P2P VS OTC — Key Nuances to know
If you are a crypto nerd, you should be aware that cryptocurrency is referred to as the currency of the twenty-first century. Many of them also started investing in it. It is also not unexpected because using cryptocurrencies gives you complete control over your money and the ability to transfer it anywhere in the world.
Users now have access to a wide range of trading models to suit their demands thanks to the growth of the cryptocurrency market. As well as the demand increases, there are many popular crypto exchange platforms founded in the early of this decade. OTC and P2P are the most well-liked and well-reached exchange types among crypto enthusiasts.
P2P Vs OTC
P2P trading entails the direct transfer of assets between people. OTC trading is carried out with a broker’s (admin)assistance between a buyer and a seller.
In this post, we’ll examine both types of trading in-depth, evaluate them, and discuss their advantages and disadvantages for both users and businesses. Let’s begin!
Let us start with the common definition…
OTC Crypto Exchange
OTC is a method that allows traders to bulk trade the crypto assets directly with the admin of the respective crypto exchange platform. OTC deals are conducted face-to-face between two counterparties, enabling the parties to discuss extensive trading without worrying about upsetting markets.
Contrary to other normal crypto exchange trading, buyers and sellers are matched through an order book. The platform acts as a mediator to help negotiate the deal when two persons are matched. OTC desks remove any limitations and restrictions that conventional cryptocurrency exchanges could have, enabling special deals.
How Does OTC Crypto Exchange Work?
The user must log in and finish KYC verification before using the OTC crypto exchange platform. The administrator of that particular OTC crypto exchange will then determine whether the user document is valuable enough for bulk trade. The required amount of money for trading must be connected to the user’s wallet. Users can purchase and sell cryptocurrency at the OTC desk.
The admin will choose the cryptocurrency asset’s pricing. The consumer can now choose their preferred price and order volume before placing their order. The administrator will send cryptocurrency to the user’s crypto wallet address after receiving confirmation.
Why OTC trading is ideal?
Cryptocurrency exchanges frequently experience liquidity problems, particularly when trading large amounts of cryptocurrencies, which causes price slippage during trade. Slippage occurs when there are no more people prepared to sell at the price you’ve set, forcing you to increase your offer above the going rate.
Being the admin of the OTC exchange, business people have a lot of opportunities to earn profit. With the help of a professional, one can Create OTC Crypto trading desk software in a hassle-free manner. And by giving access to a bigger liquidity pool, purchasing cryptocurrencies through an OTC market lowers this risk. Considering that OTC transactions are not actively reported on exchanges, users also value the freedom of anonymity.
Advantages of OTC Trading Software
One of the most alluring features of OTC trading is anonymity. Since you’re only using a broker to trade, you can continue to trade in relative secrecy. No crypto exchange website requires you to register or provide any personal information.
Additionally, the market won’t be impacted by massive purchases or sales because you’ll be able to swap a lot of coins rapidly and without slippage. Due to the lack of middlemen, brokers will charge lower fees than normal cryptocurrency exchanges, making OTC trading more affordable.
As was already mentioned, anyone can move substantial amounts of money through OTC trading. Traditional cryptocurrency exchanges prohibit trading bigger quantities due to order limits.
Drawbacks of OTC Crypto Trading
On the other side, the over-the-counter market has substantial disadvantages. It is therefore essential to be informed of these before making a choice: You must choose a trustworthy OTC broker to manage your funds when engaging in OTC trades, which is why many brokers employ escrow services. OTC trades may take longer than peer-to-peer trading and standard cryptocurrency exchanges since large transactions may take some time to process.
P2P Crypto Exchange
Peer-to-peer, or P2P, is exactly what it sounds like. It is a type of cryptocurrency exchange method that allows traders to trade directly without the need for a third party to facilitate the transactions.
Traditional cryptocurrency exchanges are businesses that serve as intermediaries between buyers and sellers and make money by assessing commissions. Peer-to-peer crypto exchanges, on the other hand, do not require any middlemen because the transactions between the counterparties are totally under the control of pre-programmed software. In contrast to centralized exchanges, peer-to-peer trading systems don’t handle currency payments or hold onto user funds.
How does Peer-to-Peer Crypto Exchange work?
The user must register and log in using their credentials in the P2P crypto exchange. After that, they must finish the KYC verification process. A user must make an order and link their wallet to the appropriate crypto exchange site to purchase cryptocurrency assets.
In the order book listing, the buyer or seller can select the portfolio that best fits their needs. They should both decide on peer-to-peer trade after choosing the buyer and vendor. The seller’s crypto assets are now being held in escrow to be sold. The buyer makes the payment after the order is confirmed. Escrow finally releases the cryptocurrency assets.
Why P2P trading is ideal?
P2P trading is the most preferred choice because of faster transactions, more payment alternatives, and withdrawal options. One of the best deals will be made when the platform is secure and does not permit a centralized authority to handle your money.
And for the business who wants to start a crypto exchange business, P2P crypto trading allows them to earn lucrative profits in various ways. Such as Withdrawal fees, transaction fees, commission fees for helping Ad-based trades, and affiliate markets for foreign fiat conversion rates. These are all possible for businesses with the prominent P2P Crypto Exchange Development service provided by professionals.
