https://medium.com/coinscapture/know-the-difference-between-exchange-and-p2p-exchange-e80fe102fa8a?fbclid=IwAR14Oz7CCfpFvVRPT_VwBjOWClOCCtCZte_WONiW6oGDD7Qh6envXZVG9Yw
Nowadays, the most trending topic is “Cryptocurrency Trading” which can be done in two different ways, either through Exchange or Peer-to-Peer exchange. But the confusion is which one to choose? This guide will help you to understand the working of each and decide the trading platform that may suit you the most.
How does an exchange work?
Regular exchanges are actual companies having their own stock of cryptocurrency for which they set their own exchange rate. At this point, they take your fiat cash through different payment gateways and trade with their own rate. In the beginning, these companies take fiat currency via different payment gateways.
To initiate the transaction, the buyer has to provide his valid identification (For e.g. KYC). After verification, the transaction executes and the cryptocurrency gets transferred in the buyer’s wallet. But the drawback is that these exchanges are owned by companies having their staff managing and handling all the interaction for which they charge.
How does a P2P exchange work?
P2P is different. These exchanges act more like a match-maker, matching the buyer and seller instead of initiating the trade right away. The matching is done on the basis of the price and what type of payment is accepted by the buyer or seller. After matching, if the buyer gets convinced with the seller’s offer. The buyer has to send a trade request and if the seller accepts, the trade is initiated and the cryptocurrency is locked in escrow. Both traders communicate mutually and complete the trade. Once the payment is done, the locked cryptocurrency is released from the escrow and deposited in the buyer’s account.
This was a small summary of working. Before selecting, please go through the following points that can ease the pain of selection.
- The exchange should allow users to control their crypto funds.
- Should have up-to-date security.
- They should not be vulnerable to the government for enforcement of administrative limitations.
- The operations must occur at a very cheaper rate.
Comments
Post a Comment