P2P exchanges enable direct, commission-free crypto transactions between users.

P2P Exchanges: Complete Guide on How to Buy and Sell Crypto

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Exchanging cryptocurrency to fiat or back on specialized platforms is not always profitable due to commissions, service fees and limits. In some cases, it is even impossible due to restrictions imposed by crypto exchanges.

But what if blockchain network users could sell and buy cryptocurrency from each other directly without intermediaries, commissions and additional conditions? Such a possibility does exist. This interaction mechanism between crypto and fiat money owners is called a P2P exchange. We are going to discuss it in this article.

What is P2P exchange?

P2P is an abbreviation of the word combination "peer to peer". The name perfectly conveys the nature of the mechanism. After all, the exchange transaction is conducted not between the end user and a service but between two owners of funds. The third-party or intermediaries do not participate in the procedure.

Of course, they almost do not participate, as tokens are practically never exchanged directly. After all, usually the interaction between users is carried out via an exchange or an exchanger. The exchange guarantees that the transaction will be executed and that both participants will fulfil their obligations, i.e., transfer the designated funds to each other.

The Binance P2P platform does not charge a commission for transactions. However, in some cases, the guarantor operates for a fee. It sets a commission for its services, but this fee is much less than the one that must be paid when exchanging cryptocurrency on a specialized service. P2P is a settlement between two users. This kind of exchange is an alternative to cryptocurrency exchangers.

We've written an article on how to buy cryptocurrency with a bank card.

P2P exchange is the solution when bank cards can't facilitate crypto transfers.

P2P exchange is relevant in cases, when it is not possible to transfer cryptocurrency to the exchange and back from Visa or MasterCard cards. The only way to exchange tokens to fiat is direct interaction between users.

We also recommend reading our article: «Cryptocurrency Exchanges: Work Principle, Popular Services».

Advantages and Disadvantages of P2P Exchange

P2P exchange has both pros and cons. The advantages include:

  • Security. Direct interaction between users may not be as secure as an exchange on a particular platform. This is not true as on a P2P exchanger, you can see the statistics of the buyer or seller, and you can understand whether you can deal with them or not. Besides, almost all exchange services offer their clients escrow security of the transaction. This means that funds will be transferred once both parties fulfil the terms of the transaction.

  • Flexibility. There are no limits or tight restrictions in P2P exchanges. Users can create their request, specifying in it any funds transaction amount. Alternatively, they can choose from the offers of other market participants.

  • No commissions. Service fees at P2P exchange are either not charged or very small. Typically, even if there is a commission, it does not exceed 1% of the transaction amount. However, remember about the commissions of the blockchain network. In the case of P2P exchange, it is often pledged by the platform in the transaction amount.

  • Choice of payment methods. Since the transaction participant transfers funds to another user and not to the service, the choice of ways to execute the transaction is not limited.

  • Stability. P2P is a fully decentralized system, so taking it out of balance is almost impossible. That is not the case with a regular cryptocurrency exchange.

P2P exchange combines security, flexibility, and low fees.

There are minuses, too. The following are the main ones: 

  • The possibility of receiving illegally earned money in the course of the exchange;
  • Low liquidity as the transaction may fail due to low user activity;
  • Hacker attacks — during a direct exchange between token holders, it is easier for attackers to get their personal or payment data;
  • The rate of currency purchase on the P2P platform, in most cases, will be higher than the official exchange rates.

As you can see, the pros still outweigh the cons.

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Popular P2P Platforms

Today, peer-to-peer exchanges offer many different marketplaces, including: 

  • Binance P2P. A convenient service that works with a large number of tokens and fiat currencies. It is part of the same-named cryptocurrency exchange. Verification is required. The main advantage is reliability.

  • Bybit P2P. A user-friendly exchanger with no verification. The main plus of the service is the ability to make a deal for a small amount.

  • OKX P2P. A relatively young Chinese cryptocurrency exchange with a P2P exchange function. Verification is obligatory here, so the reliability of sellers can not be doubted. Exchange offers start from $30-40.
    Most popular P2P exchange platforms include Binance, Bybit, OKX, Huobi, Bitzlato.

  • Huobi P2P. Service of the Chinese cryptocurrency exchange of the same name. Pros include a large number of exchange offers and user-friendliness. Verification is mandatory.

  • Garantex. There are many offers, among them are applications for small amounts of assets. Verification is not required, but it is better to complete it. It will allow you to increase the limits and exchange cryptocurrency comfortably.

