A Detailed Overview of Peer to Peer Bitcoin Exchange Development
Cryptocurrency exchanges are the platforms where people trade cryptocurrencies. Major variants of cryptocurrency exchanges include:
- Centralized Exchange
- Decentralized Exchange
- Peer to Peer Exchange (P2P)
- Hybrid Exchange
In this article, we will wrap our heads around peer to peer bitcoin exchanges and their benefits.
What is a peer to peer Bitcoin exchange
Peer to peer Bitcoin exchange platform, also known as P2P exchange platform, is an exchange which allows the market participants to come together to trade directly with each other. A peer to peer exchange does not match buy/sell orders. Instead, it matches the participants with complimentary needs.
The popularity of P2P cryoto exchange platform dates back to 2014, when the market witnessed frequent scams. Peer to peer Bitcoin exchange development gave a new definition to cryptoucurrency. It allows the two companies or entities to directly exchange their crypto assets.
Trade with P2P exchange
Trades in cryptocurrency exchanges are transacted in many ways. In a centralized exchange, orders are matched with buy orders matching with the sell orders. This whole process takes a lot of time to complete.
However, in a P2P exchange, transactions are carried out by connecting people of similar interests. They process orders on their own and strike a balance over the transactions. There is no third party involvement in the procedure. However, in any case of dispute, the arbitrator comes into position for dispute redressal.
Benefits of Peer to Peer Bitcoin Exchange
- Fully secure and safe: Each transaction is recorded on a public ledger or blockchain. Thus, you need not worry about which is the other party dealing with you. In addition, KYC details are also aligned with the database to ensure that the identity of an individual is not mistaken. Further as there is no central authority maintaining the orders, the chances of fraud are also limited.
- Censorship in transactions: The transactions once entered into the database are immutable and transparent. The proceedings are maintained in a public ledger, which minimizes the chances of hacking of the transactions. As the hash of the next blog is related to the hash of the previous blog, it becomes difficult to hack the script. This aspect brings popularity to peer to peer Bitcoin exchange development.
- Instant transactions: If someone wishes to transfer some fiat currency internationally, it takes a huge amount of time. Firstly, an individual needs to contact his bank then the bank will contact its correspondent bank. Further after applying exchange rates, fiat currency will be transmitted. On the other hand, cryptocurrency leverages peer to peer transactions. Even the countries that have not legalized cryptocurrency are in favor of P2P transactions.
- Low Operational fees: In peer to peer bitcoin exchange platforms, operational fees are generally negligent.
- Complete Privacy: P2P bitcoin exchange platforms are able to maintain complete trust between the parties. As there is no third party involved in the operations, thus complete privacy of transactions and accounts are maintained. Transaction details are only held with the counter parties, which means that nobody can steal your cryptocurrency.
Ways to Prevent Frauds
The incidents of cryptocurrency exchange hacks cannot be overlooked. But, this does not mean that the developments happening in the evolving crypto industry can be ignored. As there cannot be a separate entity to monitor the transactions round the clock, the task of maintaining the security is with the experts who have considerable experience and expertise in the field.
- Arbitrators: Transactions are always done between individuals and at times disputes also take place. There are circumstances where different parties have different concerns and they do not coincide with each other. In such a situation, the role of arbitrators come into place wherein they act as a mediator and resolve the conflict.
- Security features: The experts should take into account the right security features during peer to peer Bitcoin exchange development to achieve and maintain a high level of security. Features like SSL implementation, two factor authentication and integration of KYC or AML implementation are a few security features that can be leveraged to fortify the security of P2P exchange.
Clearly, peer to peer bitcoin exchange platforms are the most reliable form of the exchange model. The hype of P2P exchanges is still prevalent in the market and will continue to grow further due to its provided benefits.