What is P2P trading?

In the world of cryptocurrencies, you can often hear about P2P trading, as merchants and buyers give preference to this type for making deals. But, why?

We will explore P2P trading, its mechanics, advantages, legal aspects and usage for buying cryptocurrencies like Bitcoin. Join us on this journey!

What Is Peer-To-Peer Technology?

A P2P network offers direct connections to other computers or users without a centralized server or a middleman. This approach utilizes resources more efficiently and is less vulnerable to systemic failure.

In this system, each computer (a peer) has an equal status, and they seamlessly share resources such as computing power. P2P is widely used in blockchain networks and file sharing platforms, offering benefits such as reduced reliance on centralized protection.

What Is Peer-to-Peer Trading?

Peer-to-peer (P2P) trading is a way of buying and selling cryptocurrencies where traders deal directly with each other on an exchange app or website. P2P technology is established when two or more personal computers connect via a Universal Serial Bus to transfer files. The cryptocurrency exchange acts as a regulator between both parties to ensure safe trading. If you‘ve been wanting to become a merchant and trade crypto on an exchange for a while, you can find out about it here.

P2P trading platforms provide users, as happened in the market, with fair trading where buyers and merchants list their offers, negotiate terms, and complete transactions. These platforms often include features such as user ratings, escrow services, and dispute resolution to enhance trust and security. This decentralized approach has gained popularity in the crypto world because it suggests increased privacy, lower fees, and fraud prevention.

The Main Features of P2P Trading Platforms

Let’s take a closer look at the key points of Peer-to-Peer trading:

• Broad Assets Variety. These platforms support a wide array of cryptocurrencies, allowing users to trade using crypto they prefer.

• Decentralization. P2P platforms operate without a central authority or server. All users within the network can initiate or complete transactions.

• Payment flexibility. Customers choose multiple payment methods, including bank transfers, crypto wallets, cash and more.

• Escrow Services. They securely kept assets until both sides fulfilled their obligations.

• User Feedbacks. People leave their reviews and ratings in the crypto community.

• Protection. P2P trading often involves fewer identity verification requirements, including KYC (Known Your Customer), compared to centralized exchanges.

How Does P2P Trading Work?

Broadly speaking, the P2P exchange is an online platform or so-called marketplace to trade. When a merchant and customer connect to each other they are going to make a deal, and the exchange activates the escrow tool. It‘s a smart contract that holds the crypto until both sides make an agreement. Instead of signing a paper contract and relying on a third party to ensure the seller gives you the Bitcoin after you pay for it, the escrow tool does everything for you.

Most popular P2P trading platforms accept all well-known cryptocurrency pairs, including BTC/ETH, BTC/USDT and even fiat money.

Key Steps Of Successful P2P Trading:

To help you with trading, we have put together all steps that will match with the most P2P exchanges.

• Registration. Choose and sign up on a P2P platform, provide it with the necessary information, and complete the verification procedures. You can easily create an account that offers P2P trading, like Cryptomus. Cryptomus P2P exchange provides traders with a safe, secure, and reliable platform to buy and sell cryptocurrency. To know more about it, click here.

• Set up protection. Consider the safety of your assets and apply protection to the user account. Create a strong password and enable two-factor authentication (2FA); a second step in the form of an SMS with a one-time code can enhance your confidence in the security of your funds. . We recommend you don’t reuse the same keywords across several sites, and avoid using personal information when creating passwords.

• Creating a listing. Once registered, create a trade listing specifying the crypto amount, price and preferred payment method.

• Matching and picking. The platform’s algorithm matches your listing with suitable counterparts interested in the same crypto, ensuring compatibility. Look for the most suitable and profitable offer, then send a trade request and wait for the merchant to get back to you.

• Negotiation. Communicate with your trading partner through the platform’s messaging system to discuss trade terms, preferred payment methods, and additional requirements.

• Confirmation and Execution. Both parties confirm the trade terms, and the buyer sends payment using the agreed-upon method. Both parties follow and fulfill the agreement, after which wait for the funds to arrive in your wallet. Once you have verified that the correct amount has been received, click “confirm” and release your part of the payment. In any case, don’t finalize the transaction or transfer your money until the cryptocurrency is credited to you. If the merchant requests otherwise, please contact the support team.