  • Kucoin P2P. This is a service of the single-name cryptocurrency exchange. There are a lot of exchange offers, and users’ activity is great. The choice of cryptocurrencies is vast. Verification is required to use the service. There are bonuses for new customers.

The above listed are the most popular platforms. In total, several hundred similar services operate in the network. Learning about the emergence of new ones will help to monitor P2P exchangers, as well as the study of dedicated resources.

How to Buy Cryptocurrency on Binance P2P?

Let's analyze the purchase of cryptocurrency using the P2P scheme on the example of the Binance service. To purchase cryptocurrency, you will need to do the following:

  • go to the Binance website, register and go through the verification process;
  • move the mouse cursor over the "Trade" button and select "P2P" in the list that pops up;
    Let's break down the purchase of cryptocurrency via P2P using the Binance as an example.

  • choose a currency from the list (e.g. USDT) and click the "Buy" button next to it;
  • in the "Amount" box, enter the sum of funds which the cryptocurrency should be purchased for;
  • in the "Fiat" box, select the fiat currency and specify the method of settlement;
  • select a seller suitable for the currency sale rate and the number of completed transactions, and then click "Buy" again;
  • specify the exact amount of the transaction and click "Buy";
    Choose a seller that suits currency selling rate and the number of successfully completed transactions.

  • perform the transfer to the seller's account details and click "Confirm".

The seller has to confirm the receipt of the funds. As soon as he does this, your P2P wallet will receive the corresponding amount of cryptocurrency. If necessary, they can be transferred to the Binance exchange wallet for further trading.

How to Sell Cryptocurrency?

Let's understand step by step how to sell cryptocurrency, using Binance P2P as an example. You will need to do the following:  

  • go to the Binance website, register and go through the verification process;
  • put the mouse cursor on the "Trade" button, select "P2P" in the opened list;
  • go to the "Sell" tab;
    To sell cryptocurrency go to the Binance website, register and undergo the verification procedure.

  • select a currency and click the "Sell" button next to it;
  • in the "Amount" box, specify the amount the cryptocurrency for sell;
  • in the "Fiat" box, specify the currency you want to buy (for example, euro);
  • in the "Payment" box, select the payment method;
  • select a seller that is suitable by the selling rate and the number of successfully completed transactions, and then click "Sell";
    After that, the seller must transfer fiat funds to the specified address, and you must confirm their receipt.

  • enter the exact amount of the transaction and click "Sell" again.

How Not to Become a Victim of Fraud at a P2P Exchange?

Before paying with cryptocurrency to buy fiat funds (or vice versa) on the P2P scheme, it is worth learning a few simple rules that will help to protect yourself from intruders and not lose your money. Here are the main ones: 

  • Transactions should be conducted only with trustworthy users. To do this, it is necessary to study the seller's rating. First of all, take into account the total number of completed exchanges. It is also worth paying attention to how many users have added the seller to the blacklist — there should ideally be 0. If you mistakenly applied for an exchange with a seller with poor statistics, it's better to cancel it before it's too late.
    Protect your assets by following safety rules when trading in P2P exchange.

  • The transaction should be confirmed only after the actual receipt of funds. If you confirm it before the cryptocurrencies or fiat are received, you might not receive them.

  • It is better to ask the seller to comment on the transfer. This will help avoid the situation when he requests a chargeback (refund) due to an erroneous payment. With a comment it will be clear that the money was sent for exchange. They cannot cancel the transaction in this case.

  • You should not accept to interact with a seller outside the P2P platform. Even if there have never been any problems with them. Cooperation on the platform is a guarantee of protection from the unscrupulous actions of another user. Outside the service, it is absent.

  • P2P exchangers without verification should be used with great caution. The lack of a requirement to provide personal data on such platforms leads to the fact that they have a higher risk of encountering unscrupulous users. In the case of fraudulent actions of an unidentified seller, they are almost impossible to trace.

Following these simple rules will help to make transactions quickly and avoid problems, as well as protect you from losing money due to encounters with fraudsters.

Is P2P Exchange Worth Using?

P2P exchange of cryptocurrency implies the conclusion of a transaction between the participants of the decentralized blockchain network. Intermediaries do not participate in it. The exchange is performed on special platforms that act as transaction guarantors and sometimes take a small commission for their services (usually no more than 1%). All of this makes P2P very profitable. 

Of course, you should be careful when exchanging, as there is always a risk of encountering fraudsters. Avoid them by following a few simple rules: 

  • Study the seller's rating before the transaction.
  • Timely confirm the transaction.
  • Ask to leave a comment on the transfer. 

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