What is P2P trading and how to use it

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P2P trading, or peer-to-peer trading, is the trading of cryptocurrency directly between users without the participation of intermediaries. P2P exchanges match buyers with sellers and secure transactions through escrow services, review and rating systems, and dispute resolution.
The benefits of P2P trading include worldwide access, multiple payment methods, zero transaction fees, and personalized offers. However, it also has its disadvantages, such as slower transaction speed and lower liquidity compared to centralized exchanges (CEX).
IntroductionP2P trading, or peer-to-peer trading, is the trading of cryptocurrency directly between users without the participation of intermediaries. International P2P marketplaces are popular due to their variety of payment methods and low trading commissions. However, such trading also has its disadvantages, such as relatively low transaction speed and liquidity. In this article, we will discuss the pros and cons of P2P trading and how to benefit from it.
What is P2P tradingP2P-торговля позволяет пользователям покупать и продавать криптовалюты друг другу без участия посредников. Она отличается от покупки и продажи криптовалют с помощью централизованных бирж (CEX), где нельзя совершать сделки с контрагентами напрямую.

CEX используют графики и агрегаторы рыночных ордеров для оценки текущих рыночных цен и определения оптимального времени для покупки, продажи или хранения вашей криптовалюты. Когда вы готовы купить или продать, биржа вносит ваш ордер в книгу ордеров и проводит сделку от вашего имени.
Depending on the order type, slippage may occur on a centralized exchange, causing the order price to differ from what was desired. On P2P exchanges the conditions are different: they give you full control over the choice of price, settlement time and user with whom you want to trade.
How does a P2P exchange work?P2P exchanges connect buyers and sellers similar to Facebook Marketplace. However, buying and selling on Facebook Marketplace can be more difficult because it can be difficult to trust strangers.
What if the seller receives payment and then blocks the buyer and does not send him the purchased item? Then the buyer will lose money due to fraud.
However, P2P exchanges not only connect buyers and sellers, but also protect their transactions by reducing the risk of fraud. Thanks to reviews and ratings on cryptocurrency marketplaces, users can easily choose offers from other users or create their own ads.
Additionally, P2P exchanges use an escrow service that holds the cryptocurrency being bought and sold until both parties confirm the transaction. For example, if you sell Bitcoin for fiat money, Binance will place your Bitcoin (BTC) in an escrow service. Once you receive the fiat and confirm the transaction, the BTC will be transferred to the buyer's wallet.
If one party is unhappy with the transaction, they can file an appeal to resolve the issue with the counterparty, or ask Binance support to intervene. Please note that an appeal must be filed while the order is being processed while it is still pending.
Benefits of P2P tradingGlobal marketOne of the benefits of a local P2P exchange is that it provides access to a global market of cryptocurrency buyers and sellers. Some P2P exchanges are available in hundreds of countries, allowing you to trade cryptocurrencies with people around the world in minutes.
Many payment methodsP2P exchanges often offer more payment options than traditional exchanges. For example, Binance P2P offers more than 700 payment methods, including cash. It is suitable for those who prefer personal transactions or do not have access to a bank account.
Zero trading commission for takersSome cryptocurrency exchanges charge a fixed commission or percentage per trade, while others allow transactions for free. Be sure to read the terms and conditions before choosing a P2P exchange.
Secure transactions using escrowSome cryptocurrency exchanges use an escrow service to protect buyers and sellers. It holds the funds and releases them to the counterparty only after both parties have fulfilled the terms of the transaction.
In addition, a transaction on a P2P exchange must be completed within a certain time. If the buyer does not make a fiat payment within the specified period, his order is canceled and the cryptocurrency is returned to the seller's wallet.
Personalized offersSellers have complete control over the sale price, exchange rate, payment method and quantity of the asset. Buyers can also specify the price, payment method and quantity. Once the parties agree to the terms, they can enter into a deal.
Disadvantages of P2P tradingLower speedOnce both parties confirm the transaction, the P2P transaction can be completed almost instantly. However, one of the parties may delay the transaction for various reasons. In traditional trading, there is no need to wait for the buyer or seller to confirm the transaction.
