Introduction
P2P trading is a decentralized method of exchanging cryptocurrencies where buyers and sellers can deal with one another directly without the intervention of a middleman. There are several benefits of P2P trading including low fees, freedom in payment alternatives, and higher privacy. While P2P trading carries some risks like scams and fraud, one should be well advised about them.
P2P trading has recently been one of the most used forms of trading in a while now. The trading has shown to be reliable and comes with a lot of security advantages and user-friendly measures. There are a number of reasons why people might choose to trade peer-to-peer (P2P). Here are a few of the most common reasons:
Lower fees
The fees for trading in a P2P platform are generally less than compared to those of centralized exchanges. Unlike centralized exchanges, P2P trading platforms are also not necessary to develop and maintain the same kind of infrastructure.
More flexible payment options
Most centralized exchanges are limited by the number and variety of payment mechanisms they support, unlike P2P platforms. It is especially useful to individuals without traditional banking services.
Greater privacy
Trading in a P2P network is more confidential as opposed to trading at a centralized exchange. Transactions can be carried out without any personal information disclosure to a P2P trading platform when making transactions.
More control over your trades
Because one is directly negotiating the trade with the trader, it becomes more open and the party involved has much more control over the trade. One can immediately withdraw if he or she feels to.
Choosing a reputable P2P trading platform
There are many exchanges out they that support P2P trading. However, not all exchanges are legit some are just scams and frauds out there looking for ways to rake people. Especially if you are new to the crypto industry or a new trader looking to join a certain exchange it’s good to acquire more from the OGs.You can also take a step to personally learn about the exchange you are thinking of joining. However, there are some general factors that one should consider when choosing a platform, such as,
Security features
Security is one of the paramount features of consideration for anyone choosing a P2P trading Platform. Always make sure that the platform has robust security features in place in order to protect its users from scams and other misdeeds from occurring. Some security features that enhance security include:
Two-factor authentication (2FA): 2FA works as an additional security to your account password.2FA is more secure because one cannot easily guess. Some 2FA works in such a way that one is required to enter a code that is sent to the user’s phone. However, other 2FA works by the use of biometric settings. Biometric means that physical features such as face and fingerprints are used to secure the account.
Escrow services: As we have stated P2P is not controlled by a third-party intermediary, it has its own ways of working.P2P offers escrow services to all participants carrying out trade. Escrow service has been programmed to work as the third intermediary as it holds the seller’s cryptocurrency until the buyer fully confirms that they have received the purchased assets.
Dispute resolution mechanisms: The platform should have a fair and efficient dispute resolution mechanism in place in case of any problems with a trade.
Reputation
A clear and good reputation is also a factor of consideration. What achievements has the platform achieved in recent years from its services? Positive feedback from the crowd as they are the individuals who participate in it. One can also read reviews online, this will help get ideas of other users’ experiences with the platform. Always pay close attention to the reviews that mention security, customer support, and overall satisfaction.
Examples of some P2P trading platforms that have been long in the market include:
- Binance P2P
- LocalBitcoins
- Paxful
- Huobi Global P2P
- KuCoin P2P
Liquidity
Liquidity is the amount of trading activity on a platform. A platform with high liquidity will have more buyers and sellers, which means that you will be able to execute your trades more quickly and easily.
In addition may consider getting more information about how the exchange works in terms of fees, customer services, types of cryptocurrency that a particular exchange supports, and if you are comfortable with them. Let’s elaborate on them more:
Fees
In the P2P trading platform, fees are also charged for the services. These fees tend to vary from one platform to another, the currencies being traded and also the method of payment being used during the trade. Comparing the fees would be a great way to avoid platforms that over-charge. Some platforms tend to charge flat fees for every trade, while others only charge a percentage of the trade value.
Number of Supported currencies and payment methods
It is important to have a look at the list of supported cryptocurrencies and make sure they fit your preferences and interests before joining any platform. For some exchanges, there is a wide number of currencies and a good number of payment of methods, while others are limited to a certain number of cryptocurrencies and payment methods.
Customer support
A good and reliable exchange should always be available for customer support service and active 24/7 to assist users in different time zones. In case of any trading misunderstanding. This would be a great help for new users on the exchange. Always read online reviews to get an idea of the quality of customer support offered by different platforms.
Assessing the risk of individual traders
Once you have chosen a P2P trading platform, you need to assess the risk of individual traders before trading with them. There are a few things you can do to do this:
Check the trader’s profile and reputation: Most P2P trading platforms allow you to view their profile and reputation before trading with them. This includes information such as the trader’s trading volume, completion rate, and customer feedback.
Look for red flags: There are a few red flags that you should be aware of when assessing the risk of a trader. These include:
- Unusually low prices: If a trader is offering a price that is significantly lower than the market price, it is likely a scam.
- New or inactive accounts: Be wary of trading with traders who have new or inactive accounts.
- Requesting personal information: Legitimate traders will never ask you for personal information such as your bank account number or social security number.
Avoiding common P2P scams
There are several common P2P scams that you should be aware of. Here are a few tips to avoid these scams:
Never send money first: In a legitimate P2P transaction, the buyer will always send the money first. The seller will then release the cryptocurrency once they have received the payment.
Be careful of fake payment proofs: scammers may try to send you fake proof of payment, such as a screenshot of a fabricated bank transfer. Make sure you always double-check with your bank to make sure that the transaction is successful.
Never trade outside of the platform: It is important to only trade within the P2P platform that you are using. Trading outside of the platform puts you at risk of fraud.
Securing your cryptocurrency wallet
Once you have purchased cryptocurrency through P2P trading, it is important to secure it properly. Here are a few tips:
Use a hardware wallet: Hardware wallets are the most secure way to store cryptocurrency. They are physical devices that store your cryptocurrency offline, making them very difficult to hack.
Use a strong password: Use a strong password for your cryptocurrency wallet and never share it with anyone.
Enable 2FA: Enable two-factor authentication (2FA) on your cryptocurrency wallet for an extra layer of security.
Conclusion
P2P trading is a great way to buy and sell cryptocurrencies. However, it is important to be aware of the risks and always try becoming a victim. This will you keep from scams and other misdeeds associated with virtual online trading.
