How to make money using peer-to-peer cryptocurrency trading?
With the introduction of economic sanctions against Russia, the relevance of peer-to-peer cryptocurrency trading has increased significantly. In this article, you will find answers to the main questions about this type of activity.
What is meant by peer-to-peer cryptocurrency trading?
Peer-to-peer cryptocurrency trading, also known as P2P trading, refers to the process of buying and selling digital assets directly with individuals and businesses, without the need for intermediaries. In other words, it is the process of exchanging virtual currencies between people and organizations without the involvement of trusted individuals, such as exchange employees.
Where can I do peer-to-peer cryptocurrency trading?
Peer-to-peer trading of virtual currencies is conducted on:
- Exchanges.
- Specialized platforms.
P2P digital asset trading is available on many popular centralized exchanges, such as HTX, Binance и bybit. In addition, these services are provided by platforms that deal exclusively with P2P trading, in particular LocalCoinSwap, Paxful and Hodl Hodl.
Typically, specialized platforms offer more digital assets. For example, on LocalCoinSwap you can buy bitcoins, ethereums, Litecoin (LTC), stablecoins Tether (USDT) and USD Coin (USDC), as well as several other popular digital assets. bybit the range is limited to four coins: BTC, ETH, USDT and USDC. However, there are exceptions, because Hodl Hodl Only bitcoins are traded.
Some of the cryptocurrencies you can buy and sell on LocalCoinSwap
How to buy cryptocurrency on an exchange in a peer-to-peer manner?
Let’s look at the process of purchasing digital assets using P2P trading using the HTX exchange as an example. In order to purchase coins, you need to register on the platform and pass identification. Then follow these steps:
- Go to the Fiat section in the Assets tab;
- Click on the «Buy» button;
- Select a digital asset and fiat currency;
- Find a suitable offer and click on the “Buy” option;
- Enter the amount and click on the “Buy” button;
- Transfer money to the seller’s account.
Interface for purchasing cryptocurrency on a P2P platform in the HTX mobile app
Once the seller confirms receipt of funds, the virtual currency will be credited to your spot account, and you can earn passive income from storing it by opening a deposit in the Earn section. Currently, the exchange pays only 1,5% per annum for blocking bitcoins. The benefit from staking and deposits in other coins is higher, but they carry a greater risk associated with a fall in the rate of digital assets.
Profitability of locking different virtual currencies on HTX
How to make money on peer-to-peer cryptocurrency trading?
Peer-to-peer cryptocurrency trading will be profitable if you manage to sell the coins at a higher rate than at the time of purchase. LocalCoinSwap and Paxful do not provide services to residents of Russia, so let’s look at the process of exchanging bitcoins for rubles on the platform Hodl HodlTo perform this operation on the platform, you need to create an account and:
- Select the Sell BTC option, currency and payment method;
- Click on the buyer’s offer;
- Enter the amount of BTC or the cost of cryptocurrency in rubles and the address of your crypto wallet;
- Click on the Generate escrow option to create a contract, enter a password and wait for the buyer to do the same;
- Transfer bitcoins to the address written in the contract and click on the button I’ve sent the funds;
- Wait until you receive the money and select the Release deposit function.
Some offers to buy bitcoins on Hodl Hodl
What are the benefits of peer-to-peer cryptocurrency trading?
Among the advantages of peer-to-peer trading of digital assets, it is worth noting:
- Low or no commission.
- Possibility to make transactions in rubles.
- Wide choice of payment systems.
- More favorable asset rates.
Exchanges do not charge a fee for P2P cryptocurrency trading, so you can buy and sell coins without any additional costs. However, some trading platforms charge a small fee for creating coin exchange offers to combat spam. On specialized platforms, you have to pay up to 0,5% of the transaction amount for processing the transaction. At the same time, the commission for depositing and withdrawing fiat currency on exchanges often exceeds 1%, therefore, peer-to-peer trading is more profitable.
After the introduction of economic sanctions against the Russian Federation in 2022, exchanges removed trading pairs with the ruble, as a result of which Russians lost the opportunity to buy and sell digital assets for fiat currency. But P2P trading came to the rescue and became a good alternative to the traditional order book on exchanges.
As a rule, peer-to-peer trading platforms offer more options for sending and receiving fiat currency. For example, on HTX, rubles due for digital assets can be received through the SBP, on cards of all leading banks, in the YuMoney and WebMoney services.
Buyers and sellers of virtual currencies compete with each other and, in order to get ahead of their rivals, offer more favorable exchange conditions. In particular, USDT stablecoins tied to the dollar can be sold at a rate of up to ₽89,3, while the official price of the American currency is only ₽80,58. Accordingly, a higher rate makes it possible to increase the profit from selling coins.
USDT Stablecoin Purchase Announcements
What are the disadvantages of peer-to-peer cryptocurrency trading?
P2P trading is not without its downsides, including:
- Long wait for the transaction to be completed;
- Risk of fraud;
- Risk of account blocking.
Cryptocurrency purchase and sale transactions are carried out manually, which is why they can sometimes take a long time to complete. To avoid long waits, pay attention to the transaction time limit specified in the ad and give preference to options with a small limit. But usually traders get in touch quickly, and transactions are completed in 10-15 minutes.
Time limit for transactions
Scammers sometimes take advantage of peer-to-peer cryptocurrency trading. They exchange stolen fiat currency for digital assets and then transfer them to mixers to legalize their illegally obtained income. Respectable market participants who sold coins to scammers for “dirty” rubles may be accused of fraud, recognizing them as accomplices of criminals. In order not to fall into the hands of criminals, cooperate only with traders who have made a large number of transactions with a high percentage of success.
Traders’ transactions information
In Russia, it is allowed to sell and buy virtual currency, but the bank accounts of citizens who perform such transactions can be blocked. This paradox is explained by the risk of making illegal transfers using digital assets. Most often, accounts are unfrozen after clients provide the necessary information, for example, about exchanging cryptocurrencies. Despite this, sometimes the service agreement is terminated, and the money has to be transferred to another bank.
