In this article, we will review the workings of these platforms, explore their features, and introduce you to our comprehensive guide on the best bitcoin and crypto peer-to-peer exchanges.
What Are Peer-To-Peer Crypto Exchanges?
A typical crypto exchange avails the infrastructures for crypto participants to buy or sell cryptocurrencies. That said, there are several frameworks that these exchanges utilize to go about facilitating trades. Some implement a fully centralized platform where they dictate the proceedings of the entirety of the processes involved in purchasing crypto.
On the other hand, some platforms incorporate a semi-centralized system, which offers a level of freedom to users, and only exerts their authority to eliminate disputes. The last set of platforms enable a hands-off approach where an autonomous system, in conjunction with smart contracts, implements a fully decentralized exchange platform.
What Are the Differences Between Centralized Exchanges and Peer-To-Peer Crypto Exchanges?
Well, you might be wondering: Which class do p2p crypto exchanges fall under? P2p crypto exchanges implement a semi-centralized network and allow buyers and sellers to network directly to ensure that the process is smooth and inexpensive. In essence, they provide a platform where buyers can access sellers who are willing to exchange cryptocurrency for fiat currencies. That said, buyers only need to enter the price that best suits them, and the platform will automatically match them with sellers who agree to these terms.
Once the network matches users, and they agree to predetermined conditions, the seller transfers the agreed number of cryptocurrencies to the network’s escrow. The crypto would only be released to the seller as soon as he or she produces evidence of payment. You will agree that these steps vary from the rigid system found in centralized exchanges.
In some cases, p2p exchanges offer over-the-counter services, which allow matched users to negotiate and facilitate exchange physically.
Why Do People Utilize P2P Cryptocurrency Exchanges?
To Access A Cheaper Way to Buy or Sell Crypto
As stated earlier, p2p networks have effective models that slash the charges on successful transactions, while an average centralized crypto exchange would demand that users utilize their established payment facility for all executed orders. From our explanation of the workings of a basic peer-to-peer network, you can see that there are one or two processes, that find a way around the cost-ineffective services of centralized exchanges, implemented on these networks. Hence, the charges for transacting on these platforms are lower than their centralized counterparts, since these networks do not function as the sole enabler of transactions.
To Evade KYC And AML Procedures
A majority of p2p crypto exchanges forego the KYC and AML procedures that are mandatory for users of centralized exchanges. The only exception is when buyers adopt KYC as one of the requirements interested sellers must comply with. Apart from this exception, the p2p crypto trading network allows users to buy bitcoin instantly. There is no time wasted on verifying the identity of the platform’s participants. While some could argue that this practice further erodes the already tainted reputation of crypto, it is, however, true that KYC rules limit the concept of decentralization that fuels the crypto narrative.
To Access More Payment Options as Regards Fiat-To-Crypto Currency Exchanges
One recurring limitation of centralized crypto exchanges is their inability to avail enough payment methods for users willing to exchange fiat currencies for cryptocurrencies. That said, p2p crypto exchanges, on the other hand, supports an array of payment options that even include cash payments – for those that offer over-the-counter services like Localbitcoin. This functionality stems from the networks’ decision to allow sellers to set payment methods that best suit them. And so, interested buyers could match with the sellers with a payment option that is most convenient for them.
To Have Autonomy Over Their Holdings
In a majority of the peer-to-peer cryptocurrency exchanges we have today, it is not mandatory to utilize the wallet of the platform for crypto deposits. Once you pay the buyer and submit the proof of payment, you could decide to receive your crypto in the platform’s wallet or other wallets that you must have added to your account. By choosing the latter option, it becomes very unlikely that you will lose your coins in the event of an attack on the platform’s wallet. This model beats the full custodian services found on centralized exchanges, which forces users to hold crypto in the exchange’s wallets to execute trades.
Having explored the benefits of opting for peer-to-peer crypto exchanges, it is crucial to introduce you to some of the factors that you should consider before adopting one.
What Are the Factors That Should Consider Before Choosing A Peer-To-Peer Exchange?
Always Check for Liquidity
Liquidity has become an important metric for gauging the reliability of crypto exchanges. As such, we advise that you take this aspect of your research seriously. For one, the speed at which the platform can match you with sellers very much depends on this metric. Besides, the more people are willing to trade on this platform, the more likely that you will get good deals. Try as much as possible to avoid platforms with below-par ratings in terms of liquidity and trading volume. Instead, you should only join exchanges that can match your orders instantly, regardless of the time of day it is.
Ascertain That the Platform Supports Your Chosen Cryptocurrency
While liquidity is a vital criterion for analyzing the viability of a p2p crypto exchange, however, basing the entirety of your analysis on this metric is not ideal. A platform could boast superior liquidity and still not support your chosen cryptocurrency. As such, we advise that even while researching liquidity, you should ascertain that the exchange has trading infrastructures for the cryptocurrencies you plan on adding to your portfolio. This approach would allow you to know if the exchange has the infrastructure in place to cater to your trading needs.
