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How Do Escrow Services Protect Users From P2P Scammers?


Role of Escrow Services in P2P Trading

Peer-to-Peer trading is the oldest way to trade cryptocurrency. A Peer-to-Peer crypto exchange is a decentralised platform which supports the direct buying and selling of digital assets between users. It does not involve any third-party intermediate for transactions. P2P services influence technology to overcome the cost of the trade, enforcement, and information asymmetries that have traditionally been managed using third parties.

The P2P platform offers different services such as payment processing, information regarding buyers and sellers, and quality guarantee to their users.

Peer-to-Peer trading became more popular because it allows traders more control over pricing, settlement time, and type, which is impossible in a centralised exchange. With the increase in the number of traders in P2P dealings leading exchanges like Binance also entered into the P2P space.

P2P Crypto Exchange Development Offers Various Advantages:

  • Multinational Marketplace
  • Numerous Payment Methods
  • Lowborn Trading Fees

And there are some disadvantages too, such as:

  • Trading Speed can be low sometimes
  • Liquidity could be a challenge
  • Unwanted Frauds can happen

How can P2P Crypto Exchange Operators overcome these challenges?

Faster Trading Options

Peer-to-Peer Exchanges use faster trading engines that help two parties to find each other quickly and easily. Once the two parties connect with each other, they can efficiently settle the trades. 

Liquidity Problems

In comparison to a centralised exchange, a P2P exchange have less liquidity. However, there are some methods available through which this challenge addresses and solves up to a certain extent:

Listing types of crypto assets

Adding various payment forms to attract traders

Having access to multiple order books

Escrow to prevent P2P Crypto trading frauds

What is ESCROW?

Escrow refers to a third party holding digital assets or money on behalf of the other two parties in the transaction. Various P2P marketplaces use the Escrow system to secure funds and prevent fraud. 

P2P marketplaces such as Local Coin Swap secure cryptocurrency on behalf of the buyer and seller when the trade completes.

The Escrow system makes buying and selling cryptocurrency safe by protecting both buyers and sellers in the trade. The Escrow system ensures that the crypto being traded exists and that the buyer receives the crypto once the payment completes.

Escrow to prevent frauds:

P2P crypto exchange development companies integrate the Escrow system to prevent fraud on these exchanges. Escrow assures that the buyer places an order, and the sellers’ assets automatically transfer to a provisional deposit account.

The funds are held as a part of the guarantee until both buyer and seller give the confirmation of the trade completion.

If in case, in the buyer fails the trade, the Escrow service returns the assets back to the seller when the negotiation time of the trade is over.

The P2P exchange development company guarantees to protect the rights of the buyer & seller using the Escrow provision. Also, if the buyer makes the payment and the seller fails to release the assets, the buyer can open an appeal with a P2P exchange. However, the P2P exchange operator asks you to provide some proof for it to work.

Once the exchange operator is confident that the buyer payment is processed to the seller, the assets in the Escrow accounts transfer into the buyer’s reserve. Thus, the method ensures that both buyer and seller can trade risk-free methods.

Feature of P2P trading Cryptocurrency:

Free Ad Posting:

It is one of the features of P2P trading becoming popular among users. Buy/sell advertisements can be posted on the platform free of expense. Along with this, the users can share ads on their social media handles too.

Trade in Cash:

Peer-to-Peer crypto exchange help parties connect with each other. The parties connected can choose the way of the method for making payments. The exchange allows traders to meet offline and trade their assets in cash.

Prestige management:

You can rate your trading experiences with this feature. When a user ranks the trading experience with the trading party, this helps in building the confidence of other traders.


The characteristics of a P2P crypto exchange can be improved by partnering with the right P2P crypto exchange development company. At Blockcoders, we help build a ready-to-use, feature-rich P2P cryptocurrency exchange with high security and a highly intuitive UI design.

We offer white-label P2P crypto exchange services with built-in features. We also provide customised crypto exchange platforms from scratch.

Schedule a free demo with us or Connect with us to share your needs and requirements for the project for a custom P2P crypto exchange development.

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