Person-to-person (P2P) transactions are one of those wonders that make us grateful to live in these times; they are being used more and more frequently and have come to break down borders and revolutionize how payments are made worldwide. To give you an idea of the magnitude of this revolution, in Spain alone, it is expected that 100 million dollars will come from P2P transfers this year.
Likewise, in Latin America, peer-to-peer applications are becoming increasingly popular, making it easier to receive remittances and divide bills and accounts with friends or family. But what exactly is P2P? How do they work? And why use them instead of resorting to traditional and centralized financial systems? We will answer all these questions in this article, in which we will also tell you how they are related to cryptocurrencies and the benefits they can bring you.
What is P2P?
P2P stands for peer-to-peer and refers to an online technology that allows people to exchange information directly with each other without the need for a central entity to store that information.
It is crucial to make it clear that the term defines a type of application architecture and not the specific functionality of a final application; that is, this technology is used to achieve a higher end.
When we talk about P2P payments, we refer to those made through applications or networks that allow users to send money to another individual's account, for which a device with internet access is used. However, there are P2P platforms where you must trust a third party to store the banking information and carry out the corresponding transactions, as is the case with PayPal, for example.
Some applications allow users to exchange such information directly, which happens in El Dorado because, on our platform, the bank account details to be transferred are indicated directly in the order, but we will discuss this later.
This allows P2P marketplaces to be essential in expanding and diversifying the use of cryptocurrencies since, through this application, the decentralized and private spirit of cryptos can be maintained.
This speeds up the process of sending, receiving, and buying or selling cryptocurrencies using different local payment methods without complicating your life with much technical knowledge, exchanges, or platforms that significantly limit your options.
Having clear the definition and essence of P2P, it is time to delve into what you will enjoy the most: The advantages!
Since this technology emerged, users have seen various advantages and benefits, and the crypto world was no exception, so we will detail those you can enjoy when joining a P2P market.
- Ease of use and speed, faster than going to the bank to withdraw cash, and as easy as sending a text message. P2P applications allow you to send or receive money in a matter of minutes without the need to leave your home or regardless of whether both parties are thousands of kilometers apart.
- Practicality, with traditional payment methods, a large amount of data is needed, and you must carry out different bureaucratic steps to guarantee a money transfer. While in this case, the only thing both need is a common payment method and agree with the established price, and Voilá! The funds will be moved from one account to another so that both can enjoy their benefits.
- Reduction of commissions, although there are P2P platforms that charge small commissions for the transactions carried out by users, these are much lower than centralized protocols that allow international transfers, purchase and sale of currencies, and more. So, in the long run, using this option helps you save.
- Creation of opportunities, because P2P allows the emergence of a market for buying and selling goods, different prices begin to emerge for the same asset; this allows those willing to invest time and some money to generate income by carrying out various transactions we explain in more detail here. This opportunity is accessible to anyone with a bank account.
- Democratization of finances, in peer-to-peer platforms, users have an open market in which they choose with whom they will exchange their money and its price.
- Financial inclusion, through this alternative, those who do not have an international bank account can quickly receive payments from other countries; they need internet and a smartphone. This allows millions of people to be included in a financial system that gives greater power to its protagonists; the users.
Are there risks?
In general, P2P applications are safe and implement strict security measures that constantly evolve in favor of users. But as with any economic activity, there are risks, mostly linked to users' mistakes when implementing adequate security measures to protect their information and money. Also, because you usually interact with another unknown person, the other party may have malicious intent.
However, there is a solution; in the first case, you can significantly minimize the risk by implementing these security tips. To protect themselves from fraud attempts, peer-to-peer platforms develop a reputation, escrow, and dispute resolution systems that keep honest users protected.
In El Dorado, to ensure that transactions are completed successfully, users who wish to operate in the P2P market must complete an identity verification (KYC). In addition, the platform has an escrow and asks the P2P participants to rate their counterparty each time a transaction is completed, which creates a reputation that other users can see when they want to buy or sell cryptocurrencies.
In short, peer-to-peer markets are a safe place to exchange money and be included in the crypto world, which brings various benefits to everyone who uses it. Are you ready to enjoy the advantages of P2P and start your way to El Dorado? Create your account, verify your username, and connect with others through your local currency.