Advantages of Peer-to-peer Crypto Exchange
P2P exchanges, when implemented properly, have strong resistance to transaction censorship, are inexpensive to operate, private, and safe. Decentralized cryptocurrency exchanges benefit in every way from not having a single corporation in charge of everything. So, the following are some benefits of P2P exchanges:
Because there is no central authority that may be compelled, P2P exchanges are essentially immune to government involvement. P2P exchanges are managed by software, which results in minimal to nonexistent corporate overhead and, thus, minimal to nonexistent user fees.
Because P2P exchanges are exempt from these rules, trades can be carried out much more privately. P2P exchanges connect traders, enabling them to do deals directly, rather than holding cryptocurrency for their consumers.
Drawbacks of P2P crypto trading
P2P exchanges are not always better than traditional ones; some of their comparative drawbacks include lengthier trade times, less intuitive use cases, and lower liquidity.
Compared to traditional exchanges, P2P decentralized exchanges often have substantially smaller trade volumes.
Trades are performed in such a way that traders must wait until a trade is closed.
P2P exchanges are not at all popular, for instance, among professional traders who require swift transactions to close deals on time.
P2P vs OTC
Each trading method has a unique set of benefits and drawbacks. OTC deals are best used for larger, more secretive trades (especially if you don’t want to influence the market). P2P trades are great for establishing business ties with individuals you trade with frequently. Small deals (as low as $10) and launching your own cryptocurrency company are also wonderful options. Everything in trading depends on what you’re looking for. When it comes to features, they both have many similar features. Such as,
UserPanel
Admin Panel
Multi-currency wallet
Multi-layer security
Multi payment method
User interface
Referral program
Multi-language support
KYC Verification
Two-factor authentication
Some of the features that differentiate them are given below…
P2P Vs OTC Features
Many well-known exchanges have incorporated OTC and P2P features into their platforms; some exchanges do this with only one function, while others combine the two. For example, Binance, a hybrid exchange, offers OTC and P2P services by combining both features to give an advantage over other platforms. Like this, you can also Create Crypto Exchange with all the P2P and OTC features integrated to attract a massive user base.
Given that there are now so many trades operating on a global scale and transacting billions of dollars annually, the need for both OTC and P2P trades. And also, the demand increased since the launch of Bitcoin, which was just over ten years ago. Many businesses are still working to provide trading solutions that will make it easy for players all around the world to trade and transact.
So, for cryptopreneurs, it is the right time to start their crypto exchange as a business. But choosing the type of exchange is based on your business requirements and budget. If you create a feature-rich Crypto exchange platform, then you can stand ahead in the crypto market. With the attractive user interface, you can grab the attention of crypto traders. With that, you can able to earn more lucrative profit. Now you may have the query that…
Where to get the prominent crypto exchange solution?
Once you have decided on the perfect cryptocurrency exchange type (P2P or OTC), contacting the best cryptocurrency exchange development company is important to get the appropriate cryptocurrency exchange software. It’s a challenging task, therefore business owners should pay closer attention to which company best meets their needs. In the cryptocurrency sector, experience is extremely valuable, thus entrepreneurs should make sure their developers have experience working on blockchain-related projects.
Next, research the firm that developed the Crypto Exchange. Find out how many projects the company has worked on; in this situation, reviews from clients are extremely important. It is imperative to confirm that the needs can be met by the company’s services. Last but not least, don’t be hesitant to take a demo because it might provide you with sufficient details about how the project should turn out.
Top FAQs
1. Which is better: P2P or OTC?
For startups, it is based on their own interest and business requirements. By creating a P2P crypto exchange, you can have various revenue-generating ways. If you develop an OTC platform, you can allow your user to bulk trade which may provide you with a market upsurge. But whatever the exchange type, you need professional guidance from a prominent crypto exchange development company.
2. Which Crypto Exchange provides high trading volume — P2P or OTC?
The answer is OTC crypto exchange because it allows bulk trading which means high trading volume. According to a 2020 study from cryptocurrency exchange Kraken, the daily OTC transaction volume has increased about twenty-fold globally since the beginning of 2018, translating to a trading volume of about US$ 300 billion.
3. How long does it take to develop P2P/OTC Crypto Exchange?
The time taken will depend on the method you choose to create crypto exchange platform. When you develop it from scratch it would take around a year. If you go with the White label crypto exchange script, you can start your business within 10 days.
4. How much does it cost to develop P2P/OTC Crypto Exchange?
Like time, the cost also depends on the development method you choose. And also other factors such as
Application development partner
Location of the development partner
The size of the development team
Working on the type of the application
Introducing the Features Based on Needs
But if you hire a prominent Crypto Exchange Development Company, you can get an approximate cost value from their experts. The cost to create a crypto exchange would be around $55,000 to $75,000. If you choose a white label solution the cost will be from $8000 to $14000 which is based on the customization you need.
5. What are the popular P2P/OTC crypto exchanges?
In the current crypto market, many crypto exchange platforms are popular among crypto traders. Such as
Binance — Hybrid crypto exchange
Paxful — P2P ads based crypto exchange
Coinbase — OTC Crypto Exchange
Remitano — P2P crypto Exchange
Kucoin — P2P Crypto Exchange
Kraken — OTC Crypto Exchange
LocalCryptos — P2P escrow-based Crypto Exchange
Huobi — OTC Crypto Exchange
These exchanges also inspire many crypto nerds to create crypto exchanges like them and also they become successful in their business. So, as a startup, you can also start crypto exchange business with the feature-rich white label cryptocurrency exchange script.
P2P Crypto Exchange VS OTC Crypto Exchange was originally published in CryptoStars on Medium, where people are continuing the conversation by highlighting and responding to this story.