Low liquidityDue to the process itself, liquidity on P2P exchanges is lower than on centralized exchanges. If you want to make large trades, over-the-counter (OTC) trades or a standard exchange may be better for you.
How to make money on P2P tradingP2P trading is a convenient way to invest in cryptocurrencies. It allows you to trade directly with other users without the transaction fees found on traditional exchanges. There are three ways to make money from P2P trading:
Fiat currency arbitrageP2P trading opens up the possibility of arbitrage with fiat money. For example, there are more than 100 fiat currencies available on Binance, which allow you to make money on the price difference between them.
To do this, before making a purchase, you need to calculate the price difference and potential profit. Below is an example of how to use price differences.
Trading BTC/USD: If the buy price is $21,000 or €23,100 (USD and EUR markets have different prices) and the sell price is $20,800 or €22,880, buying Bitcoin with USD and immediately selling it back with USD will result in a loss $200 or €220 (sale price minus purchase price).
BTC/EUR trading: If the buy price is $21,364 or €23,500 and the sell price is $21,182 or €23,300, buying Bitcoin with USD and selling with EUR will generate a profit of $182 or €200.
The example above shows that buying BTC with dollars and selling it with euros can be more profitable than buying and selling on just one market.
Arbitration between different exchangesP2P trading provides many opportunities for arbitrageurs, as prices often differ significantly between exchanges. Many traders try to make money on this difference.
To do this, they buy assets on one platform and sell them for a profit on another.
For example, if a Bitcoin sells for $21,000 on Exchange A and $21,100 on Exchange B, then by buying it on Exchange A and immediately selling it on Exchange B, the buyer will earn $100 per Bitcoin.
Placing advertisements for purchase and saleYou can place an ad on a P2P exchange, indicating the desired asset to buy and sell and the price at which you are willing to make a transaction. Once your ad is posted, the users who see it will decide whether they want to trade with you.
If another P2P user decides to make a trade with you, they will send you a trade request. Once you accept it, both parties will be able to fulfill the terms of the transaction. If your price is higher than the market price, you will earn more.
For example, you could post an ad to buy Bitcoin for $20,000 and another ad to sell Bitcoin for $20,200. This would allow you to earn $200 for each Bitcoin you trade.
Arbitration risksAlthough arbitrage can be profitable, it comes with certain risks and costs. For example, changes in exchange rates may cause the value of an asset to decline. If the price falls before the trader has time to sell the asset in another market, he may suffer losses.
In addition, bank fees for transferring assets between markets can reduce profits. There may be other indirect costs, such as transaction costs and lost profits from unprofitable investments.
How safe is P2P trading?P2P trading is considered secure, but the degree of its reliability depends on the specific exchange and its security measures. Older P2P exchanges have been criticized for increasing the risk of theft and fraud, but many new P2P platforms have significantly improved their security systems.
Today, leading P2P exchanges ensure user safety through escrow services, regularly updated security measures, and a strict identity verification process, among other things. But even with strong security measures in place, any trading activity involves risks, and P2P trading is no exception.
In conclusionP2P trading is the buying and selling of cryptocurrencies without intermediaries. It allows you to select prices, counterparties and timing of transactions. P2P trading is similar to Facebook Marketplace, but with an added layer of security through ratings, ratings, and escrow services.
P2P exchanges provide access to a global market of users and a variety of payment methods, including cash upon meeting. P2P transactions can be slower and less liquid than transactions on centralized exchanges, but if you're willing to wait and want to personalize your trades, you can benefit from arbitrage and other P2P trading opportunities.
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Risk Warning and Disclaimer: The following materials are provided “as is” without warranty of any kind for general reference and educational purposes only. This information should not be considered financial advice or a recommendation to purchase any specific product or service. The value of digital assets may be volatile, increasing the risk of loss of investment. You are solely responsible for your investment decisions. Binance is not responsible for your possible losses. This information does not constitute financial advice.