What comes to your mind when someone says “crypto trading”? Hard to understand charts and dozens of different buttons? That’s what many people see. But it doesn’t have to be always that way.
Everyone wants to buy Bitcoin or other cryptocurrencies as cheaply and efficiently as possible. And P2P might be the answer to that.
The more straightforward method of trading without the need to understand charts or different features of crypto exchange.
This guide will teach you What is P2P trading in crypto and how you can use it to make the best trades possible. Let’s dive in!
What is P2P Trading in Crypto?
Peer-to-Peer (P2P) is an exchange of assets between two individuals directly without the help of any centralized authority. The buyer and the seller transact directly with each other. There is no middleman holding your assets during the trade.
However, P2P trading wasn’t introduced by cryptocurrencies, even though many people associate it mainly with crypto. Every trade, that you carry yourself is, in fact, P2P trade. Even when you sell your shoes on the Facebook marketplace.
How does P2P trading work?
Let’s say you are buying a house. You can go to the broker’s office — which acts as a middleman between YOU — the buyer, and the seller, as the centralized authority. The broker usually takes a commission, and this deal comes with fees. Or you can buy the house directly from a seller, without the broker, without the middleman. The whole deal happens directly between two people as a Peer-to-Peer exchange.
You can also think of P2P as Facebook Marketplace or Craiglist…
I hope this parable has shed some light on a practical example of what P2P is. And also its undeniable advantage — no fees, which you would otherwise always pay to the middleman.
Difference between P2P trading and an Exchange
You already know what P2P is. But is it better than traditional trading?
You do not transact directly with your buyer or seller when you buy or sell cryptocurrencies using a traditional crypto exchange. The exchange carries out the transaction. In specific ways, you don’t have complete control over at what point in time the transaction is executed and with what result — for example, what price in the case of a market order.
P2P trading gives you more control over all aspects of the trade. You choose the specific seller or buyer, the price at which you trade, the payment methods, and the time at which the trade is executed.
However, there are some risks due to these advantages, which can be very quickly reduced to a minimum by using a P2P exchange — such as Binance P2P. We choose to mention Binance because we have the most experience with it. But there are dozens of platforms you can choose from.
P2P in action. How can I get started with P2P trading?
If we take a look at what the P2P trading screen looks like:
At the top of the screen, you can select the FIAT currency you want to trade with and specify the payment methods you want to use.
- Now, if you look at the highlighted trader. We will move from left to right.
- First, we have the trader’s name — which is erased for security reasons in this photo.
- Below that, we have written how many orders he has already received and how many of them have been filled.
- Next to it, we have the seller’s price per BTC. If you want to learn more about Bitcoin, here is my article on the history of Bitcoin.
- Furthermore, how much cryptocurrency the trader has available and the corresponding maximum order.
- Lastly, what payment methods the seller accepts
Even though we have a platform that hosts this trade, it is P2P. Why? Because the platform only connects sellers with buyers, similar to Facebook Marketplace for example. Whereas, when you spot trade on Binance, the trade is directly executed by that exchange.
Conclusion:
Peer-to-Peer trading as such is not new, but you probably didn’t know it by that name. More caution is needed when trading cryptocurrencies using the P2P method due to the lack of authority as an intermediary. But it allows everyone more control over the trade itself and zero fees.
Due to this fact, it might not be the best option for beginners. But definitely, P2P is worth our attention and can be advantageous at certain times.