P2p exchanges act as an arbitrator between person-to-person exchanges. One difference with a traditional exchange is that you have a greater variety of payment methods.

Person-to-person (P2P) exchanges were the beginning of the purchase and sale of cryptocurrencies. The first bitcoins were exchanged directly between people and this modality is even more current ever . Times have changed, new platforms have been born, but the question remains: what is the best P2P cryptocurrency exchange platform that exists?

What are and how do P2P cryptocurrency exchanges work?
A P2P exchange is a transaction between two people. One gives the payment (be it fiat money or cryptocurrency) and the other sends the purchased crypto asset. These types of trades occurred in small environments of trust at the beginning of Bitcoin.

With the massification, many more people demanded to use cryptocurrencies, and not everyone had a trusted friend to buy or sell from. In favor of this, and to create secure exchange ecosystems, p2p exchanges were born . These, while allowing person-to-person exchanges, act as arbitrator in the event of disputes between those involved.

A P2P exchange is responsible for linking buyers and sellers. These platforms represent a safe environment for the exchange since, through different systems, they guarantee that the seller does not run away with your fiat money and your bitcoins.

One of the main systems used by P2P exchanges to guarantee a secure exchange is escrow or escrow. This system is based on depositing, in a portfolio, the cryptocurrencies to be exchanged . When the transfer is complete, and both parties agree, the funds will be released to the buyer.

Another feature used by P2P exchanges is the reputation system. Every time you make an exchange, both you and the person with whom you exchanged, must leave a weighting on the experience of the exchange. These small feedbacks will generate your reputation, which will allow other users to trust you according to your transaction history.

The prices of P2P exchanges are established through the free market and the law of supply and demand . It is the same users who decide the price at which they want to sell their cryptocurrencies, and their counterparts choose whether or not to buy at that price.

This, in essence, is the basic operation of P2P exchanges. Some platforms have innovated and improved this escrow system , offering greater control and decentralization over deposits .

Cointraffic
Learn more about the different types of exchanges on the CryptoNews Cryptopedia here .

Advantages and disadvantages of using P2P exchanges

Advantage
Variety of exchange rates.
Greater availability of payments in local currency.
Exchanges with cash deposits directly into the bank account.
You avoid the potential censorship of linking your bank account to an exchange.
Accepted in a large number of countries.
Good liquidity, depending on the platform.

Disadvantages
Scams derived from social engineering .
In some exchanges you must first deposit within the platform, giving up control of your cryptocurrencies.
Variable waiting times.
You will need to build reputation before you can trade large sums.

If you are thinking of using any of these exchanges, and it is your first time buying, take into account the reputation systems. Try to always buy with reputable users, who have a good history of transactions within the platform.

What are the criteria for choosing the best cryptocurrency exchange
The answer to this question is quite subjective. Perhaps the best exchange for you is not the best for your friend Juan. There are several criteria to take into account and that place one platform above another .

In this article, we set ourselves the task of comparing 4 giants in the field of P2P cryptocurrency exchanges, such as Localbitcoins, Binance P2P, Localcryptos and Paxful. So, to help you answer which is the best exchange for you, we have proposed a series of criteria that will help you assess which is the best P2P exchange.

Geographic availability
Find out if the P2P exchange is available in your area. This is the first question that you must answer. Bitcoin is a free cryptocurrency, it is not limited by any border, but exchange platforms are regulated by law , and may be prohibited in your country. The countries that limit the activity of P2P exchanges are quite rare, so do not worry and investigate if the exchange is available in your country.

Available cryptocurrencies
The next point on the list is to find out the cryptocurrencies that you can exchange within this exchange. There are exchanges that allow P2P exchanges between cryptocurrencies, such as Localbitcoins, in which users can only buy and sell bitcoins for national currencies , but they can exchange their BTC for seven other cryptocurrencies.

There is also the case of Binance P2P, which, being integrated into the trading platform, allows depositing and exchanging the entire catalog of cryptocurrencies supported by Binance, which exceed more than 500 available. Even so, within Binance P2P it is only possible to exchange seven cryptocurrencies directly.

