Two kinds of bitcoin and crypto exchange platforms exist within the cryptocurrency ecosystem – regular exchanges and their peer-to-peer counterparts.
All transactions (fiat-to-crypto, crypto-to-crypto, crypto-to-fiat) are powered by order books on regular bitcoin exchanges. The platform’s algorithm anonymously matches buyers and sellers based on the value of buy/sell orders.
The story is different for peer-to-peer bitcoin exchanges. Unlike the usual crypto trading platforms, transacting parties on peer-to-peer platforms connect directly and fulfill trading deals.
This is a general overview of regular and peer-to-peer bitcoin exchange platforms, but the two are different on a few more levels. Let’s examine the differences one by one.
Time Required To Complete Trades
The greatest advantage associated with usual bitcoin and cryptocurrency exchanges is time. Since buyers and sellers interact through order books, transactions happen in a jiffy.
On the other hand, it takes quite some time to complete trades on peer-to-peer bitcoin exchanges. Why? Because transfers happen only after peers ensure complete satisfaction wrt genuity of their transacting counterparts.
Also, transactions (involving both fiat money and cryptocurrencies) are considered complete when peers receive the agreed funds in their respective accounts.
Information Of Trading Counterpart
Regular bitcoin exchanges by their very design provide anonymity to traders. So, transacting parties don’t get to know anything about their peers except the order value.
Although, we at WazirX have successfully kept the peer-to-peer nature of cryptocurrency transactions by developing the world’s first P2P engine. Also, traders can seek peers in the official WazirX Discuss Telegram group to fulfill their crypto-USDT trades.
Trading on a peer-to-peer bitcoin exchange begins with an ‘exchange’ of personal information between traders. Peers share name, location, bitcoin/crypto wallet addresses to initiate transactions.
Sometimes, traders even conduct face-to-face meetings to ascertain the source of funds, past crypto trading experience, etc. Few platforms have chat functionalities to help trading peers clarify things before executing transactions.
Besides the above there are few more points of distinction between regular and peer-to-peer bitcoin exchanges.
Trading on usual crypto exchange platforms happens based on digital asset prices generated through the value of trades in order books. On the contrary, users of peer-to-peer platforms can set their own rates to execute a deal.
Very few understand the functionality of peer-to-peer trading platforms. The customer journey can be long and tiring for a new user.
Whereas, with regular bitcoin exchanges, it’s just a matter of setting up an account and finishing a few steps to become eligible for trading.
Trading on peer-to-peer bitcoin exchanges can involve a substantial number of fraudulent incidents as there is no KYC procedure involved.
Dispute resolution could take longer times, with some disputes remaining unresolved. Users are responsible for the security of their funds.
In an incident of fraud or malicious activity, regular bitcoin exchanges can help restore funds, and track the source of the attack/theft due to appropriate KYC/AML procedures.
We try and do our bit in keeping cryptocurrency and fiat funds of users safe. And how?
By performing regular security audits to ensure that the platform is secure enough to buy and trade crypto assets.
To open an account on WazirX check out this link.
Also you can download the app and Start Trading Now!
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