If you have only been trading on the big exchanges, you owe it to yourself to learn about p2p trading. Decentralized as crypto is meant to be.
Cryptocurrencies have presented the best investment opportunities in the past decade. With cryptos gaining more and more popularity every day, we see a massive increase in the number of crypto exchanges.
Most of these exchanges are centralized, i.e., they are controlled by a single entity.
Considering the main goal of cryptocurrencies is to create decentralized networks, even though the tokens themselves are decentralized, a lot of trading and purchasing platforms are not.
But what’s the alternative? Let’s find out
Enter peer-to-peer (p2p) platforms.
In a peer-to-peer network, it is all about choice.
You can buy or sell cryptocurrencies from verified buyers and sellers. You get your choice of sellers, buyers, and price points. Even payment method and verification becomes a choice.
- Paypal is your only payment option? find someone that takes Paypal.
- Are you obsessed with dog-themed tokens and but only want to buy from someone in Japan (because kawaii desu ne)? no problem
- If one seller tries to sell their crypto at a higher price than the market value, you can look for a different seller. You are never forced to accept the rates the exchange sets.
Ok, you say “WOW” so far so good but let’s deep dive a bit into the actual advantages of what we get.
Advantages of a Peer to Peer Exchange
1. Flexible Payment Methods
One of the biggest disadvantages of centralized exchanges is the payment methods. Most of the time, you need to use a credit or a debit card to purchase crypto on centralized exchanges. Moreover, some platforms may not accept payments in your local currency.
P2P networks change all of this by providing a vast array of payment methods. If you find a valid seller from your region, there is a good chance that the seller may accept the local currency. Moreover, a lot of buyers offer various local payment methods that may not require a credit card.
2. Provides a Global Marketplace
P2P exchanges allow crypto transactions between people from any country. Usually, if someone wants to sell some crypto, they’ll post a listing in the exchange. You can then contact the seller from any corner of the world.
P2P exchanges don’t usually ask you for your Personally Identifiable Information upfront. Most of the time, you just have to provide them an email address for the registration process. Apart from that, you can choose to keep your identity completely secure.
On the other hand, in centralized exchanges like Binance or Kraken, there are a lot of verification processes that you must go through. You don’t have to perform KYC verifications in most P2P trades. This is not always true but you do get to keep most of your info to yourself.
In a centralized exchange, all your assets are held by a single company. The security of your assets depends upon the platform itself. On the other hand, P2P exchanges allow you to manage your own security, keys, and coins.
5. Can be Used in Banned Countries
If cryptocurrency trading is banned in your country and you’re still holding some, you can sell it using P2P exchanges. P2P networks are decentralized, and they don’t have a permanent location. All such exchanges operate globally. So even though a government decided to ban crypto, it’s impossible to ban a global network. Maybe a controversial point here but I am just pointing out what’s possible.
TL;DR: The big exchanges are not the only way to trade cryptocurrency.
I hope I made you at least consider doing your own research into what exists in the p2p space and consider diversifying your options. Knowledge is power!
This will be a series of articles on alternative cryptocurrency trading methods and platforms. Stay tuned for part 2 where I plan to try and do a run down of all the p2p platforms out there.