Are you a cryptocurrency enthusiast, looking to know more about cryptocurrency exchange development? The article gives you a high-level overview of how cryptocurrency is revolutionizing the global trading space. Also, we will analyze the development aspects and benefits of a peer-to-peer cryptocurrency exchange. At Oodles, we provide a range of cryptocurrency exchange development services.
P2P crypto exchange is essentially the decentralized form of exchange, maintained and operated exclusively on a blockchain-powered software or platform. In usual scenarios, there is always intermediaries involved to execute transactions and trade. In a p2p exchange, no third-party or intermediaries oversee the transactions.
Rise of P2P Exchange
P2P exchange came into prevalence in 2014, when cryptocurrency faced setbacks in the form of scams. Due to which, many countries denied the use of cryptocurrencies. It gave rise to a new system that we today know as p2p cryptocurrency exchanges. It is quite contrary to the centralized way of exchanging money, where two companies or entities can directly exchange cryptocurrency.
As the types of trading got diversified, the methods of exchange too changed. Earlier, if someone needs to exchange cryptocurrencies, they used to post an order, containing the amount of and price of cryptocurrencies. A common ledger used to collect all such orders, and thus, got termed as an order book. Then, users would select an order suitable to their budget. The trading process used to begin as soon as the buying and selling order is matched. The entire process was (is) time-consuming, while it also involved intermediaries. Consequently, the p2p cryptocurrency exchange script came into the role and made the cryptocurrency exchange development process easier.
In a p2p exchange model, when users trade their cryptocurrencies, the trade settlement happens instantly. Although here the physical currency process remains in process, the trade settlement between users come to a closure. The p2p crypto trading software analyzes orders and connects people with similar interests. Further, they get into negotiation and complete the trade within themselves only. The trade does not get into the hands of any third party. However, for security purposes, they involve third-parties as arbitrators. P2P cryptocurrency trading software enables users to find orders quickly around the world.
If you want to develop a p2p cryptocurrency exchange platform, knowing the benefits is crucial. The followings are a few significant benefits of developing and launching a p2p cryptocurrency exchange platform.
In a p2p exchange, every transaction happens on the blockchain’s public ledger. It eliminates the need to worry about the counterparties’ authenticity. In addition, their KYC details remain in sync with the blockchain database. It means that there are nominal chances of identity and other types of fraud.
All transactions happen on the blockchain’s public ledger, which means there almost no chance of fraud or detail hack. Every information and transaction on blockchain’s ledger remains distributed across the network with the embedded encryption mechanism. Thereby, it enables the traceability of information when only authentic parties need access.
When we go to exchange fiat money, it takes days to weeks for international transactions. P2P exchange models enable fast, global, efficient, and cost-effective transactions. They enable any person around the world to conduct transactions on the platform. Even the countries that don’t allow the use of cryptocurrency can make transactions in this mode. It is also the factor why crypto buyers and sellers are preferring this mode.
When a transaction involves multiple intermediaries, its operational fee increases. However, the p2p exchanges are based on software that has blockchain as the underlying technology. It reduces the operational costs to almost zero. Sometimes, there is some fee levied which remains comparatively low to other exchanges.
P2P cryptocurrency exchanges don’t require a third party operator to execute transactions, thereby, ensuring complete privacy. They directly connect buyers with sellers and the transactions take place only between them. In addition, blockchain attributes, such as distributed ledger, immutability, and encryptions further strengthen the security of the entire platform.
Some important things to remember here can prevent most of the fraud cases in cryptocurrency exchange development.
Whenever any transaction happens, a community of people is set up to oversee it. These people assist users in managing the privacy of deposits privacy, time for a trade, etc. Generally, they play their role when a dispute starts to emerge between a buyer and a seller.
Another right security feature is enabling both the transacting parties to pay some amount before the trade. If the trade settlement is successful, the escrow can release the amount through smart contracts.
Apparently, P2P cryptocurrency exchange models offer comparatively more features than the traditional ones, including security features, efficiency, and cost-effectiveness. However, it is necessary to ensure that you are aware of the cryptocurrency laws in your country. Also, ensure that buyers and seller have their KYC details submitted to involve in crypto trading. If this seems a hassle, you can also reach out to a reliable cryptocurrency exchange development company.