The Peer to Peer exchange is one of the old forms of exchanging Cryptocurrencies among the known parties. We can directly say it as a “person to person” mode of transaction. P2P platforms match the people who make the orders in order to carry out the process.
The way P2P Exchange works
- The User- Both the Buyer and seller gets registered on an Exchange Platform
- KYC Verification of the users takes place.
- The user who would like to buy Cryptocurreny would Place a Buy Order
- The Buyer then gets a his wallet address.
- The matching engine matches the buyer with the right seller.
- The buyer and seller have a convo between them and they come into aggerment on terms of trade.
- The Escrow which is based on smart contract-holds seller’s Crypto assets that has to be sold.
- Mean while, The buyer will deposit the payment required for the Crypto assets to be purchased
- The seller then Confirms the payment
- Escrow then releases the Crypto assets, transferring the same to Buyers wallet address.
- The asset held by the buyer can then be transferred to a cold wallet.
The advantageous features of P2P Exchange
Low trading charges
As most of the process is completed by the parties involved in a transaction, the exchange platform won’t put up high charges for trading.
Since there is no third party involved in the process, the exchange does not hold any funds and supports only user pairing thus making it Secured.
Unlike CEX where they will ask complete about the individual while signing up to the platform, P2P doesn’t ask any such details. No KYC authentication process is involved in P2P Exchange.
No Government intrudence
The Non-involvement of third party makes it free from any government intrudance.
Free to select Cryptocurrencies / Multiple Cryptocurrency usage options
The users can exchange a wide range of cryptocurrencies among them if needed.
Even at one part of the country, the crypto transaction becomes restricted, the rest of the system remains unaffected.
The exchanges may provide services globally as well as locally.
No withdrawal or Deposit limits
This gives the user to add or remove cash when ever needed
Use of Fiat currency for Buying
Unlike DEX, fiat currencies can be used to buy Cryptocurrencies and is much easy to use.
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