Bitcoin and other cryptocurrencies have quickly gained the attention of versatile markets across the globe. In addition to significant stakeholders, new users are also being introduced to blockchain technology and its many benefits. Although it can be challenging to navigate the world of Bitcoin and other altcoins, NeuronEx has made it easy for everyone to obtain, sell, and trade cryptocurrencies through a secure and robust platform. In this article, we discuss the many facets of trading Bitcoins and other cryptocurrency tokens through the means of an exchange. We shall also provide five points on keeping yourself safe and secure from fraud, malicious individuals, and harmful sites.
Understanding the Basics
Before you begin, have a quick look at the information provided below to gain an in-depth understanding of the nature of Bitcoin exchanges and how they work.
What is a Bitcoin Exchange?
A bitcoin exchange is a secure platform where users can obtain/buy, sell, and exchange cryptocurrencies and Bitcoins in a convenient manner. An exchange provides users and merchants a way to connect to each other, offer deals and attractive prices, and make liquid investments, all under one platform. The nature of a bitcoin exchange is similar to the stock market, but in a Bitcoin exchange, you trade cryptocurrencies instead of stocks or bonds.
The Types of Bitcoin Exchanges
There are two kinds of Bitcoin exchanges: the traditional exchange and the Peer-to-Peer exchange.
In a traditional Bitcoin exchange, clients and merchants are indirectly connected to each other, and no chat communication is enabled. Each transaction is handled by an automatic order book that acts as a middleman between the client and the merchant.
A traditional Bitcoin exchange offers faster transaction times but may provide higher exchange rates and take hefty commissions and fees per transaction from each party.
In this kind of exchange, the identity of both the buyer and the seller or merchant is protected, and the transaction is conducted anonymously.
What is a P2P Exchange?
A P2P exchange is slightly different from a traditional exchange as it allows direct communication between the merchant/seller and the buyer.
Furthermore, the seller can set specific terms and conditions for each listing they provide. They are free to include whatever statements they wish in their listing, as long as they follow a pre-determined set of rules that are enforced by the particular platform.
The seller and buyer can then interact directly through a chat option, agree on the terms, determine a transaction, and execute the exchange without needing a third party.
The Benefits of a P2P Exchange
A P2P exchange often offers more reasonable exchange rates and support for a more significant number of payment methods such as different cryptocurrencies, fiat currencies, and gift cards.
The P2P exchange allows buyers and sellers to freely talk and decide upon the terms of a transaction, without needing a mediating party to complete any transaction.
Although transaction times may vary, P2P exchange enables users to find more versatile and profitable deals than traditional exchanges.
How Does a P2P transaction work?
As the first step, a buyer enters the P2P exchange site and searches for deals among the multiple listing according to their preference. Once the buyer has found a good deal, they can view the terms and conditions set by the seller or merchant regarding this particular offer. Once these terms are reviewed, the buyer can directly message the seller or merchant and decide on the terms, limits, and conditions of the transaction according to their preferences.
The transaction can then be initiated, and each individual receives their share of the deal, as the platform stores the transacting amount from each user into a “vault” or safe. The transaction is only completed once both parties deposit their end of the bargain to the safe.
Is P2P like a Credit Card?
No, P2P is not similar to credit cards in any way. A correct analogy would be like a barter trade. You exchange something of value against another thing having a relative value equal to the number of assets you have transferred.
Buy, Sell, or Trade?
On a P2P exchange, users can sign up as merchants, traders, sellers, or buyers, depending on their requirements. You can conduct different kinds of transactions from a single profile as well. A merchant or seller ahs the ability to create a listing or deal that attracts buyers to their offer.
Users can either directly trade fiat currencies for Bitcoins and other cryptocurrencies and vice versa. Users can also exchange fiat and cryptocurrencies for gift cards or coupons that carry a particular value in fiat currencies or do the same for digital goods or credits redeemable at online platforms.
