P2P transaction platforms. They include key features like two-factor authentication and encryption to support safe trade. This will boost the user’s confidence when transacting on the platform.
It boosts customer support
New investors with little or no cryptocurrency knowledge are usually reluctant to invest their money at first. They assume they will be scammed with their money.
However, this is not always the case as transactions are uniquely registered on blockchain technology. Data available on this platform cannot be wiped out like other platforms.
A user must be certified that the transaction is complete before funds are released by the centralized exchange. This bolsters trust among users and also trust in the system.
It cut down costs
The exchange charges are usually so small that they are almost negligible. Aside from those extra charges, users buy and sell crypto at almost the same price. If this was done outside the P2P crypto exchange, users might be required to buy at a higher amount than they are willing to.
It supports multiple payment methods
P2P connects buyers and sellers, thereby providing a variety of payment methods. For example, users could decide to pay using Paypal or credit cards or to use a variety of virtual currencies such as BTC, ETH, LTC, etc.
This feature is not readily available on local cryptocurrency exchanges that have a limited number of cryptocurrencies they operate in. The need for conversion on P2P crypto exchange has also been eliminated as there is no need to convert to other assets just to acquire cash.
Users can set their price
P2P crypto exchange has afforded users the right to set the price for their cryptocurrency. The price set by a specific user may not be the same price or general price obtainable by other users.
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A final note
On a Peer-to-Peer crypto exchange, you can be assured of the fact that your data is private and is not shared with any third party or Government agencies. You can take advantage of the volatility of the global crypto market to make a good profit without the Government or its regulators interfering with the process.
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