Peer-to-peer (P2P) crypto exchange is a software-based platform that allows crypto-market participants to trade directly with one another by eliminating any third-party involvement. It has made the transactions most accessible by eliminating the risk associated with middlemen as it has elevated the levels of security and is worth mentioning the speed of digital currency transactions.
A peer-to-peer crypto exchange platform, in particular, is known for its decentralized network, transparent, and highly secure transaction mechanism.
P2P exchanges allow the participants of the market to trade directly with each other without any trusted third party to process all trades.
How Does Peer-to-Peer (P2P) crypto exchange Work?
A peer-to-peer cryptocurrency exchange allows verified buyers and sellers to conduct hassle-free crypto trading. To connect buyers with preferred sellers, top-of-the-line match engines are used.
People looking to sell bitcoins and other coins specify the amount and the price they’d like to sell them at. All those requests, known as ‘orders’, are placed in a common ledger, called the ‘order book.’
When another person wants to buy bitcoin or Ethereum, they either look for a satisfactory offer in the order book or, if none can be found, create their own ‘buy order’, specifying the terms of the deal as they like. Whenever possible, the exchange matches buy and sell orders by price and processes the trades.
In order to remove the need for a third party, P2P exchanges operate in a different way. Instead of matching orders in the order book, they match the people behind those orders. That is, whenever matching buys and sell orders are found, the exchange software does not immediately process the trade, but instead, it connects the buyer with the seller, allowing them to conduct the deal without any intermediaries.
Assume David puts in a purchase order for 1 BTC. Rebecca, on the other hand, puts a sales order for 1 BTC. David and Rebecca are matched by a peer-to-peer crypto exchange platform, which allows them to make a contract without the intervention of a third party. The smart contract-driven escrow keeps 1 BTC of Rebecca until they agree on the terms of trade. David transfers the necessary funds to Rebecca’s account. Escrow releases 1 BTC and sends them to David’s wallet address as soon as Rebecca accepts the payment. Of course, both David and Rebecca will have to have opened one of the best crypto wallets for seamless trading.
Best P2p Crypto Exchange in Nigeria
One advantage of using P2P exchange in Nigeria is that it gives you access to a market of cryptocurrency buyers and sellers. Choosing the right crypto exchange can be difficult due to the various factors you need to consider. However, it is important to evaluate the following criteria when making this choice: safety, reputation, liquidity, accessibility and whether your crypto exchange of choice supports options to deposit and withdraw crypto in Nigerian naira (NGN).
Bitmama is one of the best crypto exchanges in Nigeria. It is noted for its user-friendly interface and is a great option for beginners just getting to know crypto trading. It supports popular coins like Bitcoin, Ethereum, XLM, Celo, USDC, Tether etc. Bitmama allows Nigerians to buy and sell cryptocurrencies through P2P exchange.