You know that today’s digital era is full of bitcoin exchanges, and there are numerous bitcoin exchanges on the web that you can use for bitcoin and other crypto trades. But I also got confused when I heard the name of the peer-to-peer bitcoin exchange. So I researched a lot and came to the point of the peer-to-peer meaning and how it differs from the standard bitcoin exchange that we use regularly. Visit Ekrona, a complete guide to cryptocurrency trading, if you’re interested in bitcoin trading.
What is a bitcoin exchange?
A bitcoin exchange is a webspace on the internet that facilitates you to use the platform to access the digital currency, not even the bitcoin but currencies apart from that. A group of persons quickly solves the issue of purchasing and selling bitcoins by registering their company according to the country’s regulations. These people are the owner, managers, or controllers of the bitcoin exchange-like the banking system.
Is regular bitcoin exchange is same as bitcoin exchange?
Yes, there is no difference between the bitcoin exchange and a regular bitcoin exchange, and we can say it according to our wish. So it means the second name of a bitcoin exchange is a traditional bitcoin exchange because the average crypto user opens the exchange application regularly.
What is a peer-to-peer bitcoin exchange?
Most people confuse by listening to the name peer to peer like I was, but it is different from the regular exchange we use in our ordinary life. Peer to peer means person to person where you both know each other. For instance, you want to sell, but you do not know about the person, but in peer, to peer exchange, you know to whom you are going to sell your bitcoins without the involvement of the third party.
Peer to Peer bitcoin exchange vs. Regular exchange
There is the following difference between the peer to peer bitcoin exchange and a regular bitcoin exchange given below:-
- Meaning: A regular exchange works on the order book, which means multiple bitcoin users sell and buy bitcoin under the market time. The traditional exchange matches buyers and sellers without knowing the identity of each other. If you are a bitcoin exchange user, you know that they appear in your wallet when you purchase any crypto coin but do not show from who you bought it. On the other hand, the peer-to-peer bitcoin exchange is a private network of bitcoin users that match the buyer and sellers internationally, domestically, and locally without any third persons, making it more convenient than a regular exchange.
- Fees structure: All the regular bitcoin exchanges have fixed charges for a transaction on deposit or withdrawal to a bank account because they are registered as a company. They have to show the profit to the government for taxation purposes. So fee structure is very crucial and may vary in different exchanges according to the popularity and user base. In the peer-to-peer bitcoin exchange, the fees are negotiable because you have to contact the seller, and you will pay through the decentralized wallet that gives you the option to customize payments. Suppose there is a buyer in your local area who want to buy bitcoin, and in exchange, you need cash. So you will go to the peer-to-peer exchange to find the purchaser who is willing to purchase, and you can negotiate with him to decrease your fees.
- Privacy: In the regular bitcoin exchange, you have to submit your details to the company owners, and they will bring you residential proofs, selfies, and your signature in some cases. They have all your details that they can share with anyone if they want; that means your privacy is no secret, and when the exchange gets hacked, your data might be leaked. The peer-to-peer exchange makes a decentralized platform for private transactions so the interested crypto users can make the right deals, but here you also have to create an account which means there is also low privacy.
- Cash transactions: Since the regular exchange works on the order book system where you do not know about the buyer and seller, you can only accept money when you sell bitcoins in your bank account in digital fiat currency. You can also meet with the local bitcoin or crypto users using a peer-to-peer exchange. And It all depends upon the buyer if he wants the cash payment or payment in his bank account via an online payment method.
- Risk: Both exchanges (regular bitcoin exchange and peer-to-peer bitcoin exchange) have moderate to high risk because they collect users’ data, making it a centralized system.