What’s an Exchange Platform?
An exchange platform enables cryptocurrency users across the globe to exchange digital assets with each other. They are of two types: Centralized and Decentralized.
- Centralized exchanges involve intermediate facilitators to conduct the transactions. For the transactions to get processed, the users have to submit the legal documentation for verification purposes.
- Decentralized exchanges waive off the involvement of third parties and act as a trade matching engine. DEXs allow users to do anonymous transactions with less information about each investor.
What’s a P2P Exchange?
Peer-to-Peer or P2P exchanges, as they are known, allow the participants to conduct transactions within the friend-zone. It means users can exchange only with their counterparts. A P2P exchange limits the trade to a private zone rather than posting it publicly.
Let’s take a deeper dive to understand P2P exchanges and their benefits.
P2P Bitcoin Exchanges
The P2P Bitcoin Exchange is one of the old methods of exchanging cryptos among the known parties, followed by the Hybrid Exchange. It is a direct form of Person-to-Person mode of transaction. P2P Bitcoin exchange platforms match the people who make buy & sell orders to regulate the processes.
How does it Work?
- In a P2P network, both the buyer and seller post a trade ad. The P2P exchange filters all the ads concerning the time and location.
- If a user wants to buy a bitcoin at a specified place, then the P2P exchange connects him with the person who is selling the bitcoin.
- This method makes it easy for both parties to carry out the transaction at the right time & place along with a reliable payment gateway that’s easy to access by both the parties.
Benefits of P2P Bitcoin Exchanges
- Highly Secure: The transactions occurring on P2P exchange are stored on a blockchain network. Also, KYC details of the involved participants are stored in the network. So, one need not worry about the loss of their orders and personal information.
- Transaction Censorship: The transactions once entered into the database are immutable and transparent. The proceedings are maintained securely in a public ledger, which minimizes the chances for hackers trying to steal the transaction details.
- 100% Privacy: P2P bitcoin exchange platforms can maintain a state of complete trust between the parties. As there is no third party involved in the operations, thus complete privacy of transactions and accounts are maintained.
“A P2P exchange will connect the participants and allow them to manage their operations without acting as an intermediate. In case any problems or disputes arise, then the platform itself helps to ease up the process.”
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