As cryptocurrency increases in popularity and the market expands, new ways of selling, buying, and trading cryptocurrencies have emerged. One of these developments is the peer-to-peer (P2P) crypto exchange that allows traders to trade directly with each other without needing an intermediary to facilitate transactions.
It is crucial to understand what P2P crypto exchange entails and its pros and cons if you just got into crypto trading. This article will explore various advantages and disadvantages of P2P cryptocurrency exchanges.
Understanding Peer-to-Peer Crypto Exchanges
Before we look at the benefits and drawbacks of these crypto exchanges, it is imperative to understand what P2P is. This exchange platform aids the direct trading of cryptocurrencies without involving a third party. In short, there is no intermediary to facilitate transactions. It is often a brilliant way of trading and uses escrow services and smart contracts for fair facilitation and secure execution of the exchange.
The Advantages of P2P Crypto Exchanges
Cryptocurrency has become popular and widely accepted, such that you can use it not only in the crypto world but also to pay for services and buy items. For instance, playing blackjack in a casino using cryptocurrency is now possible. So, this exchange platform has come with several benefits, as follows.
➤ Lower Transaction Fees
One thing that makes P2P exchanges favorable is their relatively low fees for transactions compared to other exchange platforms. Once you remove the intermediary, the fee you pay them is deducted. That means both users can save more.
➤ More Privacy
Another good thing, why P2P is appealing is because of its enhanced privacy. The transaction happens between two traders without the involvement of a third party. Furthermore, you don’t need to know who is buying or selling as long as you have confirmed the secure transaction route.
➤ Better Control
P2P gives you total control over your trades. You can set unique conditions and prices while being flexible. Flexibility is something you lack in traditional exchange platforms.
➤ Various Payment Methods Acceptable
P2P is also appealing because it accepts various payment methods. Both users agree that you can transact through PayPal, bank transfers, and other online strategies. Therefore, you can choose your preferred payment method.
➤ Local Services
P2P exchanges can cover local markets. Users have an easy time trading within the region, facilitating transactions in local payment systems and currencies.
Disadvantages of P2P Crypto Exchanges
Even though P2P exchanges have all the benefits mentioned, it also comes with several disadvantages that traders must know.
➤ High Fraud Risk
Even though P2P exchanges offer more privacy, they are also prone to fraud. This is because you don’t need to know your customer. Therefore, you can easily get scammed with a few identity checks and a lack of information about the trader on the other side.
➤ Slow Transactions
The speed of a transaction depends on the payment method you choose. All in all, transactions in P2P are slower.
➤ Lack of Customer Support
Another drawback of P2P crypto exchanges is that they lack customer support. Now that no third party is facilitating the transactions, you have no one to go to if you experience issues during the exchanges.
A Take-Home Message
As cryptocurrency continues to rise, it is imperative to understand everything it comes with if you want to start trading. Learn about P2P crypto exchange and other exchanges to securely facilitate your transactions.