With 10 years under its belt, bitcoin and its technology have evolved so much throughout the years. Nowadays, it’s incredibly easy to buy bitcoin, even if you’re a beginner who’s just about to embark on their cryptocurrency journey. Back when bitcoin was still new and no one knew what it really was, there was only one solid way to buy bitcoin: through traditional bitcoin exchanges. Now, there are peer-to-peer marketplaces, a revolutionary way of buying bitcoin.
Because of peer-to-peer bitcoin trading, there are hundreds and hundreds of different payment methods available on peer-to-peer marketplaces. This not only gives buyers and sellers more options but it also allows easier and more personalized transactions.
What is a peer-to-peer marketplace?
To truly understand what a peer-to-peer marketplace, you’ll first have to understand how traditional bitcoin exchanges work.
Traditional bitcoin exchanges
Being around for a longer time, traditional bitcoin exchanges are more known and more popular. On traditional bitcoin exchanges, buyers and sellers are matched via order book. This means that there are fewer interactions between the buyer and the seller. Middlemen are assigned to the orders and they help carry out the trade. Having fewer interactions means that people are allowed more anonymity.
Although traditional bitcoin exchanges are a more popular option at this moment, there has been a rise in popularity when it comes to peer-to-peer marketplaces. On these platforms, buyers and sellers are matched and they have the opportunity to close the trade themselves. This allows for perks such as:
- If you’re a buyer, you can ask the seller directly for clearer instructions. If at any point you feel confused about how the process goes, live chats are a common feature in the best peer-to-peer marketplaces. Also, as a buyer, you’ll get to filter out the offers you can see, allowing to find better deals and more efficient trades.
- If you’re a seller, you have the ability to create offers based on your preferences. You can customize things like profit percentage, preferred currency, and even limit your buyers to those that are in your area.
Essentially, peer-to-peer marketplaces add a personalized touch which means, depending on your trade partner, secure and efficient trades.
Peer-to-peer marketplaces: how to stay secure
Given that peer-to-peer marketplaces match buyers and sellers instead of directly helping them with the trade, it is possible that people might into a few bad apples. By bad apples, I mean scammers. Since users have more control of their money on peer-to-peer platforms, it could make the environment a breeding ground for people who want access to your funds. Before the peer-to-peer system was polished, scammers were running rampant on these platforms, making them unworkable.
Here’s an example: let’s say that you joined a peer-to-peer platform and you’re looking to buy some bitcoin with a gift card. You start looking for available offers and you find one that looks good. You take the offer and start sending the seller your payment details (gift card code, a selfie with a gift card, receipt of the gift card bought with cash, etc.) What’s stopping the seller from ripping your gift card of its value and running away with it? Flipping the situation, what if you’re the seller and he/she asks you to send the bitcoins before he/she sends the payment? More or less, this is how people get scammed on peer-to-peer marketplaces.
Fortunately, there are platforms that have polished the process and now have security measures to protect users from situations like that. Here are some of the features you should be looking for in a peer-to-peer marketplace:
- A good escrow service – Escrow services are what protect buyers and sellers from running away from each other’s payments. When a trade begins, the bitcoins that are promised are automatically put into escrow. When the buyer pays and marks his/her end paid, the seller has to verify the payment and then release the bitcoins from escrow. It basically acts as a third party service that makes sure that the transaction is as smooth and safe as possible.
- 2-Factor Authentication – This feature is to help you secure your account even further. By enabling this feature, it gives your account an extra layer of security which will make it harder for any unwanted guests accessing your account.
- A responsive customer support team – A good customer support team is the bedrock of a safe peer-to-peer platform. These are the people that will help you if something ever goes wrong. With that being said, you’ll probably want a platform that offers 24/7 customer support because who knows when you’re going to run into a problem? The customer support team is also there to guide you if you’re confused about how to use the platform.
Other than these features, there are still other ways to secure your account further. For example, setting a strong password can make your account even safer. You can also verify your ID on your platform to enable extra security features.
A peer-to-peer revolution
It was mentioned earlier that peer-to-peer marketplaces are starting to see a rise in popularity. This is because people are starting to discover new real-life users for bitcoin and its peer-to-peer aspect. This includes remittances, earning a stable income, wealth preservation, and even charity. The perfect example of this would be Paxful’s #BuiltWithBitcoin campaign. The campaign accepted bitcoin as a donation method and with that, they were able to build 2 schools in Africa and fund scholarships for female Afghan refugees.
Peer-to-peer marketplaces are starting to become more viable as a channel to buy and sell bitcoin not only for it’s easy and security but also for its real-life uses.