A Complete Guide to P2P Trading

Crypto trading is one of the trending investment practices in the present day. The main reason behind the popularity of crypto trading is that it occurs via peer-to-peer trading and hence offers more privacy on transactions than the traditional mode of trading. P2P or peer-to-peer trading is, thus, a decentralised and straightforward mode of coin trading. 

In the above context, all crypto enthusiasts must know the ins and outs of peer-to-peer trading.

So keep reading to know more

What is peer-to-peer trading?

Peer-to-peer trading refers to the direct exchange of coins between two traders without any involvement of a centralised third party. Individuals can use their preferred payment method and seal the deal at a price both parties agree to. Thus, buyers have the freedom of purchasing coins at lower rates and sellers have the opportunity to make as much profit as they want.

How does P2P Trading work?

P2P trading platforms work similarly to any other e-commerce trading platform. Sellers advertise their coins on various P2P trading platforms, encouraging buyers to purchase them at an affordable rate. These platforms are similar to marketplaces where individuals can buy and sell crypto coins.

P2P platforms directly connect a seller to a potential buyer while charging a minimal fee for the service. These platforms also use feedback systems to protect buyers from scams.

How to initiate a P2P crypto exchange? 

The steps to initiate a crypto trade are as follows:

Step 1: Choose a P2P trading platform that perfectly suits your needs.

Step 2: Create your account on that platform using strong passwords. This helps to secure your transactions from scams and risks.

Step 3: Research thoroughly and select the currency you want to trade in. Deposit the currency in your account to start trading.

Step 4: Check out the ads to find a suitable offer. Once you find an offer that fits your budget, connect with the seller to start your trading journey.

What are the advantages of P2P trading?

Peer-to-peer trading offers several advantages, such as:

Flexibility of payment method

There are crypto traders from across the world. Therefore, one of the biggest advantages of crypto trading is that traders have the freedom to use a payment method convenient for them. They are at liberty to even use crypto coins as a payment method.

No trading fees involved

The P2P platforms connect buyers and sellers directly. Hence, during P2P trading, you do not need to pay any extra fees.

Free of restrictions

Several countries have strict regulations for crypto trading. However, since P2P trading connects traders directly, no such restrictions can be imposed on them.

Access to a global marketplace

There are traders from different countries involved in P2P trading. Hence, traders across the globe can connect directly with each other and ensure a smooth trade.

Offers privacy

Traders do not need to share contact details or other personal details during trading. This protects the privacy of a trader without any interruptions in the trade.

Live chat while trading

Sometimes, a buyer might have queries or discussions with the seller before trading. P2P trading allows live chat during trading without the intervention of any central system. This ensures that traders can easily clear all their doubts regarding the trade.

Posting customised ads

Sellers can easily post customised ads on a P2P platform to attract potential buyers. This offers flexibility to sellers as they are free to customise their offers by including different discounts and terms of payment.

Charges are flexible

Traders can choose the price they want to sell or buy coins. This gives them more control over their trade.

Instant transactions

Transaction speed varies with the payment method. Credit card transfers are often processed instantly, whereas bank transfers take a few days. However, completion of a transaction generally takes between 20 minutes to 3 working days.

Secured transactions

During a P2P transaction, several security features are involved, such as encryption and two-factor authentications. This ensures a secured trade as the traders know their account details and funds are safe during transactions.

What are the disadvantages of P2P trading?

On the flip side of the P2P trading coin, you can encounter certain risks that you must be aware of:

Trading speed is low

A trader may back off midway through trading. There is also a possibility of delay in transferring funds from a buyer's side. This is often frustrating since there can be a considerable change in the price of that coin due to this delay.

Liquidity is less

There are often situations when no buyers or sellers are available to meet the price requirement for trading a coin. This also delays transactions, causing a change in the coin's market price in the meantime.

Risk of scams present

As the peer-to-peer trading system is free of government intervention, you can be a victim of several types of scams. These include posting false information or using a fake profile. Sellers generally do these to take advantage of buyers online. Hence traders should take precautions such as conducting a thorough check on the seller or going through the seller's ratings before proceeding with the trade.

P2P trading V/S traditional trading

P2P exchange is a popular and easy coin trading method considering the associated advantages. With a little awareness and security measures, you can easily and immensely benefit from P2P trading.