Payment methods
As we mentioned at the beginning, one of the main utilities offered by this type of P2P exchange is offering liquidity in your local payment method. Of course, it is also used to buy and sell foreign currency. In CriptoNoticias we even have a tutorial on how to send remittances using Localbitcoins (it can be used for any P2P exchange).

Your task, in this case, is to investigate if the exchange works with the fiat currencies that you want to use and if the means of payments that you use are available, be they bank transfers, payment processors, or any other.

commissions
Commissions are also another vital point when choosing an exchange. Find out if the exchange charges any kind of commission for depositing, for keeping your cryptocurrencies in storage, and for withdrawing. These also include transaction fees. Similarly, it is necessary to take into account if the exchange establishes minimum limits for withdrawals.

Liquidity
Liquidity refers to the amount of money that the exchange moves on a daily basis. In the case of P2P exchanges, liquidity is determined by the number of users who post buy and sell announcements.

Easy to use
This attribute refers to how simple and user-friendly a platform can be. Including user help such as tutorials or step-by-step guides, that there are no obstacles or currencies in the sale of bitcoin and other cryptocurrencies.

Remember that in CriptoNoticias you have a complete section of tutorials, dedicated to explaining in detail how to use the different platforms, including P2P exchanges, in an easy way.

Escrow type
The escrow , as well we explain, are the central basis of the exchange. These work with or without custody.

In exchanges with custodial escrow , the exchange is the only one that owns the private keys of the cryptocurrencies . This means that you have to trust the platform while it is keeping your funds.

In the case of non-custodians, the private keys of the escrow are divided into three: one for the buyer, one for the seller and one for the exchange. To release the funds it is necessary to have 2 of the 3 escrow keys . The exchange retains one of the keys to dispute resolution.

In this case, it is difficult to say which one is better than the other. In the world of cryptocurrencies, it is often assumed that “centralized is bad”, but this can have nuances. Before evaluating what type of escrow to use, consider other criteria.

Identity verification
Identity verification is a requirement of exchange houses. Bitcoin will never ask you to reveal your identity. Of course, these types of policies are based on regulations by law that P2P exchanges must comply with.

These types of verifications usually have levels according to the volume of trade. Based on this, you should find out how many levels of security the P2P exchange has, and if you can comply, at least, with the basic level of commerce.

What is the best P2P exchange to buy and sell cryptocurrencies
In Spanish there are a large number of P2P exchanges to have available. However, there are four giants that dominate the market: Localbitcoins, Binance P2P, Localcryptos and Paxful. Which one is the best for you? Let’s get to know each one of them.

Localbitcoins

Geographic availability: It operates in more than 150 countries, including all of Latin America and Spain.
Available cryptocurrencies: Bitcoin (BTC). It also offers BTC exchanges to 7 other cryptocurrencies.
Payment methods: Varies by country, with bank transfer being the most common.
Commissions: Establishes deposit and withdrawal commissions, varying according to network congestion. Charge 1% commission per exchange.
Type of escrow : Custodian.
Identity verification: Mandatory. It has different levels.
Localbitcoins is one of the oldest P2P exchanges that offers buying and selling exclusively of bitcoins. This exchange accepts 7 other cryptocurrencies among its payment methods. That is, you sell your bitcoins, you receive another cryptocurrency as payment, or vice versa.

Among the negative details present in Localbitcoins is its interface and ease of use, since it is usually quite rough, receiving minimal aesthetic updates in recent years. It does not offer a step-by-step guide on how to buy and sell for inexperienced users. Although it should be noted that the site is in Spanish.

This exchange, at least in Latin America, usually offers good liquidity, which translates into quite competitive prices compared to other exchanges. This is one of the main highlights of Localbitcoins.

Learn how to use LocalBitcoins in this tutorial .

Paxful
Geographic availability: More than 100 countries. Its use in Venezuela and Cuba is banned.
Available cryptocurrencies: Bitcoin (BTC), Ether (ETH) and Tether (USDT).
Payment methods: More than 350 different payment methods.
Commissions: In withdrawals it varies depending on the amount sent and the cryptocurrency. It does not charge commissions for deposits. More information here .
Type of escrow : Custodian.
Identity verification. Not mandatory for operations under USD 1,000 per year. Rather, it needs to be verified.
Paxful is an exchange that had a deep restructuring of its interface. It currently offers a very clean look and user guides. This makes it a very easy and intuitive cryptocurrency trading system.

