Since the evolution of Bitcoin, Cryptocurrencies have become a buzzword in the world. People are intrigued by the concept of a new currency not held by the bank. Celebrities like Elon Musk and Bill Gates started to endorse this new currency by tweeting about it. People now are more interested in this decentralized network and its immense opportunities.
In current times, there are more than ever cryptocurrency exchanges. Enterprises are now shifting to these development processes to earn revenue and other opportunities.
What is P2P cryptocurrency exchange
A peer-to-peer cryptocurrency is a platform that allows users to trade directly with each other. It does not involve a centralized entity between them for trade or currency exchanges. It is a decentralized system that does not require any third party to look after the transactions.
Since there is no third-party involvement, the users do not have to pay any transaction fees. Since there is no middle man involved in the process, the transaction is between two people only, and thus the speed of the transactions increases drastically. Transactions on the P2P platform are not likely to fail compared to the centralized network.
How does a Peer-to-Peer (P2P) exchange work?
A peer-to-peer exchange helps in a hassle-free crypto transaction by connecting buyers and sellers directly. To connect buyers with preferred, sellers’ match engines are used.
A user can register with the exchange without any identity verification process.
After the registration process, you can go through different buy and sell offers posted on the platform.
Each offer presented has different payment methods, a different rate, and a maximum and minimum purchase amount.
A buyer can select the desired offer listed and directly contact the seller to set up a transaction.
If you are a seller, you can add the desired payment method and any fee involved.
The P2P cryptocurrency exchange uses the ESCROW system to ensure safety.
Therefore this decentralized system is easy to understand compared to the centralized system.
Benefits of p2p cryptocurrency exchange
Since the system is decentralized, there is no involvement of any third party and a direct transaction between the seller and the buyer.
The ESCROW system helps to secure the transactions between the two parties. It holds the funds of a third party until the transaction completes.
There is no third party involved there, for the transaction process charges are less as compared to a centralized system.
There is no need to produce any confidential data on the platform apart from the verification process. The user does not need to provide any banking details, etc.
The system is independent of the centralized system, which means that the computers connected are independent of each other. If one network fails, it will not disrupt other parts.
P2P has the best scalability features. Even if some new clients are added to the network, it does not affect the performance.
Types of P2P crypto exchange
Unstructured P2P network
In this network, each device can make its equal contribution. It is easy to connect every device, but being unstructured, users can find it challenging to search for rare content.
Structured P2P network
The network is tricky as compared to the unstructured network. But it makes it easy for users to find rare content on the network. A software is used that creates virtual layers to put nodes into a specific structure.
Hybrid P2P network
It is a client-server network designed to perform all activities as a server, such as keeping all information about peers and sending responses to requests for that information.
P2P is the core of blockchain. It makes cryptocurrency exchange easy for the users without having any centralized entity. P2P cryptocurrency exchange is easy to use and provides security, and eradicates dependency on third-party intermediates. Thus if you want to step into blockchain technology, P2P is the way. We at The Block Coders offer various P2P cryptocurrency development services.