10 Best P2P Crypto Exchanges To Know About in 2024

P2P crypto exchanges compared

What are P2P crypto exchanges?

Peer-to-peer (P2P) crypto exchanges are online platforms where users looking to buy and sell crypto can connect directly with minimal oversight. Unlike centralized exchanges, these P2P platforms don’t depend on order books to fill demand. Instead, buyers and sellers list themselves on the platform along with their offers. 

For example, suppose you have 1,000 USDT to sell. You can register on the platform and list your offer along with an asking price. Additionally, you can specify terms and conditions so long as they are in tune with the general platform’s policies. For instance, your terms may include preferred payment methods, minimum and maximum purchase amounts, alternative communication methods, and even identity verification for added security by following KYC norms (even if the platform does not enforce a strict KYC policy).

Any buyer willing to buy at your asking price while agreeing to your terms will contact you. Note that the buyer may opt to buy all 1,000 USDT at once, or offer a partial amount equal to or above the minimum purchase amount you have set. You will be notified once the buyer makes the payment, which is often protected by escrow. Once the payment is made, you can release the agreed-upon amount of USDT. 

P2P exchanges operate on automated computer protocols or smart contracts based on the architecture. As there are no human interventions in the process, a large workforce is reduced; thereby reducing the transaction costs.

Libin M: LinkedIn

Why use a P2P crypto exchange?

P2P crypto exchanges offer a more direct and often more private way to buy and sell cryptocurrencies. These platforms cut out intermediaries by connecting buyers and sellers directly, which then enables them to offer lower fees, faster transaction times, and increased control over your trades.

Here are the key areas where P2P exchanges often excel compared to traditional crypto exchanges:

• P2P exchanges enable sellers to set their own prices independently of market prices. This also allows buyers to find good deals on popular cryptos. In contrast, traditional exchanges assign a set price relative to market demand.
  
• Transactions on P2P exchanges can also be completed quickly if the buyer and seller are active online. In this, the buyer sends payment, the seller confirms receiving it, and then instantly releases the crypto. Finally, the buyer can transfer it to their wallet.
  
• This form of transaction is also more suitable for countries with crypto restrictions. In places like China and Bangladesh, which have stringent laws against crypto, peer-to-peer exchanges act as a way around this by facilitating direct transactions between individuals. Banks see these just like any other money transfer and not as crypto-related transactions.
  
• P2P exchanges generally use escrow systems to hold funds during transactions to protect both buyers and sellers from potential disputes and malfeasance.
  
• P2P exchanges generally support an array of payment methods, including popular ones like PayPal, Skrill, and Western Union, as well as local bank transfers and mobile payments. In contrast, traditional crypto exchanges and even decentralized exchanges (DEXs) often offer less variety in payments.

Risks of P2P trading

There are a number of risks associated with P2P trading. The first is related to the fact that these platforms facilitate direct communication between traders. It is, therefore, important that traders avoid sharing personal and financial details, as phishing scams are prevalent.

Redressal in crypto P2P scam cases is an uphill battle. The lack of clear regulations and complexity of the fundamentals of peer-to-peer transactions, decentralized ledgers, and the pseudonymous nature of crypto wallets among law enforcement officials makes it incredibly challenging to seek justice.

Pawan Laddha, senior partner at AMLEGALS and blockchain/Fintech lawyer

How to choose the best P2P crypto exchanges

Choosing the best P2P crypto exchange involves considering several key factors, including:

Security 

First on the list is crypto security. At the very minimum, the platform should have advanced encryption protocols and features like two-factor authentication in place to ensure that user accounts are not compromised. Look for exchanges with solid reputations and positive security-related reviews.

Once your transaction is complete, it is best practice to move your fund to a secure, non-custodial cryptocurrency wallet for safekeeping. Note that mature platforms that comply with crypto regulations in their respective locations will always be a safer bet than newer, entirely unregulated peer-to-peer exchanges.

Ease of use

The user interface of a platform is key. A properly designed, user-friendly interface will make your overall trading experience smoother — more so if you are new to P2P trading. The best P2P exchanges provide clear instructions along with easy navigation to make sure transactions run smoothly. 

