Pros & Cons of Traditional Bitcoin Exchanges and Peer-to-Peer Marketplaces

With the ever-growing popularity of bitcoin and abundance of cryptocurrency exchanges, buying and selling BTC is more straightforward than ever. The wide array of options can be intimidating, but it doesn’t have to be. As long as you know the difference between traditional bitcoin exchanges and peer-to-peer marketplaces, you’ll be able to narrow down your options. Traditional Bitcoin Exchanges The traditional bitcoin exchanges of the world are some of the most popular and recognizable platforms you’ll see in the market. Throughout bitcoin’s history, they have remained the more popular option for one reason: they’ve been around longer. The first traditional bitcoin exchange went live in 2010 (Bitcoinmarketcap), and although the site was buggy and clunky, it showed that there was a real need for platforms that would establish real-time exchange rates for BTC and the US dollar. So how do these exchanges work? On traditional bitcoin exchanges, buyers and sellers are matched via order books. Once the two are paired, the platform acts as a middleman and helps mediate the trade—making the trading process extremely enticing for new traders. Pros Traditional bitcoin exchanges, such as CoinBase and Binance, are one of the easiest ways to buy bitcoin. Because the platform itself acts as a middleman to help mediate the transaction, by nature, it’s a more beginner-friendly and (relatively) anonymous means of BTC trading. If you’re new to BTC trading, the promise of easy trades can be very alluring. Cons Because the platform has direct interaction with both buyers and sellers, their services as middlemen are often compensated—meaning higher fees on traditional bitcoin exchanges. Aside from that, there’s also the issue of linking your bank account to your exchange profile. Although that may make things more convenient for some people, for others, bank accounts can be a luxury they can’t afford. In some places in the world, bank accounts can be extremely hard to acquire (limits are too high or requirements are too difficult). In turn, the unbanked (or underbanked) are immediately disqualified from using bitcoin. Peer-to-Peer Marketplaces Although peer-to-peer (P2P) marketplaces are a relatively new player in the game, their user bases are starting to see more growth. Similar to traditional bitcoin exchanges, buyers and sellers are matched via order book. The main difference between the two is that on P2P marketplaces, the platform has little to no interference with the trade. Instead, buyers and sellers complete the trades themselves via live chat. Through the peer-to-peer system, buyers can search through offers based on their preferences (preferred payment method, fiat currency, location, etc.) and sellers can create offers with their own settings (profit percentage, payment window, offer limits, etc.). In essence, P2P marketplaces take the entire trading process and personalize it. Although some may view that as giving up anonymity, it can be a more efficient way to trade. Pros The first thing to take note of is that on P2P marketplaces, there are hundreds of payment methods—offering more flexibility in terms of buying and selling bitcoin. With all of these payment methods at your disposal, buying and selling bitcoin has never been this flexible. P2P marketplaces also often make the trading experience more cost-efficient. Since the platform has little to no interaction with the trade, the fees are much lower. Some P2P sites even have no fees when buying BTC. There is no compensation for a platform that barely has anything to do with the trade. Unlike traditional bitcoin exchanges, P2P marketplaces are more accessible. Most marketplaces do not require you to link your bank account to the platform, providing financial inclusion to the unbanked and underbanked—which is only one of the many real-use cases created by peer-to-peer finance alongside bitcoin. Because of the P2P finance and bitcoin partnership, a lot of people are using BTC as a financial passport as a means to reap the rewards of BTC. Cons Unfortunately, P2P marketplaces also come with their own set of cons—one of which is a steeper learning curve. Although they’re not excessively difficult, P2P marketplaces are more technical compared to its predecessor. Since there’s no big brother to help you out, mastering the process of P2P trading is essential. Additionally, the nature of P2P marketplaces (no bank accounts linked; anyone with an email and phone number can join) provokes scammers to create dummy accounts and prey on the ill-researched. Luckily, P2P marketplaces have implemented several security protocols such as escrow systems, 2FA, and upgraded customer support teams to prevent scammers from getting their way. What’s Your Trading Style? Between the two types, there is no clear winner because which type to choose depends on you and the way you like to trade. Some users would support a more personalized trading experience while others would not. Essentially

Pros & Cons of Traditional Bitcoin Exchanges and Peer-to-Peer Marketplaces