This exchange is known for the large number of payment methods it offers, reaching more than 350 methods. The characteristic of Paxful is that it is possible to sell BTC, ETH or USDT in exchange for gift cards from different companies, such as Amazon, Netflix, Ebay, among many others.

Despite being banned in Venezuela and Cuba, Paxful is fully available in the rest of the Spanish-speaking territory. It offers good liquidity in the different markets, with BTC and USDT being the ones with the greatest demand.

Learn how to use Paxful in this tutorial .

LocalCryptos

Geographic availability: Worldwide. The amount of national currencies varies according to the offer.
Available cryptocurrencies: Bitcoin (BTC), Ether (Ether), Dash (DASH), Litecoin (LTC).
Payment methods: more than 40.
Commissions: 1% charged between the seller and the buyer. It does not establish deposit or withdrawal fees beyond the network fees.
Type of escrow : Non-custodian.
Identity verification: No.
LocalCryptos, formerly known as LocalEthereum, is a somewhat different platform than the rest of the ones you will find in this list. Its main characteristic is to offer exchanges without custodians . You, as a user, will own the private keys of both the wallets within the exchange and the escrow . Learn more about how the LocalCryptos platform works in this review .

An important point about P2P exchanges on LocalCryptos is that it does not require identity verification of any kind. Although this protects the privacy of users, as a result of this characteristic, a very unfavorable point arises and they are triangulation scams.

In this type of scam, the scammer captures the victim through the alleged sale of an asset. Subsequently, you share the bank details of a third party to make the deposit; on the other hand, the scammer has opened a BTC purchase on a p2p exchange (Any exchange is vulnerable to this type of scam). The scammer then shares the BTC seller’s data to the victim .

When the payment is made by the victim, the seller, unaware of the situation, is notified. This releases the BTC because, indeed, it has received the payment. The criminal flees with the victim’s fiat money, converted, in this case, into BTC.

In this situation, the victim is totally vulnerable since the data received for the transfer does not correspond to the offender and he cannot proceed with the complaint. This type of situation is mitigated a bit with identity checks , since users must share real personal information.

Regarding the interface and ease of use, LocalCryptos is very good. It offers step-by-step guides in Spanish on how to buy and sell within its portal. A good point about LocalCryptos is that it does not set minimum withdrawal amounts.

Learn how to use LocalCryptos in this tutorial .

Binance P2P

Geographic availability: All of Latin America and Spain.
Available cryptocurrencies: Bitcoin (BTC), Tether (USDT), Binance USD (BUSD), Binance Coin (BNB), Ether (ETH), DAI and EOS.
Payment methods: More than 70 payment methods that vary by region.
Commissions: There are no exchange or deposit fees. Withdrawal fees depend on the cryptocurrency.
Type of escrow : Custodian.
Identity verification: Yes, mandatory.

Binance P2P is one of the newest P2P exchanges on this list. It works as a module within the entire Binance suite of services. This offers a great advantage over the exchange between cryptocurrencies, since you can exchange between the more than 500 cryptocurrencies and tokens accepted by the exchange, for one that is available within the P2P market.

Identity verification within Binance is optional for certain trading volumes. However, for all those who wish to use the P2P platform, it is mandatory. It will also be necessary to verify the phone number.

A point against that can be found in Binance comes from the commissions and minimum withdrawal amounts . These are usually quite high, in the case of BTC, at the time of writing this tutorial it is 0.0005 BTC. This must be taken into account if you plan to buy low amounts and transfer them to your wallet. The amount may vary depending on the network congestion and the cryptocurrency.

Learn how to use Binance P2P in this tutorial .

So what is the best P2P cryptocurrency exchange?
The answer to this question is quite obvious: the one that you consider the best. If you don’t know which one to tell you about, as advice, create an account in each of them, and compare prices and liquidity of offers in your country, so you can have a better idea. Remember that you can learn how to use each of these platforms in the tutorials that CriptoNoticias has for you.