Five Things to Keep in Mind
If you are beginning to explore the realm of P2P Bitcoin exchanges, you should go through the brief list mentioned below to protect yourself from malicious individuals, harmful sites, and bad deals. Here are five points to consider when buying Bitcoin on P2P platforms.
Before you begin trading on a traditional or P2P Bitcoin exchange, it is best to check for the legitimacy of the website and its parent company.
To check for the status of the exchange, simply review each page carefully and search for the provider on the internet to find legitimate, independent, third-party mentions in news sources or other trustable places.
You can also check the legitimacy of the exchange by searching for the contact details and verifying the address or contact information through independent listings on the internet.
The Bitcoin exchange you use must provide a high-security level to ensure that each transaction is completed safely and that malicious individuals can not target or trace your personal details through the site.
If the site asks for personal details other than your Bitcoin wallet or public shared keys such as your address or contact number, think again before submitting the details and check whether other sites ask for the same information.
You can verify the site’s security by having a look at the address bar to check if the web address begins with an “https” header, which signifies a secure certificate and connection to the site.
You can also utilize a Two-Factor authentication option to add a layer of security to your account.
Terms and Conditions
Be careful to read the entirety of the terms and conditions of the exchange and individual listings in the case of a P2P exchange and ensure that you fully understand all statements and information provided by the seller and the site.
It is best to visit the FAQ page of the site and get an idea of the fees, commissions, and terms specific to the exchange.
In the case of individual listing, you can directly ask the merchant or seller to clarify confusing or complicated statements to ensure that you move forward with full consent and knowledge of what is being offered and taken.
- Exchange Rates and Fees
One thing that applied to all Bitcoin exchanges is that if it seems to good to be true, it probably isn’t true at all! Keep an eye on the Exchange rates offered by the Bitcoin Exchange platform and individual merchants and sellers.
By comparing the offers from various sources and different listings, you can get a clear idea of what to expect in any specific case and steer clear of listing and offers that seem suspicious or too far above or below the average to be legitimate and authentic.
You should also visit the page that specifies the different rates of commissions or fees that apply to each transaction through a specific exchange to get an exact idea of what charges you will incur and the liabilities you must agree to accept.
Limitations and Special Considerations
Keep a close eye on the limitations specified by the Bitcoin exchange, as individual platforms enforce certain geographical restrictions or currency limitations.
Once again, you can visit the FAQ page of the Cryptocurrency Exchange you are using, and ask the merchants and seller with whom you are dealing for any special terms and conditions you must be aware of before proceeding a transaction.
There may also be legal restrictions in certain areas or countries that should be considered before initiating a transaction. You should be well-versed with regards to the local laws or policies that apply to cryptocurrencies and blockchain technology in your area of residence.
How to Keep Yourself Safe
The internet is a tricky place, and sometimes, you are exposed to risks and dangers posed by malicious individuals, fraudulent entities, and scam websites.
To keep yourself safe, you must ensure that you refrain from providing highly personal information such as your address or contact details unless you are entirely sure regarding the authenticity and legitimacy of a merchant and exchange platform.
It is best to conduct preliminary research regarding a Bitcoin exchange or any other cryptocurrency platform before engaging in financial transactions through the site.
It is highly advised to research the legal status of blockchain technology and cryptocurrencies in your area of residence, as certain jurisdictions may have conflicting policies regarding cryptocurrency transactions.
Remember, being well-informed is the best way to ensure your safety and security in all matters, especially when it comes to Bitcoin.
We hope that we have covered most of the basics and advanced concepts related to Bitcoin exchanges and blockchain technology in general.
By following the rough guidelines mentioned above, you can protect yourself from scams and fraud and engage in profitable cryptocurrency trading using legitimate Exchange sites and platforms.
We wish you Goodluck and Godspeed for your future investments and hope you find the wonderful world of cryptocurrencies as exciting and engaging as we do!