With the ever-growing popularity of bitcoin and abundance of cryptocurrency exchanges, buying and selling BTC is more straightforward than ever. The wide array of options can be intimidating, but it doesn’t have to be. As long as you know the difference between traditional bitcoin exchanges and peer-to-peer marketplaces, you’ll be able to narrow down your options. Traditional Bitcoin Exchanges The traditional bitcoin exchanges of the world are some of the most popular and recognizable platforms you’ll see in the market. Throughout bitcoin’s history, they have remained the more popular option for one reason: they’ve been around longer. The first traditional bitcoin exchange went live in 2010 (Bitcoinmarketcap), and although the site was buggy and clunky, it showed that there was a real need for platforms that would establish real-time exchange rates for BTC and the US dollar. So how do these exchanges work? On traditional bitcoin exchanges, buyers and sellers are matched via order books. Once the two are paired, the platform acts as a middleman and helps mediate the trade—making the trading process extremely enticing for new traders. Pros Traditional bitcoin exchanges, such as CoinBase and Binance, are one of the easiest ways to buy bitcoin. Because the platform itself acts as a middleman to help mediate the transaction, by nature, it’s a more beginner-friendly and (relatively) anonymous means of BTC trading. If you’re new to BTC trading, the promise of easy trades can be very alluring. Cons Because the platform has direct interaction with both buyers and sellers, their services as middlemen are often compensated—meaning higher fees on traditional bitcoin exchanges. Aside from that, there’s also the issue of linking your bank account to your exchange profile. Although that may make things more convenient for some people, for others, bank accounts can be a luxury they can’t afford. In some places in the world, bank accounts can be extremely hard to acquire (limits are too high or requirements are too difficult). In turn, the unbanked (or underbanked) are immediately disqualified from using bitcoin. Peer-to-Peer Marketplaces Although peer-to-peer (P2P) marketplaces are a relatively new player in the game, their user bases are starting to see more growth. Similar to traditional bitcoin exchanges, buyers and sellers are matched via order book. The main difference between the two is that on P2P marketplaces, the platform has little to no interference with the trade. Instead, buyers and sellers complete the trades themselves via live chat. Through the peer-to-peer system, buyers can search through offers based on their preferences (preferred payment method, fiat currency, location, etc.) and sellers can create offers with their own settings (profit percentage, payment window, offer limits, etc.). In essence, P2P marketplaces take the entire trading process and personalize it. Although some may view that as giving up anonymity, it can be a more efficient way to trade. Pros The first thing to take note of is that on P2P marketplaces, there are hundreds of payment methods—offering more flexibility in terms of buying and selling bitcoin. With all of these payment methods at your disposal, buying and selling bitcoin has never been this flexible. P2P marketplaces also often make the trading experience more cost-efficient. Since the platform has little to no interaction with the trade, the fees are much lower. Some P2P sites even have no fees when buying BTC. There is no compensation for a platform that barely has anything to do with the trade. Unlike traditional bitcoin exchanges, P2P marketplaces are more accessible. Most marketplaces do not require you to link your bank account to the platform, providing financial inclusion to the unbanked and underbanked—which is only one of the many real-use cases created by peer-to-peer finance alongside bitcoin. Because of the P2P finance and bitcoin partnership, a lot of people are using BTC as a financial passport as a means to reap the rewards of BTC. Cons Unfortunately, P2P marketplaces also come with their own set of cons—one of which is a steeper learning curve. Although they’re not excessively difficult, P2P marketplaces are more technical compared to its predecessor. Since there’s no big brother to help you out, mastering the process of P2P trading is essential. Additionally, the nature of P2P marketplaces (no bank accounts linked; anyone with an email and phone number can join) provokes scammers to create dummy accounts and prey on the ill-researched. Luckily, P2P marketplaces have implemented several security protocols such as escrow systems, 2FA, and upgraded customer support teams to prevent scammers from getting their way. What’s Your Trading Style? Between the two types, there is no clear winner because which type to choose depends on you and the way you like to trade. Some users would support a more personalized trading experience while others would not. Essentially, it boils down to you choosing between relative anonymity and ease (traditional bitcoin marketplaces) or cost efficiency (P2P marketplaces) in your trades. Which do you prefer? Bio: Jeffrey Barroga is a Digital Marketing Officer at Paxful – one of the biggest peer-to-peer bitcoin marketplaces in the world. He’s an active trader and currently holds BTC and ETH. The post Pros & Cons of Traditional Bitcoin Exchanges and Peer-to-Peer Marketplaces appeared first on Blockchain News | Blockchain Structure | Blockchain Technology.