Can you believe bitcoin has been around for 10 years? The cryptocurrency has evolved in so many ways now. This includes the hundreds of ways to buy bitcoin and what you can spend your bitcoins on. Back then, the main way to buy bitcoin was to hop on a bitcoin exchange (a.k.a. traditional bitcoin exchanges) and buy from the platform directly. These types of exchanges usually do their business via order books. Basically, you’re matched with a trade partner but little to no interaction is needed as there is a middleman that helps carry out the trade. They’re extremely simple to use but just like all things, they have their downsides.
Another method of buying bitcoin is starting to slowly gain popularity: peer-to-peer marketplaces. Though the idea isn’t new, peer-to-peer marketplaces have started gaining popularity in countries that have economic struggles. This is because people are starting to find new and creative ways to use the peer-to-peer aspect to better their lives. This includes making payments easier, earning a stable income (whether it be through trades or e-commerce), and even wealth preservation (for countries that have diminishing fiat currencies).
What are peer-to-peer marketplaces?
Just like traditional bitcoin exchanges, peer-to-peer marketplaces match buyers and sellers. Unlike traditional bitcoin exchanges, there is no middleman to help carry on the trade. Essentially, buyers and sellers are tasked to carry on the trades themselves. People who are looking to buy bitcoin are shown an offer list and from there, they can choose the best offer according to their preferences. These preferences include how much bitcoin they’ll be getting per dollar, the location of the seller, the preferred currency, and many more. As a seller, you have the option to set these preferences and find an ideal buyer to take you up on your offer.
As you can see, although traditional bitcoin exchanges and peer-to-peer marketplaces serve the same purpose, they do it in drastically different ways. While some may argue that there is more privacy on traditional bitcoin exchanges (since little to no interaction is needed between trade partners), there are certain advantages when it comes to the more personalized trading experience that peer-to-peer marketplaces provide.
So what are these advantages? In a traditional bitcoin exchange, the platform basically hols your hand throughout the whole process. This is what makes it easy to use and attractive to beginners. The thing is, holding that had isn’t free. Traditional bitcoin exchanges will often charge for helping you out and sometimes, the fees can stack up quite a bit. If you compare the fees charged by traditional bitcoin exchanges to the ones charged by peer-to-peer marketplaces, the ones on peer-to-peer marketplaces are lower by a landslide.
Other than that, the main reason why peer-to-peer marketplaces are so appealing is that they give more control over one’s finances. Buyers and sellers can trade the way they want and don’t get charged a lot for it. Here are a few common features on peer-to-peer marketplaces that personalize the trading experience:
- Live trade chat – This feature allows trade partners to chat in real time. This can be used for clarifying payment requirements and just general conversation. This allows for more efficient trades as there is less confusion between the two trade partners. It also allows people to form business relationships that could go long term.
- Personalized offers – As mentioned earlier, sellers have the ability to personalize their offers according to their preferences. This makes it easier for people to find what they’re looking for and what offer suits them. Sellers can set things like profit percentage, payment method, and payment window.
With that being said, there are also security measures that protect you throughout the whole process:
- Escrow service – Common on good peer-to-peer marketplaces, escrow services act as third parties that protect buyers and sellers alike. It prevents sellers from stealing buyers’ payments and prevents buyers from running away with the seller’s bitcoins
- Customer support teams – The best peer-to-peer platforms have customer support teams that operate 24/7. They’re there to help you if you don’t understand how to use the platform or if (god forbid) you get scammed
- Account security – As extra layers of security, it is advised that all users set a strong password and enable 2-Factor Authentication to prevent any unwanted guests on their accounts
These are just a few of the features that make peer-to-peer marketplaces so special. To get the full experience, it is advised that you go ahead and give it a shot. They’re often free anyway and some platforms will even give you a free wallet upon registration. There’s no harm in putting a little money in and testing the waters and if it isn’t your cup of tea, then at least you gave it a fair shot. Before you do put any money in, make sure to do your research. Learn about the platform and how peer-to-peer trading works in general so you aren’t blind when you test it out.