A type of trading where buyers and sellers deal directly with one another instead of buying from or selling to an exchange or liquidity pool.

With respect to trading among users, P2P trading involves direct transaction between a buyer and a seller. The buyer buys from the seller at the seller's specified price and receives crypto in return. P2P trading can occur in person, on social media, or on an exchange. P2P trades that involve a large quantity of cryptocurrency are also known as over-the-counter (OTC) trades. The buyer or seller in a P2P trade can be an individual, group, exchange or even a government.

P2P trading was very popular in the earliest days of cryptocurrencies and remains a mainstay of the industry. However, this type of trading leaves room for scams because it's based on trust in strangers, which can turn out to be misplaced. Thus, when P2P trading takes place on exchanges, the exchange typically serves as an escrow, keeping the seller's crypto and releasing it to the buyer once the seller has confirmed receipt of payment.

On most reputable platforms, P2P trading involves a buyer or seller exchanging bitcoin, ether or USD stablecoin for fiat or vice versa.

A cryptocurrency whose price is attached to a real-life asset or reference.

A pegged currency is any cryptocurrency whose price value is determined by an external asset. Also called a stablecoin, the market value of these virtual currencies is always ‘pegged’ to something external to it, either to a fiat currency like the US dollar or a commodity like oil. As a result, pegged currencies are generally less volatile and therefore reliable compared to other types of virtual currencies.

There are 3 major types of pegged currencies: the ones with price values pegged to fiat currencies, the ones with price values pegged to other cryptos, and the ones with price values determined by supply-stabilizing algorithms. Examples of pegged currencies include USD Coin (USDC), Tether (USDT), Binance USD (BUSD), and Dai (DAI).

A blockchain-native term that refers to direct interaction between two computer nodes on the network.

Peer-to-peer (P2P) is the term used in blockchain technology to describe the system of interaction between two computer nodes on the network. This interaction system is peculiar because it is one of the pillars of a distributed network and functions without intermediaries. As a result, two nodes (computers on the network) can share information between themselves. In fact, the entire body of information going from one node to another on a blockchain network comes from this system.

P2P is one of the safeguards against cyberattacks on a blockchain. However, as a concept, P2P has wider usage than just a broadcast system across a network. It is now a definitive feature of new methods of banking.

Peer-to-Peer (P2P) Trading

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