Experts have claimed that cryptocurrency is currently on its way to becoming a central legal tender, only digitized and more transparent. While this remains to be seen, one has to concur that the use of cryptocurrency for transactions is rapidly growing. One of the widespread transactions is
peer-to-peer crypto (P2P) trading. This article analyzes the essence of P2P crypto trading and its pros and cons.
What is Crypto Trading
Crypto trading involves
buying and selling cryptocurrency to profit from the changing value of the digital asset or currency purchased. Peer-to-peer crypto trading is a sub-form of crypto trading that allows users to trade in crypto directly on decentralized and independent exchange markets. Many P2P trading platforms help buyers to connect and match to make the trade more accessible and faster. Usually, the venue hosting the business and matching traders mandates that users store their currencies in a
digital wallet. They would also require a small fee for every transaction done on the platform.
What are the Pros of P2P Crypto Trading?
P2P crypto trading comes with several advantages, hence its widespread popularity. Some of the pros of p2p crypto trading include:
- This form of crypto trading works in an independent and decentralized manner. Users can take charge of their transactions in whatever form without needing an intermediary or broker.
- Trading arbitrage is made more accessible in the p2p crypto trade. Essentially, users can buy a cryptocurrency for a lower price and then sell it at a much higher price on another platform, relying on factors like market volatility and liquidity.
- The legal tender for performing transactions comes with multiple options and is relatively easy to navigate. Parties only have to pair up with others that have the same token as they do.
- Due to its independent and decentralized nature, transaction security in the p2p crypto trading platform is through the roof as it uses encryption and two-factor authentication for all transactions.
What are the Cons of P2P Crypto Trading?
Undoubtedly P2P crypto trading makes things a lot easier; however, it does have a few disadvantages.
- P2P crypto trading, for all of its perks, cannot be relied on for fast transactions. The transaction is held up or rendered incomplete if one party fails to do all that is necessary on its end.
- Liquidity remains a big con for the p2p trade. Decentralized transactions are not as widely accepted as their centralized counterparts, so there is not enough liquidity to complete the p2p transaction.
- With p2p trading, there is always the lingering risk of being defrauded. Buyers and sellers can often get conned without extra care to validate transactions.
- Notably, there are no refunds in p2p transactions. Also, in cases of dispute, the affected party may have to foot the bills and stress as there is no mediator to mediate.
Conclusion
Although a lucrative trade, crypto trading requires extensive research on the proper technique or method. Do well to seek the consultation of experts and other knowledgeable sources before you engage in direct p2p crypto trading.
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