P2P (Peer-to-Peer) trading is a trading format employed by crypto exchanges to allow traders from different regions to connect and trade their coins with the presence of a third party. Trading on P2P platforms is more flexible as it is not controlled by any central authority, unlike centralized trading platforms.

You do not need charts and market indications to conduct trades on P2P trading platforms. Also, transactions are primarily free, swift, and secured. In this article, we discussed how P2P trading platforms work, their types, as well as merits and demerits.

How do P2P crypto trading platforms work?

The simple mechanic behind the cryptocurrency trading platform is that it creates a marketplace for crypto assets buyers and sellers to connect and conduct trades leveraging Telephony, media streaming, or file-sharing networks for connection.

Transactions on these P2P platforms are usually free, unlike trades conducted on centralized exchanges. Also, users save their crypto holdings in a different platform wallet.

With data encryption, customers’ privacy and transaction details are well protected. But, P2P platforms are not censored; hence, you can encounter vendors with fake identities lurking to steal users’ funds. However, to avoid this, duly check for vendors’s reputations before initiating any trade.

Types of P2P networks

To better understand how P2P networks work, let’s take a quick look at the types of P2P networks. Outside of crypto trading P2P platforms, there are a variety of different P2P networks available, each with its unique features and benefits:

●    File-sharing P2P network

This P2P network is common as it enables users to transfer files like books, music, and videos. This network has many legitimate uses however, lawbreakers also use it to download copyrighted files.

●    Telephony or VoIP

Telephony networks enable users to connect via phone call without any central server or telephone firm. Alongside phone calls, Voice Over Internet Protocol allows you to make video conferences.

●    Media streaming

Popular streaming service providers like YouTube use P2P streaming to share content with customers.

Advantages and Disadvantages of P2P Crypto Trading Platforms

Naturally, every innovation has its benefits and challenges. Below are some of the advantages and disadvantages of peer-to-peer cryptocurrency trading platforms.

Advantages

P2P crypto trading platforms have numerous merits, which include:

• Multiple payment methods

After connecting with your buyer, you can pay with various payment methods such as credit cards, PayPal, and crypto assets like BTC or ETH.

• Secured buying and selling platform

P2P trading platforms offer you a global trading platform where you can sell or buy crypto assets from anywhere. In addition, your transactions are safe and secured, as it is protected with encryption and two-way authentication.

• No Sanction Interference

As any central body does not guide P2P platforms, it is not obligated to obey any country’s ban or sanction on crypto trading. Hence, you can trade anywhere at any time.

• Community and customer support

Most P2P trading platforms have huge communities where users discuss promising coins, news, and other vital indexes to improve your experience as an investor.

• Accessible Marketplaces

As a seller or buyer, P2P platforms provide marketplaces where you can paste your ads to attract prospective customers with discounts and favorable payment terms.

• No trading fees or commissions

P2P crypto trading platform only connects buyers with sellers and vice versa. Hence, transactions are free.

• Flexible trade orders

It gives you more control over your transaction by allowing you to set your trade conditions, price, and quantity to your preference, a feat you cannot achieve on centralized platforms.

Disadvantages

Below are some of the common disadvantages of P2P trading platforms.

• Low liquidity

When compared with centralized exchanges, P2P platforms have smaller liquidity, meaning a match for your trade order may be unavailable sometimes. While waiting, your preferred asset price might increase or decrease.

• The risk of scams

P2P platforms lack central authority, so you are exposed to the risk of being scammed by fake traders. Ensure you trade with a trusted vendor to keep your funds safe.

• Slow trading speeds

Selling or buying on P2P crypto trading platforms can take time, as transaction completion depends on the availability of your vendor to mark your order from his end.

Conclusion

To initiate trades on a P2P crypto trading platform is simple. As there are many P2P crypto trading service providers, conduct thorough research to choose your preferred one in terms of robust security, reputation, supported currencies, fees, payment method, customer support, and the like.

Register your selected provider, move to the P2P section, browse through the vendors’ adverts, and select the one that suits you. Type in the crypto amount you wish to buy/sell and wait for the vendor to complete the order. Exercise patience and caution to avoid making costly mistakes.