What is P2P?
Peer-to-peer, or P2P, is a way to keep track of how cryptocurrencies are bought and sold. P2P is how people who are interested in cryptocurrencies buy them with regular money.
For example, if you are new to crypto, you need to sign up with an exchange and open a crypto wallet before you can make your first deposit. To make your first deposit, you need to buy crypto with fiat currency.
Since cryptocurrency is a digital asset, you can’t buy it with cash at a physical office or bank. Also, banks won’t help you make any transactions from fiat currency to cryptocurrency. P2P is the answer in this case.
You simply need to find someone who owns cryptocurrency and wants to sell coins, find out how much they want, and send money from your bank account to theirs. Once they confirm that the payment went through, the exchange platform approves the transaction and puts the cryptocurrency in the buyer’s wallet.
It is called “P2P” because it is only for people in a certain area.
How P2P Works
As previously said, P2P is a strategy, and exchanges make it work by using blockchain and smart contracts. A smart contract that works on a blockchain is a set of instructions that only run when certain conditions are met.
In peer-to-peer (P2P), the smart contract is a computer program that checks to see if the rules for P2P have been met.
For instance, it’s like a code that gives a user the right to an asset (like cryptocurrency) if the other party is happy. However this means that the user will get the BTC when the other person clicks on the payment confirmation console.
It is very important that buyers or sellers do not click the “payment confirmation” button until they are sure they have received the fiat money from the other party’s bank. This is because once you give permission to sell the cryptocurrency, you can’t take it back.
Are P2P payments safe?
P2P transactions are safe as long as both devices involved are connected to a reliable network.
Before signing up, it’s important to find out about a provider’s security measures and how they prevent fraud. You should also be very careful with P2P payment systems. Blockchain is used by P2P networks to encrypt or protect your financial information, but you still need to be careful when choosing an exchange platform.
Peer-to-peer trading of cryptocurrencies gives you access to a large market of people who want to buy and sell. You can also choose from different payment methods. When you want to buy or sell cryptocurrencies, this is a tried-and-true method.a