What is P2P Trading? Effective ways of Trading P2P?

Recently due to the government policy in Nigeria where anyone who makes any transaction related to cryptocurrency, he or she will get his or her account blocked immediately. A case scenario is a young man that sends a screenshot in one of our groups saying he made a transaction and then added Ethereum charges, within 5 minutes his account was blocked.

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This implies that the government of the country doesn't want anyone to make any transaction related to cryptocurrency. People have become scared especially Steemians, so many came to my DM and complained and they are scared because they don't even know how to go about their transaction any longer.

In the midst of this situation, I have told them that they can use the P2P method which the government are also still fighting seriously at the moment, though a lot of them don't know what and how the P2P format works and for that reason I have decided to make a comprehensive write up to explain and guide users on what and how to use the P2P method.

What is Peer to Peer (P2P)

P2P which stands for peer to peer in cryptocurrency means the exchange of digital assets between the buyer and the seller without the involvement of a third part or intermediary. This means that P2P is a method of trading cryptocurrency without involving a third party.

In P2P, when there is a buyer and a seller, they both can make their transaction without a third party involve. So there are different exchanges that support this P2P and anyone be you a buyer or a seller must register with this platform and verify your identity so as to be eligible to trade on the platform.

In the exchange platform where the buyers and the sellers create their account, they can place an order for buy or sell as we have sections for buying and selling. The screenshot below is a buying and a selling section in the P2P platform of the Kucoin exchange platform. This is one of the exchange platforms I uses for my P2P trading.

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From the screenshot above, if you want to buy you will use the buy P2P section whereas if you want to sell you will use the sell P2P section. One other thing you need to know is that you must look for a trader who is willing to buy or sell the amount of asset you are willing to buy or sell.

Aside that, you will also have to look for a peer who has your payment method. There are lots of payment method used in P2P such as bank transfer, digital wallets etc., here in my case we have Opay, Kuda and many other financial institutions as means of payment.

Another thing to take into consideration is rate of the user it is always in %. Here you need to check and be sure that the user has a good reputation and also the number of trade he or she has carried out before buying or selling with that person.

What Is A P2P Exchange

Since we have discussed what P2P is all about, let's look at what P2P exchange is also all about. This is an exchange that connect the buyer and the seller together to carry out their transaction without an intermediary. So with the help of this exchange, a buyer or seller can place an order and then look for someone who matches the order and then trade with him or her directly.

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Now how does this work on the exchange? There are few criteria that must be meet before a buyer and seller will transact and this criteria are as follows.

• Both buyers and sellers must be registered and verified members of the exchange platform. They must also place an order specifying the amount and quantity of the crypto asset the wish to buy or sell.

• If the buy order matches the sell order, those involved will now negotiate the process of payment and the platform also provide a means of communication between the two parties. You will see all that is required before making payment, such as the payment method, the charges etc.

• If the negotiation goes well, then the transaction is executed. The buyer and the seller finishes the transfer of funds and of asset and then they rate each other to gain a higher reputation.

Advantages And Disadvantages Of P2p Trading

Everything that has an advantage also has a disadvantage and the case of P2P is not an exception. We have some basic advantages of P2P which I will like to share with us below.

Advantages of P2P trading

Flexibility: One of the major advantages of P2P is the flexibility in transaction. Here the buyers and the sellers come to an agreement before transaction is executed. No one is forced into doing anything he or she doesn't want to do.

No Third-Party Interference: Another major advantages of this method is that there is no room for a third party interference. So the dealing is directly between the buyer and the seller and this helps reduce the risk of fraud.

Transparency: Everyone in the financial market loves to see that his or her transaction is transparent. This will allow anyone around the world to see and verify the transaction since it uses blockchain technology.

Low Cost: The absents of intermediary on this transaction has made the cost to reduce drastically. Hence it has a low or no cost attached.

Disadvantages of P2P trading

Security Risks: There is a lot of risk associated with P2P trading such as fake alert and many more because you are trading with a total stranger hence you need to take all security measures when trading P2P.

Limited Exchange Options: Country's like Nigeria has banned a lot of P2P exchange platform which has made it limited and the available also may not have the method of payment in your country which is also a very big problem.

How Can I Protect Myself from Fraud, Risks in P2P Trading?

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There are many ways one can protect his or her self from fraud, risk in P2P trading and a few of the tips on how to do that are seen below.

• Ensure that you use a reputable P2P exchange platform such as Binance, Kucoin etc.

• Take your time to study how the P2P system works i.e, check the reputation of the buyer or seller and also the payment method and many more. Just be familiar with the P2P environment.

• Ensure to comply with the rules and regulations of your country with regards to the cryptocurrency transaction. In Nigeria you must not anything related to cryptocurrency when transferring money so avoid that to be on a safer side.

• Have a separate account that you will always use to do your transaction on crypto just like you have wallets use for your AirDrop. Once the money or asset is sent you can transfer to your holding wallet or your bank account.

Conclusion

Peer-to-peer as we have seen from the above explanation is a method of transactions in the crypto asset that helps users to have complete freedom and independence in the financial market. Here the need of the intermediary is eliminated completely. So buyers and sellers are incharge here and they trade based on agreement 🤝.

P2P trading as we can see helps users to reduce the cost of transaction, it is also very transparent means of performing transaction as everyone in the world can view the transaction and verify it. It is also secured means of transactions.

Finally, I want to thank you all for reading through my post today. If you have any questions or contributions, please do well to use the comment section of this post. See you all in my next publication.

Disclaimer: ^{This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your research and consult a financial advisor.}