What is P2P Crypto Trading? 

TL;DR

• Peer-to-peer (P2P) crypto trading allows users to buy and sell cryptocurrencies directly with each other through a platform that connects buyers and sellers.

• Blacksheep is both a buyer and a seller of crypto on many P2P platforms. 

• P2P trading offers a fast and convenient way for Australian crypto investors to buy and sell crypto directly from their bank account or crypto wallet.

• P2P trading does not always require funding a crypto exchange account, resulting in much fewer bank closures or halted transfers from anti-crypto banks.

• When trading on a P2P platform, users can create custom offers, specifying the price, amount, and preferred payment methods, or accept existing offers that match their needs.

• P2P trading platforms typically employ escrow services to protect both buyers and sellers, ensuring that funds are only released when the terms of the trade are met.

  
  

Buying cryptocurrencies has never been easier, thanks to the rise of peer-to-peer (P2P) trading platforms. These exchanges have changed the way people acquire digital assets, offering a simple, direct and more convenient alternative to typical centralised exchanges. P2P trading allows individuals to purchase cryptocurrencies directly from other users, creating a global marketplace where buyers and sellers can connect seamlessly. 

By trading P2P, the buying process is much more streamlined. The buyer simply sends the funds directly from their bank account after creating the order and receives crypto directly into their crypto wallet from the seller. This decreases the likelihood of having funds frozen and enables much larger transactions to be completed quickly and easily. For these reasons, P2P trading has become an attractive choice for Australians looking for a hassle free way to buy and sell crypto.

What is Peer-to-Peer (P2P) Crypto Trading?

P2P crypto trading is a method of buying and selling cryptocurrencies directly between users, without the need for a centralised exchange (CEX) or other intermediaries. In P2P trading, individuals can connect and transact with each other on their own terms, offering greater control and flexibility compared to traditional trading methods.

Unlike CEXs, where users rely on the exchange to facilitate transactions and determine prices, P2P trading empowers users to set their own prices, choose their preferred payment methods and decide whom they wish to trade with. Some CEXs offer P2P marketplaces alongside their exchange, like Binance, Bitget, OKX and Kucoin. 

In a P2P trading scenario, buyers and sellers can directly negotiate the terms of the trade, including the price, the amount of cryptocurrency to be exchanged and the settlement time. This direct interaction between counterparties eliminates the need for intermediaries, reducing fees and allowing for faster transactions.

P2P trading platforms, while not always decentralised, provide a secure environment for users to interact and trade with each other. These platforms often include features such as escrow services, which hold the cryptocurrency until the buyer confirms payment, and reputation systems that allow users to rate and review each other based on their trading experience.

By enabling direct trading between individuals, P2P crypto trading offers an alternative to centralised exchanges, providing users with greater autonomy, privacy, and control over their cryptocurrency transactions.

How does P2P Trading Work?

P2P crypto trading typically involves the following steps:

1. Posting or accepting an offer: Users create or choose buy or sell offers specifying the cryptocurrency, amount, price and accepted payment methods.

2. Agreeing on terms: Buyers and sellers communicate via the platform's messaging system to finalise trade details.

3. Initiating the trade: The seller transfers the cryptocurrency to the platform's escrow account for safekeeping.

4. Making payment: The buyer sends payment using the agreed method and provides proof through the platform.

5. Confirming payment: The seller verifies the received funds and confirms on the platform.

6. Completing the trade: The escrow releases the cryptocurrency to the buyer's wallet.

Throughout the trading process, the P2P platform acts as a facilitator, providing a secure environment for buyers and sellers to interact. The use of escrow services protects both parties by ensuring that the cryptocurrency is only released when the payment is confirmed, minimising the risk of fraud.

However, it is essential to exercise caution. Only ever use a trusted P2P trading platform, trade with reputable users like BlackSheep, watch out for common scams and follow the best practices and guidelines. BlackSheep has curated a list of the top P2P Crypto Exchanges for Australians in 2024, which is a great place to start your journey.

Advantages & Disadvantages of P2P Trading

Advantages of P2P Trading:

• Simple, Direct Trading: Trading P2P enables you to buy crypto directly from your bank account and sell crypto directly from your wallet.

• Fast and Easy:  If you trade with reputable counter parties, you will often find the process of getting AUD into crypto or crypto into AUD is much faster than using a typical centralised exchange.

• Avoid Frozen Accounts: Banks and centralised exchanges are notorious for freezing cards or accounts for seemingly no reason. P2P greatly reduces the chances of having your funds frozen.

• Customisable Offers: P2P trading allows users to create personalised offers, setting their preferred prices, exchange rates, payment methods and trading amounts.

• Global Reach: P2P exchanges connect buyers and sellers worldwide, offering a global marketplace for trading cryptocurrencies.

• Increased Privacy: P2P trading enables users to limit who can see their ads, allowing them to maintain discretion in their transactions.

Disadvantages of P2P Trading:

• Potential Delays: P2P trading may be slower than traditional trading if one party fails to promptly confirm the transaction.

• Reduced Liquidity: Some P2P exchanges typically have lower liquidity compared to centralised exchanges, so filling large orders may require multiple transactions.

