Peer-to-peer marketplaces have seen a rise in popularity over the years despite them being a relatively new way to buy and sell bitcoin.
If you aren’t familiar with what a peer-to-peer marketplace is, they’re a new kind of exchange that matches buyers and sellers via order book. Once matched, buyers and sellers will complete the trade themselves instead of having a middleman complete it for them (as traditional bitcoin exchanges do). Through the use of live-chat, buyers send the information needed to make the payment. Sellers verify the payment in real-time, and once checked, he/she releases the bitcoin from escrow, and the trade is complete.
That’s the gist of it, so if you’re pondering on where to buy bitcoin, peer-to-peer marketplaces are a good option.
Peer-to-peer bitcoin marketplaces personalize the whole trading experience—and there are a lot of benefits in doing so. Buyers can input their preferences, and in turn, they are shown a list of offers that match those preferences. Sellers, on the other hand, can personalize offers themselves—giving them the ability to set partialities like:
- Payment option – what they will accept in exchange for their bitcoin
- Profit percentage – how much sellers will earn on the trade
- Payment window – the time that it will take for the trade to expire
- Location – allows sellers to choose the location of their buyer
- Trade limits – how much the seller is willing to trade
The specific personalization features depend on the platform you’re using, but the best marketplaces have the features mentioned above. Compared to traditional bitcoin exchanges, there is much more interaction between traders on a peer-to-peer bitcoin marketplace, which can result in more efficient trades.
Fixing the problems of a traditional bitcoin exchange
Throughout bitcoin’s history, traditional bitcoin exchanges have remained to be the most popular method of buying and selling bitcoins. However, as bitcoin adoption rose, people began to see the problems of traditional bitcoin exchanges.
First, most traditional bitcoin exchanges require its users to link their accounts to a bank. For people who have access to a bank account, this is not a problem as it even speeds up the buying and selling process for them. However, some people don’t have it that easy.
There is a real unbanked population, and in some parts of the world, it can be challenging to obtain a bank account. Instead of linking their accounts to banks, most peer-to-peer bitcoin marketplaces only require ID and e-mail verification, which makes these platforms more accessible (which is extremely helpful for unbanked populations).
Second, the personalization of trade allows for more efficient trades. Although peer-to-peer marketplaces seem to sacrifice anonymity for efficiency, some people prefer more efficient trades. The ability to live-chat with your trade partner allows users to clarify requirements and verify payments quicker and easier.
Lastly, peer-to-peer bitcoin marketplaces eliminate the excessive fees usually charged on traditional bitcoin exchanges. Since traditional bitcoin exchanges act as a middleman between the traders, the help that they offer does not come free. In most cases, they’ll charge more fees as compensation for their support. Peer-to-peer marketplaces, on the other hand, charge lower fees as the only time the platform interferes is if there is a dispute between traders.
Security protocols on peer-to-peer marketplaces
When it comes to security in a peer-to-peer bitcoin marketplace, there are several protocols in place—all to protect both buyers and sellers. Each platform has its security measures in place, so to give you a better idea, let’s use Paxful—one of the leading peer-to-peer bitcoin marketplaces in the world. On this platform, four main features assure the users that they’re trading in a safe environment:
- 24/7 Community and Customer Experience team – The Community and Customer Experience (CCX) team is there at your beck and call for any questions, clarifications, and disputes that you may have.
- 2-Factor Authentication (2FA) – Before any send out, withdrawal, or log-in, users are required to go through authentication (whether that be via Google Authenticator, Authy, or SMS). 2FA prevents any unwanted actions from ever happening to your account.
- Know Your Customer (KYC) – To further ensure the safety of your account, it’s ideal that you comply with all KYC laws as it gives more accountability to the traders.
- Escrow – Paxful’s escrow service prevents both buyers and sellers from being scammed. It acts as a third-party service that holds the bitcoin until the buyer has fully paid the seller.
All these features create a safe trading environment for traders at Paxful. Other peer-to-peer bitcoin marketplaces may have similar features that protect their traders.
The rising popularity of peer-to-peer bitcoin marketplaces
As mentioned earlier, peer-to-peer bitcoin marketplaces have seen a rise in popularity. The increase in popularity can be attributed to many factors, but the main reason is that people are starting to see the power of peer-to-peer finance.
More real-use cases for bitcoin are being discovered, and peer-to-peer finance is to thank for that. These real-uses include making payments easier (especially cross-border payments), sending remittances, and wealth preservation. Bitcoin is being used as the perfect vehicle to drive peer-to-peer finance forward.
With all the benefits elaborated, it’s worth a shot using a peer-to-peer bitcoin marketplace to buy and sell bitcoin—so what are you waiting for? Give it a chance!