Everyday many new users join our platform. And they don’t what a P2P exchange is. In this article, we will tell you in detail what P2P exchange is and how it works.
P2P or peer-to-peer means that all participants in the system have equal rights, and there is no hierarchy in it. This is a characteristic that decentralized models share, and one of these models is blockchain technology.
In trading, the term peer-to-peer indicates that all exchange transactions are carried out directly, and there is no intermediary between the participants.
P2P exchanges offer a different approach: counterparties transfer fiat currency directly to another user’s card, account, or wallet, and the site itself acts as a guarantor of the transaction. This means avoiding commissions for depositing fiat on exchanges and makes trades more profitable – you only pay a commission to the seller.
First, users agree on the terms of the deal: sellers publish ads, indicating which currency and how they are willing to exchange within the amount they have. If the buyer is satisfied with the seller’s terms, they open a deal.
At this point, the service freezes the cryptocurrency on the seller’s internal account, ensuring that the seller cannot withdraw money until the buyer abandons the transaction or it turns out that he has not transferred the funds within the allotted time.
Further, the buyer of the cryptocurrency must transfer the currency according to the specified details provided by the seller and inform him as soon as the transfer is completed. If the funds are credited to the seller’s account, then he closes the deal, and the cryptocurrency is debited from his internal account in favor of the buyer.
In the event that something went wrong during the transaction, the counterparties open a dispute, into which the exchange’s support enters. This happens, as a rule, in two cases:
This can happen because of a mistake made by the users themselves or due to technical problems, for example, network failures, due to which notifications are received with a delay, and balances in the bank or payment system application may not be updated immediately. But this often becomes the reason for fraud: unscrupulous counterparties can even fake certificates or screenshots of transfers in order to convince users of the integrity of the transaction.
If the funds have not been credited to the account, but the counterparty assures that they have sent the funds, it will not be difficult to detect fraud: most likely, the attacker will try to rush the victim so that he closes the deal as soon as possible, after which he will appropriate his money for himself.
Advice: do not close the deal until the funds are credited to the account, no matter how much the counterparty persuades you to do so. In case the deal cannot go through, open a dispute and provide support with the necessary evidence in order to quickly understand the issue.
The method of P2P exchange has gained popularity not only among beginners but also among experienced traders due to its advantages. But it also has its drawbacks. Let’s first list the advantages of peer-to-peer exchanging, of which there are many.
Exchange rate. You do not need to make a deposit to buy cryptocurrency: after completing the transaction, you can immediately withdraw the coins to your crypto wallet.
Savings on commissions. You do not pay commission for fiat currency deposits but transfer it directly to another user’s account. As a rule, within one payment system or bank, there is no commission for transfers within the established limit.
Available for beginners. Users unfamiliar with crypto trading do not need to understand orders and technical analysis to trade on a P2P exchange. The exchange process is intuitive and easy for beginners to understand.
Sellers set commissions themselves. This is a plus for those who publish their own ads on the exchange. But if others have a lower commission, users are more likely to choose a competitor’s offer.
The P2P platform Bitzlato offers great features that personalize your cryptocurrency trading experience. On Bitzlato, you have a great opportunity to buy and sell cryptocurrency fast and easy.