How to Start Trading on a P2P Crypto Platform

Getting started with peer-to-peer (P2P) crypto trading is a simple process that can be accomplished in just a few steps:

Step 1: Choose a Reputable P2P Exchange

Research and select a reputable P2P cryptocurrency exchange that suits your needs. Consider factors such as security, supported cryptocurrencies and fiat currencies, available payment methods, fees and user reviews. If you don't already have an account, sign up for one on the chosen platform.

Step 2: Complete Identity Verification

Most P2P exchanges require users to undergo an identity verification process to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. Prepare the necessary documents, such as a government-issued ID and proof of address, and submit them to the exchange for verification.

Blacksheep is required to KYC all people they trade, even on P2P trades, as Blacksheep is a registered Digital Currency Exchange with AUSTRAC. 

Step 3: Set Up Payment Methods

Once your account is verified, proceed to set up your preferred payment methods. P2P exchanges often support a wide range of options, including bank transfers and cash deposits.

Step 4: Start Trading as a Buyer

If you intend to buy cryptocurrencies, you can now browse the available offers on the P2P platform. Use the search filters to find offers that match your desired cryptocurrency, amount and payment method. Once you find a suitable offer, you can initiate a trade by contacting the seller through the platform’s chat system.

Step 5: Fund Your Wallet for Selling

If you plan to sell cryptocurrencies on the P2P platform, you'll need to transfer the desired amount of crypto from your personal wallet to your exchange wallet. Navigate to your wallet on the P2P exchange and generate a deposit address for the specific cryptocurrency you wish to sell. Transfer the funds from your personal wallet to this address.

Step 6: Create or Accept a Sell Offer

With your exchange wallet funded, head to the P2P trading section and create a new sell offer. Specify the cryptocurrency you're selling, the amount, your desired price and the accepted payment methods. Alternatively, you can browse existing buy offers and accept one suits you.

By following these steps, you'll be well on your way to starting your P2P crypto trading journey. Remember to always exercise caution, thoroughly research your trading partners and follow security best practices to ensure a safe and successful trading experience.

Start P2P Trading with BlackSheep 

Ready to try P2P crypto trading? BlackSheep makes it easy for you to buy and sell crypto without the hassle. Find our straightforward listings on Binance, Bitget, OKX, and Kucoin, or sign up with us directly. With BlackSheep, buying and selling crypto is as simple as it should be.

Disclaimer: This information is provided by Blacksheep Operations Pty Ltd ABN 16 674 111 392 for general informational purposes only and may refer to products not available in your location. It does not constitute (i) investment advice or a recommendation to invest; (ii) an invitation or solicitation to buy, sell, or hold digital assets; or (iii) financial, legal, accounting, or tax advice. Digital assets, including stablecoins and NFTs, are highly volatile and carry significant risks. You should carefully assess your financial situation before deciding whether to trade or hold such assets. For advice specific to your circumstances, please consult your legal, tax, or investment adviser. All data and statistics are provided solely for general information. Blacksheep Operations accepts no responsibility or liability for any errors or omissions in this information, nor for any use of or reliance upon it by others.

FAQs

How does P2P work in crypto?

P2P crypto trading works by connecting buyers and sellers directly through a platform, allowing them to trade cryptocurrencies directly with other people safely and easily. Users can create offers to buy or sell crypto, specifying the price, amount and payment method. When a matching offer is found, the platform's escrow service holds the seller's crypto until the buyer sends the payment. Once the payment is confirmed, the crypto is released to the buyer, completing the trade.

Is P2P good for buying and selling crypto?

Yes, P2P trading is a great way to trade crypto as it offers several advantages. P2P platforms provide a convenient and flexible way to buy and sell cryptocurrencies, often with a wide range of payment options. They also enable users to trade directly with each other, potentially leading to better prices and faster transactions compared to traditional exchanges.

Would my bank know about my P2P trading?

Your bank may not directly know about your P2P crypto trading activities, but they might become aware of related transactions. When you use bank transfers or other payment methods linked to your bank account for P2P trades, these transactions will appear on your bank statement. However, they will typically show up as transfers to individuals or the P2P platform, rather than explicitly stating they are for cryptocurrency purchases. 

It's important to note that Australian banks have become increasingly hostile towards crypto purchases in general, so P2P trading can be a great way to avoid unwanted questioning or scrutiny from your bank. Despite this, it is important that you comply with your bank's policies or you may be asked to close your account.

Are scams common on P2P marketplaces?

While reputable P2P crypto trading platforms implement various security measures to protect users, there are ways for scammers to slip through if you aren’t careful. Common scams include fraudulent payment confirmations, identity theft, and attempts to move transactions off the platform. However, by using the platform's built-in escrow services, only trading with reputable users like BlackSheep, carefully reviewing seller ratings and feedback, and following the recommended safety guidelines, users can significantly reduce their risk of falling victim to scams. It's crucial to remain vigilant, only trade within the platform's ecosystem, and report any suspicious activity to the platform's support team immediately. Remember, if an offer seems too good to be true, it probably is.