• Feedback and Ratings. Traders can leave feedback and ratings, promoting trust and responsibilities within the P2P community.

How To Buy Bitcoin Via P2P Exchange?

Three essential players collaborate to enable safe transactions in the Bitcoin escrow process: the merchant, the customer and the escrow agency. As you may already know, Cryptomus offers a P2P trading platform where you can buy and sell cryptocurrency. We’ve written a detailed guide for you below on how you can purchase Bitcoin via a Cryptomus P2P exchange.

To buy Bitcoin via a Cryptomus P2P exchange, follow these steps:

• Go to the Cryptomus website.

• Create an Account. Sign up for an account and complete any necessary verification processes. With an account, you will be able to trade cryptocurrency, set prices and choose payment methods. You can sign up using Telegram, Google or Tonkeeper accounts.

• KYC-Verification. Take care of your assets at the beginning and go through KYC-verification (Know your customer). The screenshot below provides instructions on how you can do this.

• Start Trading by going to the main wallet page and clicking on the P2P trading wallet tab, then select “Trade now”.

• Set Up Filters and Browse Offers. Use the platform’s search features to find Bitcoin sellers who match your preferred payment method, region and price range.

• Choose The Most Appropriate Offer. Be sure to double-check the minimum and maximum amounts of Bitcoin available for purchase. If everything meets your requirements, click “Buy”.

• Confirm The Terms Of The Transaction. You will see three important fields: “I want to pay”, “I will receive”, “Commission”. Enter the amount you wish to pay, and the conversion will be done automatically. If you agree with the terms, click “Buy”.

• Contact With The Merchant. After confirming the term, wait for a message from the merchant. Discuss the details once more. If both parties are satisfied, send the funds to the seller.

• Complete the Deal. Once you receive Bitcoin, confirm the transaction on the Cryptomus and leave feedback for the merchant.

Advantages of P2P Trading

P2P trading gives users several essential benefits:

• Decentralization. As we mentioned earlier, unlike traditional centralized exchanges, P2P trading allows users to directly exchange assets with each other without intermediate middlemen.

• Lower Costs. By cutting out intermediaries, users often pay lower fees compared to centralized exchanges.

• Flexibility. Users have the freedom to choose from a variety of payment methods and transaction conditions.

• Global Access. P2P trading platforms enable users from around the world to connect and trade without geographical restrictions.

• Privacy. Direct interactions and the option for anonymous transactions protect users’ identities.

Traditional Trading vs. P2P Trading

We’ve prepared vital points related to the comparison of P2P trading and traditional one. You may find them in the table below:

Feature	Traditional Trading	P2P Trading
Intermediaries	Traditional Trading Trading is done through intermediaries such as brokers or centralized exchanges.	P2P Trading There is direct interaction between buyers and sellers on the platform.
Control	Traditional Trading Exchanges have control over trades and funds, KYC procedures.	P2P Trading Users have more privacy over transactions and fewer identity verification requirements. But still, there are some verification procedures (KYC).
Fees	Traditional Trading Often higher due to intermediary commissions.	P2P Trading Lower fees as there are no intermediaries despite the platform.
Variety of Cryptos	Traditional Trading A limited selection of crypto is available on the centralized exchange.	P2P Trading A broader range of crypto for buying and selling.
Security	Traditional Trading It depends on the exchange's security measures.	P2P Trading In-built escrow services and user ratings enhance security.
Payment Methods	Traditional Trading Limited to methods supported by the exchange (bank transfers or fiat deposits).	P2P Trading Wide range of payment options, including cash, crypto wallets, and bank transfers.
Trading hours	Traditional Trading Limited to the exchange’s trading hours.	P2P Trading Trading operates 24/7.
Speed	Traditional Trading Transactions may be faster due to liquidity.	P2P Trading Choosing an ad, further negotiations, and confirmation all affect speed.

So, today we’ve gone over P2P trading. This type of trading is revolutionary, and it’s catching on with exchanges. The key features of P2P trading are decentralization and the lack of intermediaries but the final choice still depends only on your preferences and needs.

Thank you for your attention! Please tell us your opinion about P2P trading. Write it in the comments.