Blockchain and cryptocurrency have always been related to the concept of decentralization. Anyhow, when it involves the cryptocurrency exchanges, the concept of decentralization must take a backseat. Peer-to-peer cryptocurrency exchanges, commonly abbreviated as P2P crypto exchange, present themselves as perfect solutions to the present challenge. allow us to study these P2P crypto exchanges and therefore the benefits that they carry.
The Classic Crypto Exchange
Basically, when it involves cryptocurrency exchanges, there’s always an intermediary involved in executing the trade and transactions.End Users who wished to exchange cryptocurrency would post an order with details like the number and unit price. These details would be added to a shared ledger called the order book. On the other side, users who would really like to shop for those listed coins would choose an order that matched their commercial requirements. The trading process begins only after the customer and seller requirements match.
This brings a few disadvantages. a number of the foremost prominent ones are the disclosure of identity, excessive consumption of your time, the likelihood of fraud, and in fact, the value involved.
The most significant disadvantage caused by the centralized exchanges lies within the very name! In essence, the core philosophy of blockchain being decentralized was compromised by the way during which these exchanges functioned.
P2P crypto exchanges were created to counter these challenges and supply an efficient and effective thanks to perform an exchange of crypto coins.
A Brief History
P2P exchanges made their first flicker in 2014 as a mirrored image of the rising fame of cryptocurrency-related scams. Many countries, including a number of the most important economies, were averse to recognizing cryptocurrency as a legalized sort of transaction.
In an attempt to extend the magnitude of trust in cryptocurrency, P2P exchanges came into existence. because the name implies, it involves two companies or entities directly exchanging cryptocurrency without the necessity for and involvement of intermediaries.
The Novel P2P Exchange
Unlike the classic exchanges, the P2P exchanges enabled the moment settlement, drastically bringing down the time taken for the exchange process. The physical currency, however, is kept within the exchange until the entire process is executed. In essence, the transfer of ownership rights is instant.
The crypto trading software takes care to research the order and connects the customer and seller. The users can directly get into a negotiation with one another without involving an intermediary, making the whole process simple and effective.
Anyhow, within the interest of security, the transactions can sometimes involve third-parties, designated as ‘arbitrators’. These arbitrators are volunteers whose interest is bent towards upkeep the reputation of the exchange. This indirectly means there’s no cost related to these intermediaries because it would be during a classical exchange!
If we’ve to offer an unusual summation to the present contrast, a classic exchange is often considered an arranged marriage, but the P2P exchange is like finding your date on Tinder!
How P2P Cryptocurrency Exchange works?
The Benefits they carry No innovation can still thrive without bringing in significant advantages, and therefore the P2P exchange surely fits into this task!
The blockchain world believes that openness is that the key to digital security. during a P2P exchange, all the transactions happen on the general public ledger. Therefore, the authenticity of the exchanging parties doesn’t need to be put into a territory of doubt. Also, the KYC/AML details remain in perfect synchronization to the blockchain database. Therefore, the chances of fraud and identity fraud are almost eliminated.
All the knowledge about the transaction and therefore the user remains distributed all across the network, and its uses and embedded encryption mechanism. Therefore, it’s quite impossible for anyone to trace the knowledge unless they need the essential credentials to try to do so.
The value of a transaction is directly proportional to the amount of intermediaries involved in affecting it. If we’ve to require this equation into consideration, employing a P2P exchange almost costs nothing! This makes it quite an economical option for cryptocurrency exchange. As a perquisite , the P2P crypto exchange software also increases privacy by directly connecting buyers and sellers.
Every device with a secure and active internet connection and a legitimate user may be a potential instrument for transacting on the terrace exchange. The exchange is fast and efficient, and it can facilitate transactions even in countries that don’t allow the utilization of cryptocurrency. It’s one among the most important reasons that contribute to the expansion of P2P cryptocurrency exchanges.
It is quite evident that P2P cryptocurrency exchanges are going to be the order of the longer term. Big global economic powers are slowly embracing the utility of blockchain and are accepting cryptocurrency with every passing day. Given this progress, a P2P cryptocurrency exchange could also be one of the mainstream exchange mechanisms within the future.
If you’d wish to maximize this wave of P2P cryptocurrency exchanges, you’ll consider creating one. However, this process would be extremely time and resource-consuming. As an alternate, you’ll consider purchasing the white label P2P cryptocurrency exchange. These cryptocurrency exchanges are easy to customize, but at an equivalent time, don’t compromise on the essential functionalities of everything that an exchange is predicted to provide!
Want to build your own P2P cryptocurrency exchange platform connect with Enkryptoz to Grow your exchange business with 100% secure and scalable solutions.