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What is P2P Trading?



On crypto exchanges, peer-to-peer (P2P) trading occurs when users buy and sell

cryptocurrencies directly with one another. Sometimes, an exchange might charge a small percentage as network fees for the transaction while others might not.

P2P trading enables buyers and sellers to make transactions without any third-party involvement and also with their local currency and preferred payment methods. The elimination of third-party occurs because the crypto platform relies more on algorithms to verify transactions. In addition, exchanges sometimes offer rating/badge systems to build trust between participants in the transaction. A buyer or seller will be often advised/prompted to view the ratings or badges before making a sale or purchase.





PROs of P2P Trading


Payment Methods: On a P2P trading network, traders have a variety of payment methods to select from and only have to choose their most convenient method to receive or accept payments.


Global marketplace: P2P network offers a global marketplace where participants can trade with anyone across the world regardless of their location. Buyers and sellers can trade whichever coin in whichever currency they prefer. This is a great option for traders who reside in countries where crypto is either unaccepted or unrecognized.


Low Transaction Fees: P2P trading often requires little to no transaction fees dependent on the exchange. Hence traders can make transactions easily without worrying about additional charges.


Fast Transaction Speed: Typically, P2P traders often experience a faster transaction speed since they have full control of the payment methods.


Secure Transactions: P2P Trading platforms usually offer security options such as encryption and two-factor authentication to initiate secure transactions.






Cons of P2P Trading:


Risk of Fraud: In as much as P2P trading platforms are secure, the transactions are also prone to fraud. There is a high risk that traders can lose money with scammers. To prevent a scam, a participant has to confirm that another participant has met all the requirements before

commencing trade.


Low Liquidity: Unpopular P2P trading platforms sometimes experience low liquidity. This means there may not always be someone available to match a trade order and this results in a longer waiting time to make a sale or purchase which affects the trading price. In this regard, it’s always better to trade on popular exchanges.


Slow Transaction Speed: Transactions can also be slow on P2P trading platforms. If a participant fails to confirm a transaction quickly, it will affect the speed of the transaction.


Unreliable Third-Party Networks: Relying on third-party networks can be a huge disadvantage with a P2P transaction. Sometimes, downtime occurs during the interbank transaction that causes heavy delays and both buyers and sellers tend to assume that fraud is lingering. `Also, issues within third-party transactions might take a long time to resolve.

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