Liquidity

Liquidity is another important factor. High liquidity in a P2P platform means quick buying and selling of cryptocurrencies with competitive pricing. Check the trading volume and the number of users on the platform to ensure it offers enough liquidity. A high trading volume typically indicates a more reliable and effective market. 

Range of crypto

You should also consider the range of cryptos supported. Some peer-to-peer crypto exchanges have a broad scale of digital assets, while others work with a few significant coins. Select an exchange that supports the crypto you are interested in.

Fees

The transaction fees applied by P2P exchanges vary considerably. Compare fee structures and look for an exchange offering competitive rates without compromising on crypto security or service quality. Some platforms charge flat rates per transaction, while others charge a percentage of the trade amount. Almost all of the exchanges we have listed above don’t charge any fee on P2P trades (as of June 2024).

Payment methods

Payment methods also matter. The great thing about peer-to-peer exchanges is that they usually support various forms of payment: bank transfers, credit and debit cards, or even cash. This variety ensures you can choose a method that is most convenient and cost-effective for you. 

Customer support

Finally, check out the customer support of each platform you are considering. Ideally, you should look for exchanges with responsive, helpful support you can reach through various means, including live chat, email, and even phone support.

How to stay safe when P2P trading

Considering the risks involved, trading on any P2P platform usually calls for several key precautions:

• Always start by checking the reputation of the counterparty you are considering trading with. Verified accounts with good overall feedback from previous transactions are usually safer to trade with.
  
• A strong password is a must-have for protecting your account, irrespective of the platform you are using. Ideally, you should also enable two-factor authentication (2FA) to add an extra layer of protection.
  
• Keep up-to-date on the latest scams to avoid falling prey to fraudsters. An easy way to do it is to regularly follow relevant subreddits or other social media channels where P2P users share their experiences.
  
• Always begin with smaller amounts to build trust when dealing with a new trader
  
• Keep all conversations and transactions within the P2P platform. This is to ensure that you have detailed records of all conversations and transactions in case of disputes.

In addition to these standard precautions, you should ideally prioritize P2P platforms that offer escrow services for an added layer of security. More on that in the next section.

What’s an escrow system?

Escrow is the safety valve that protects buyers and sellers from malfeasance and potential disputes. In this financial process, a neutral third party holds funds or assets for a time before transferring them from one party to another. The third party, known as the escrow agent, holds the funds until both the buyer and seller have fully met their end of the contractual requirements.

Let’s illustrate the underlying concept using the previous example. Again, you are the seller offering 1,000 USDT. Suppose you have already received a buy-offer for all 1,000 USDT. However, the buyer is an anonymous person you may have never previously dealt with. So, naturally, you would prefer to have assurance that the buyer won’t default on the payment after receiving the USDT. Similarly, the buyer would also like to have the assurance that you wouldn’t back out of the deal unfairly after receiving the payment.

When P2P crypto exchanges offer escrow services, the platform is often the escrow agent. The buyer can place the funds with the instructions to disburse it only after the seller, i.e., you, releases the correct amount of USDT as per the agreement. So, the platform effectively locks the funds. Once you have released the USDT, the payment will be forwarded to you. 

Dispute resolution by escrow agents

The ideal P2P crypto exchange with escrow protection usually has the following grievance redressal mechanism:

• It starts with an agreement between the two parties. Both parties agree that the escrow platform will hold the buyer’s payment until they confirm receipt of the agreed-upon crypto.
  
• If there is a disagreement between the buyer and seller, either party can initiate a dispute within a specified timeframe. For instance, the seller might kick off the dispute by claiming that they have not received payment. Conversely, the buyer could also trigger the dispute by claiming not to have received the crypto.
  
• Once a dispute takes place, the onus is on both parties to back their claims. The escrow agent may ask them to submit proofs such as communication logs, transaction IDs, screenshots, and other relevant info.
  
• The exchange’s dispute resolution team or an appointed mediator then reviews all the evidence submitted by both parties. This process may take some time.
  
• The escrow platform gives its verdict after a thorough evaluation of all the evidence before it. The decision could be to release the funds to the buyer or seller, or, in some cases, to refund the transaction entirely.