The Advantage of Trading Bitcoins Through a Peer-to-Peer Marketplace Over A Traditional Exchange

Since the dawn of bitcoin, people have been using traditional bitcoin exchanges to buy and sell their bitcoins. If you don’t know how a traditional bitcoin exchange works, they usually go about their business via order books. If you wanted to buy bitcoin, you’d set a buy order and then a middleman would match you with a seller and help you both out complete the trade. Basically, you’re matched with a trading partner and then there is little to no interaction. Everything is carried out through the middleman. They’re extremely easy to use but they also have their drawbacks. Mainly, they’re pretty expensive to use and although the no-interaction aspect of it can be viewed as trading with more privacy, it isn’t as efficient as it could possibly be.

Recently, there has been a rise in popularity in another kind of exchange: peer-to-peer bitcoin marketplaces. The model isn’t as easily understood by many as its predecessor, but it’s starting to gain popularity due to the creative ways people can create opportunities for not only profit but for survival.

What is a peer-to-peer marketplace?

You can view a peer-to-peer marketplace as a more personalized traditional bitcoin exchange. These peer-to-peer platforms also match buyers and sellers but instead of having a middleman help them carry out the trade, the traders are tasked to complete the trade on their own.

It sounds like more work but there are a lot of advantages that come with having a more personalized trading experience. To understand these advantages, let’s first go through the trade process.

  1. The offer list.  On peer-to-peer marketplaces, there are literally hundreds of payment options available. You’ll be able to buy bitcoin with cash, bank transfers, and even a wide array of gift cards. Once you set your preferences (what currency you’ll be using, payment method, the denomination of your payment method, etc.), you’ll most likely be taken to an offer list. From there, you’ll be able to choose who you trade with. Obviously, the factors vary per platform, but generally, you’ll want to choose an offer that has a seemingly reliable vendor, reasonable requirements, and a high return rate of bitcoins (in most cases, vendors will be able to set their own profit percentage, so choose one that will get you the most bitcoin for your dollar!).
  2. Trading. After successfully choosing an offer, you’ll be taken to an individual trade page where you can submit the requirements of the vendor. Once you submit all the requirements, give the vendor some time to verify your payment.
  3. Release. Once the vendor verifies your payment, he/she should release the bitcoins from escrow (a service that holds all the bitcoins until all requirements are met). Voila! You’ve just bought your bitcoins in a peer-to-peer marketplace!
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*Note: Processes vary per peer-to-peer platform. The process mentioned above was modelled after one of the biggest peer-to-peer marketplaces in the world — Paxful.

Advantages of trading on a peer-to-peer marketplace

Now that you know how the trade process goes, it’s going to be easier to understand how trading on peer-to-peer marketplaces can be better than trading on traditional bitcoin exchanges. Essentially, it all boils down to one thing: more power.

“Power” in this sense refers to the number of control users have on peer-to-peer marketplaces. This is the most attractive aspect of it for both newbies and experts alike. On traditional bitcoin exchanges, middlemen help you throughout the whole trading process. Although that could sound more appealing to newbies, it’s important to know that that help doesn’t come free. There are usually extra fees added to compensate for the help given to the traders—and when you’ve been trading for a while, “extra fees” shouldn’t be in your vocabulary. Although peer-to-peer marketplaces charge fees as well, they charge significantly lower compared to traditional bitcoin exchanges.

Other than that, there are a few common features found on peer-to-peer marketplaces that make trading more efficient. Here are a few of them:

  • Personalized offers – As mentioned earlier, vendors have the ability to create personalized offers. There are tons of settings for them to choose—including profit percentage (how much bitcoin buyers will be getting on the dollar), payment window (how long the trade is going to last before it expires), the currency of choice, and even countries (the offer will only be shown to a specific location). With personalized offers, buyers are able to find what they’re looking for and choose an offer that suits their needs.
  • Live trade chat – Although not all platforms may have this feature, some of the very best peer-to-peer platforms have it and it makes trading much easier—especially if you’re a newbie. When engaged in a trade, this is a feature that allows buyers and sellers to interact directly with one another—allowing buyers to clarify requirements and vendors to properly verify payments. It also allows people to form business relationships that could beneficial for years to come.
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The peer-to-peer revolution

These are just a few things that peer-to-peer marketplaces have to offer. If you delve deeper into specific platforms, there are more benefits for you like special security measures, quality customer support teams, and bitcoin affiliate programs that will help you make a great passive income.

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