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What is peer-to-peer trading?

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What is peer-to-peer trading?

Peer to Peer (P2P) trading occurs when traders directly communicate with each other to buy and sell an asset, and there is no intermediary between them. In this type of trading, the buyer and seller usually register on a platform and place their buy and sell orders at a predetermined price. This platform can be a site like a digital currency exchange or a P2P platform.

What is peer-to-peer trading? How does P2P exchange help users?

P2P trading is one of the easiest types of exchanges that has attracted a large number of users. In this exchange model, you perform the same operations as buying goods from Etsy or eBay, except that the asset being exchanged is digital currency. In other words, in a P2P exchange, you trade a certain amount of a cryptocurrency at an agreed price without intermediaries.

How peer-to-peer networks work

P2P trading takes place in a peer-to-peer network, these networks operate without the need for a central server and have a type of decentralized communication between two nodes. In a P2P network, each exchange party can act as a Seeder or Leecher; This means that users can save and share files without the need for an intermediary. These networks are divided into three categories: unstructured, structured and hybrid.

In unstructured peer-to-peer networks, nodes are randomly connected and are suitable for high-speed activities such as social networks.

Structured P2P networks allow efficient lookups and are used to implement distributed hash table (DHT).

Advantages and Disadvantages of Peer-to-Peer (P2P) Trading

Advantages and Disadvantages of Peer-to-Peer (P2P) Trading

Currently, Peer-to-Peer (P2P) trading is a popular method in the crypto market with the approval of many users. This method offers many possibilities to traders. The positive features of P2P trading are:

  1. Global Market
  2. No need for identity verification (KYC)
  3. Increased security
  4. More diversity in choosing digital currencies
  5. 250 different ways to withdraw and pay
  6. No restrictions on withdrawals or deposits

Also, the disadvantages of a peer-to-peer exchange include:

The possibility of spreading virus files by intruding users

Reduced security and lack of presence of regulatory and legal institutions

The best and most popular peer-to-peer cryptocurrency exchanges for P2P trading

  • Binance P2P
  • LocalBitcoins
  • Paxful
  • Bisq

How to make money from peer-to-peer exchange

There are several ways to make money from P2P trading, including:

  • Start local crypto trading
  • Proper use of arbitrage to your advantage
  • Using payment methods with high demand
  • Receiving digital currency in a passive form, reducing the performance speed at some times for users

On the other hand, arbitrage provides the possibility of buying a digital currency at a low price and selling it at a higher price. If you can buy a digital asset at a lower price on one exchange and sell it on another platform at a higher price, you have used this concept correctly. P2P platforms are a good platform for making money in this way.

P2P trading of digital currencies in the crypto market

The concept of peer-to-peer was first proposed in 1979 by American students and was used in online markets, P2P blockchains, web search engines, etc. Peer-to-peer trading has a lot of fans in the digital currency market. In this type of exchange, people can have an independent business without intermediaries.