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What are the Differences Between Peer-to-Peer and Regular Bitcoin Exchanges?

By August 28, 2020May 9th, 20233 minute read

Two kinds of bitcoin and crypto exchange platforms exist within the cryptocurrency ecosystem – regular exchanges and their peer-to-peer counterparts.

All transactions (fiat-to-crypto, crypto-to-crypto, crypto-to-fiat) are powered by order books on regular bitcoin exchanges. The platform’s algorithm anonymously matches buyers and sellers based on the value of buy/sell orders.

The story is different for peer-to-peer bitcoin exchanges. Unlike the usual crypto trading platforms, transacting parties on peer-to-peer platforms connect directly and fulfill trading deals.

This is a general overview of regular and peer-to-peer bitcoin exchange platforms, but the two are different on a few more levels. Let’s examine the differences one by one.

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Time Required To Complete Trades

The greatest advantage associated with usual bitcoin and cryptocurrency exchanges is time. Since buyers and sellers interact through order books, transactions happen in a jiffy.

On the other hand, it takes quite some time to complete trades on peer-to-peer bitcoin exchanges. Why? Because transfers happen only after peers ensure complete satisfaction wrt genuity of their transacting counterparts.

Also, transactions (involving both fiat money and cryptocurrencies) are considered complete when peers receive the agreed funds in their respective accounts.

Information Of Trading Counterpart

Regular bitcoin exchanges by their very design provide anonymity to traders. So, transacting parties don’t get to know anything about their peers except the order value.

Although, we at WazirX have successfully kept the peer-to-peer nature of cryptocurrency transactions by developing the world’s first P2P engine. Also, traders can seek peers in the official WazirX Discuss Telegram group to fulfill their crypto-USDT trades.

Trading on a peer-to-peer bitcoin exchange begins with an ‘exchange’ of personal information between traders. Peers share name, location, bitcoin/crypto wallet addresses to initiate transactions.

Sometimes, traders even conduct face-to-face meetings to ascertain the source of funds, past crypto trading experience, etc. Few platforms have chat functionalities to help trading peers clarify things before executing transactions.

Other Differences

Besides the above there are few more points of distinction between regular and peer-to-peer bitcoin exchanges.

Trading on usual crypto exchange platforms happens based on digital asset prices generated through the value of trades in order books. On the contrary, users of peer-to-peer platforms can set their own rates to execute a deal.

Very few understand the functionality of peer-to-peer trading platforms. The customer journey can be long and tiring for a new user.

Whereas, with regular bitcoin exchanges, it’s just a matter of setting up an account and finishing a few steps to become eligible for trading.

Trading on peer-to-peer bitcoin exchanges can involve a substantial number of fraudulent incidents as there is no KYC procedure involved.

Dispute resolution could take longer times, with some disputes remaining unresolved. Users are responsible for the security of their funds.

In an incident of fraud or malicious activity, regular bitcoin exchanges can help restore funds, and track the source of the attack/theft due to appropriate KYC/AML procedures.

We try and do our bit in keeping cryptocurrency and fiat funds of users safe. And how?

By performing regular security audits to ensure that the platform is secure enough to buy and trade crypto assets.

To open an account on WazirX check out this link.

Also you can download the app and Start Trading Now!

Android App – WazirX – Buy Sell Bitcoin & Other Cryptocurrencies

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Frequently Asked Questions

What Type Of Currency Is Bitcoin?

Bitcoin is a type of digital currency or cryptocurrency. In January 2009, Bitcoin was established. It's based on Satoshi Nakamoto's ideas, which he laid out in a whitepaper. The name of the individual or people who invented the technology remains unknown.

Is Bitcoin Mining Free?

Bitcoin mining isn't free, but it can be tried on a budget. Bitcoin mining is an essential part of the blockchain ledger's upkeep and development and the act of issuing new Bitcoins. It is accomplished by the use of cutting-edge computers that tackle complicated computational arithmetic problems. The effort of auditor miners is rewarded. They're in charge of ensuring that Bitcoin transactions go off without a fuss and that they're legal.

How Does Bitcoin Technology Work?

The blockchain is the foundation of Bitcoin. It is a decentralized, distributed ledger that tracks the provenance of digital assets. The data on a blockchain can't be changed by design, making it a real disruptor in industries like payments, cybersecurity, and healthcare.

How Can I Convert Bitcoins To Cash?

Bitcoin may be converted to cash in various ways, including crypto exchanges, Bitcoin ATMs, Bitcoin Debit Cards, and Peer to Peer Transactions. You may do this by using Bitcoin exchanges like WazirX. You may also sell Bitcoin for cash faster and more anonymously through a peer-to-peer marketplace.

Is Bitcoin Cash A Good Investment?

Bitcoin Cash is a hard fork of Bitcoin formed in 2017 to address Bitcoin's scalability and challenges. Bitcoin Cash seeks to make global transactions faster, cheaper, and more secure. Bitcoin Cash is now accepted by thousands of online and offline businesses all over the world. Studied correctly, Bitcoin Cash may be an investment worthy of consideration.

Can Bitcoin Be Converted To Real Money?

Crypto exchanges, Bitcoin ATMs, Bitcoin Debit Cards, and Peer Peer Transactions are all options for converting Bitcoin to cash. This can be accomplished by using Bitcoin exchanges such as WazirX. A Bitcoin ATM is a real place where you may purchase and sell Bitcoins with cash, unlike standard ATMs that allow you to withdraw money from your bank account. Many websites provide the option of purchasing Bitcoin in return for a prepaid debit card that works similarly to a standard debit card. Through a peer-to-peer marketplace, you may sell Bitcoin for cash faster and more privately.

What Is Bitcoin Used For?

Bitcoin was created as a means of sending money over the internet. The digital currency was designed to be a non-centralized alternative payment system that could be used in the same way as traditional currencies. Bitcoin is being used by an increasing number of businesses and individuals. This includes establishments such as restaurants, apartments, and law firms.

Is Bitcoin Legal In India?

In India, Bitcoin is not illegal. Because of cryptocurrency's rapid evolution, policymakers and regulators seemed to have recognized the chance to accept the new technology early. From the infamous 'RBI ban' in 2018 to reports of an impending bill banning cryptos in 2021 that has yet to develop, India has seen its fair share of ups and downs when it comes to Bitcoin regulation. Last year, the Supreme Court Of India approved the use of Bitcoin throughout the country. According to the Supreme Court, the existence of Bitcoin or any other cryptocurrency is unregulated but not unlawful.

How To Invest In Bitcoin?

Bitcoin may be invested in two ways: through mining or exchanges. Bitcoin mining is carried out by high-powered computers that solve challenging computational arithmetic problems that are too difficult to complete by hand and complex enough to tax even the most powerful computers. WazirX, a Bitcoin exchange, is another alternative.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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