One of the best parts about cryptocurrency and the blockchain in general is that it is decentralized. This means that there are no banks or governments that are in control of it. It is basically a free market for currency. However, even though it is decentralized, you generally still need to use a central marketplace to trade it.
That is unless you use a Peer-to-Peer (P2P) trading platform. In this scenario you use a platform to trade directly with other holders of the currency you are looking to trade; in some cases, you are able to buy gift card in Nigeria and sell gift card. There are a number of benefits you’ll get when using this method of buying or selling your cryptocurrency. In this article, we will go over several of them.
Privacy and Anonymity
One of the biggest reasons to use cryptocurrency is the privacy you get from it. There is a level of anonymity that you can’t get when you use a credit card or bank that you get with cryptocurrency. However, when you need to sign up for a marketplace or exchange, you often have to give up some of that privacy when you sign up.
There is a thing called Know Your Customer (KYC) that comes into play for many of these central exchanges so a vigorous identity verifying process is needed for them to let you use the platform.
When you trade on a P2P platform, you have more privacy since the trade is between two private people and are not on a central exchange. Exchanges also keep track of transactions which can be used by third party apps which further erodes your anonymity.
Lower Fees
Most P2P platforms have much lower fees than what you would get from an exchange. Centralized exchanges have a variety of fees that can include deposit fees, trading fees, and withdrawal fees.
On the other hand, P2P platforms often have a more straightforward fee structure which is easier to understand and calculate. The operating costs are much lower on a P2P platform which allows them to keep the fees to a minimum.
If you are a frequent trader then the fees on an exchange can add up to be quite a hefty sum. If you trade on a P2P frequently, the fees will let you keep most of your currency in your pocket.
Increased Security
The weakest link of the blockchain is the exchange. The blockchain is immutable and has a high level of security. All transactions are transparent and verifiable. However, using an exchange means having to come off of the blockchain for the transaction to happen. This is a very weak link that allows it to get hacked.
Many exchanges have a rigorous security system but some of them are still vulnerable. When you hear about millions of Bitcoin being stolen, it is almost always from an exchange.
However, when you use a P2P platform, you never have to leave the blockchain. All the trades happen on the chain and there is far less risk of getting hacked.
