One of the easiest and safest ways to buy and sell cryptocurrencies is via p2p exchanges. Thus, it comes as no surprise that the global bitcoin trading activities have surged in recent weeks. These platforms provide the level of flexibility and autonomy absent in conventional crypto exchanges. However, as it is with every other crypto market, the p2p exchange terrain has its drawbacks. And so, users must go the extra mile to ensure that the crypto p2p services and products provided meet established standards.
To achieve this, it is advisable to explore the workings of a variety of offerings before settling for one. Nonetheless, this is easier said than done, considering the growing number of p2p networks operating in the market. In this guide, I will compare two of the most popular p2p trading platforms in the world. These exchanges are LocalBitcoin, Paxful. And to make it more interesting and inclusive, I have decided to throw in new and promising trading hubs in the form of Bitcoin Global and Binance P2P.
What are the factors to consider?
When researching the viability of p2p exchanges, it is critical to analyze the features and factors that directly impact the user experience of these platforms. Hence, I have decided to focus on four main factors. They are the reputation of the exchange, the liquidity and spread, fees, and the added features.
I believe that reputation is one of the core criteria to use to determine the viability of crypto platforms. Although all of the platforms mentioned-above have thrived to establish a reputable brand, there are facts that you ought to know. For instance, LocalBitcoins has been operational since 2012, which makes it one of the oldest and most established names in the crypto p2p market. Thus, over the years, its services had come under regulatory and security scrutiny. In January 2019, attackers successfully breached the exchange’s security and stole $27,000 worth of bitcoin. Other than this incident, LocalBitcoin has managed to keep attackers at bay.
It is worth mentioning that the amount lost to this security breach pales in comparison to the amount stolen from Binance in the same year. In May, hackers carted away with 7,000 bitcoins, valued at $40 million, and users’ personal information. Although Binance p2p did not exist at the time of the breach, it is impossible to objectively analyze the security modalities of the trading solution without factoring the track record of the Binance ecosystem.
Conversely, Paxful, launched in 2015, has avoided security crises. Paxful’s ability to deliver a secure p2p network for traders is one of the main reasons why it has emerged as a formidable player in the crypto industry. As for Bitcoin Global, it is still too early to judge its competence. However, from early indications, Bitcoin Global seems serious about the safety of users’ funds and information. It enables a transparent system that combines 2FA, AML security checks, and military-grade encryption.
p2p trading platforms are popular with traders because of the flexibility they offer in terms of pricing. Buyers expect to access a wide array of offers below the spot prices of cryptocurrencies. While this is a given, it only resonates with p2p networks with high trading activities. Such exchanges deliver competitive prices because sellers have to settle for lower rates to stand a chance of attracting buyers. Of the four platforms highlighted in this article, only LocalBitcoins and Paxful attract high traffic. In contrast, Binance P2P and Bitcoin Global are new offerings. Therefore, they provide nothing close to the level of liquidity synonymous with their established counterparts.
The fee framework is another factor that should interest you. Though it is relatively cheap to buy and sell crypto on p2p networks, it does not hurt to check for disparities in the fees of market players. Currently, Bitcoin Global is running a limited offer that allows users to execute trades without incurring any charges. Likewise, LocalBitcoins offers free transactions but imposes a 1% fee on all trades generated from advertised offers. In other words, users who create advertisements to sell or buy bitcoin will pay a 1% commission on all completed trades.
Paxful, on the other hand, collects a 1% commission from sellers and offers zero fees to buyers. As for Binance, users can access its p2p services for free.
Other than fees, security, and liquidity, p2p trading infrastructure ought to ensure that they implement innovative features to establish user-centric services. Bitcoin Global seems to have grasped this fundamental requirement as it continues to explore new ways to provide its users with advanced trading features. Its latest effort in this regard is the introduction of pricing equation formulas that let traders keep track of the price of bitcoin on reputable exchanges and automatically program their advertisements to reflect aggregated rates. By doing so, traders can ascertain that they are buying or selling bitcoin profitably.
From what I have learned thus far, it is safe to say that LocalBitcoins and Paxful are formidable p2p trading ecosystems and are not showing any sign of relenting. However, that does not mean that new entrants like Bitcoin Global do not have what it takes to challenge established players. Such trading platforms can disrupt the global crypto p2p market.