The Legality of The Platform in Your Location
Owing to the crypto regulatory trends that countries are increasingly adopting, you must determine the legal standing of cryptocurrency in your region before even dabbling in the crypto market. And even if crypto is legal in your location, it is still important to verify the legality of the p2p crypto exchange in your location. The failure to do this might unnecessarily subject you to all sorts of legal troubles. And so, we advise that you do comprehensive research to confirm the regulatory requirements for crypto exchange platforms, as stated under the rules governing their activities, and whether your p2p trading network complies with them.
The Transaction Fees of The Platform
Even though we have already stated that p2p crypto exchanges charge less for their services, yet, it does not mean that you should not do in-depth analysis on the transaction fees of each platform under consideration. Some exchanges set competitive charges while others implement transaction fees policies that might seem unreasonable. Besides, you should consider the volume of trades you are looking to perform in the long run and how the transaction fees would accumulate over this period. By so doing, you can ascertain that charges do not eventually add up into monstrous figures.
The Customer Service Culture of The P2P Network
The same way it is a standard requirement to review the customer support systems of traditional platforms, we advise that you take the time to explore the customer service culture of p2p crypto exchanges before adopting them. Customer support plays a major role in the success or failure of this class of crypto exchanges, as it determines whether a platform can settle disputes arising from the break-in communication between buyers and sellers. It is also helpful when a platform offers articles or guides that would help new users familiarize themselves with the policies of the network as well as share insight into the workings of some of the features of the site.
Another indicator to look out for is the capacity of the p2p exchange to avail customer support in different languages, especially if it claims to provide services to a global market. Ensuring that your p2p network has a support system in your local language makes it easy to communicate your plight or even to utilize the services available on the site.
The Security of The Platform
When it comes to anything related to crypto, you should never take security with levity. This notion holds as crypto thefts and scams continue to rank as the biggest travails of the crypto industry. Hence, we advise that you take security seriously. Review all of the website’s security features and how they measure up against security standards. For one, ensure that the platform avails multi-factor authentication systems, which introduce another tier of a protective layer on top of the username-password defense mechanism. With this, you are certain that your activities and funds on these platforms are safe.
Also, since the network would hold crypto, on behalf of their users, in escrow, the platform ought to do everything within its power to protect users’ funds. And in the event of a hack, the platform must have procedures in place that would help users claim lost coins.
The User Experience of The Platform
The user experience should feature in your research because it projects how easy it is for users to navigate sites. P2p crypto exchanges have a model that is similar to that of a dating site. And so, the same level of simplicity that the latter adopts should govern the website layout of platforms looking to enable a p2p network to facilitate the exchange of cryptocurrencies. The design should reflect thoughtfulness, on the part of the platform’s administrators, to make navigation easy and fast. It also helps when the platform has adopted mobile-friendly designs and layouts, which spurs users to access the network on the go.
The Payment Options Accepted on The Site
While p2p crypto exchanges normally give users the liberty to use the means of payments that is convenient for both the user and the buyer, it is, nonetheless, important that the payment options popular with users of the platform aligns with yours. Here, you ought to verify that these payment systems are available in your location and how long it will take to receive payments, which could also determine when the platform releases the crypto to your wallet.
How Did Cryptolinks Compile Its List Of Top Bitcoin And Crypto P2P Crypto Exchanges?
As it is with our culture, we are aware of the importance of p2p exchanges and have taken up the responsibility to provide quality research material for crypto practitioners, regarding this topic. Knowing fully well that participants have varying needs and interests, we have, therefore, ensured that our analysis aligns with the recommendations listed in this guide.
To go about this, we first examined the legality status of the platforms mentioned on our list. With this assessment, we could determine that the networks have the legal backings to run a global brand. Next, we checked the liquidity and the number of coins that each platform supports. This review entailed that we relate the customer base of the network and the average volume of trades that it facilitates in a day.
After getting this information, we analyzed the security measures of each platform to ascertain the level of protection that these platforms avail their users. Thereafter, we assessed each p2p crypto exchange’s feedback mechanism to score their customer support system. Platforms offering customer services in languages other than English had extra points.
Not forgetting that almost-negligible transaction fee is one of the major selling points of p2p crypto exchange, we ensured that only platforms with competitive charges featured on our list. Similarly, we put the user experience of these networks in the spotlight to discover how easy it is to navigate their website. Lastly, we checked to see the popular payment options of each exchange and how easy it is for users to meet payment requirements.
At the end of these rigorous processes, we found 6 p2p crypto exchanges that you could consider for your trading needs. Take a closer look at the pros and cons of these platforms and get informed before making a decision.