Buy Bitcoin Without Fees, How P2P Exchanges Work Explained
There is no doubt Bitcoin is the most desirable cryptocurrency to have in 2020. Despite extremely volatile market conditions, BTC is still in great demand. There are lots of places where one can buy BTC starting with usual crypto and instant exchanges to peer-to-peer or person-to-person (P2P) crypto marketplaces and so on. Anyone wants to spend less and get more and this also concerns cryptocurrency. Today, we are going to explore how to buy Bitcoin without fees.
It might seem that centralized exchanges do the same thing as P2P markets and it won’t be a lie. They connect buyers and sellers just like P2P exchanges do. However, there is one great disparity.
A centralized crypto exchange aggregates orders from both buyers and sellers to match them. Once they are matched, a transaction has to be processed within a crypto exchange. This means a certain crypto exchange through which transactions are made is also a participant of a trading process. Or to put it simply a third-party, middleman, intermediary and so on. Acting as an intermediary, a crypto exchange makes a user trust it with not only personal information but with a belief the exchange won’t be hacked or compromised in any manner.
Centralized exchanges currently held the biggest share of the crypto market trading and provide higher liquidity and volume than P2P ones. Most crypto exchanges have top-notch security features that make trading quite secure. However, sometimes hacks take place on the centralized exchanges.
How P2P Exchanges Work
Unlike centralized crypto exchanges, P2P platforms connect a buyer and a seller directly without any involvement of a third party. Consequently, this reduces expenses on maintenance work and as a result, a user can purchase cryptocurrency with paying either low fees or not paying them at all.
When exchanging crypto via P2P platforms, a user doesn’t need to trust a third party. However, there is a necessity to trust another peer, which might occur as a bad actor. To prevent any kind of fraud and speculation, P2P exchanges introduce an escrow feature. Both a buyer and a seller have to deposit a certain amount of BTC. Once the trade is done, the deposit returns to counterparties.
Another solution is proposed by LocalBitcoins. The platform offers its users to meet in the physical world to process the transaction, so every part will be assured there is no set-up.
Advantages and Disadvantages of P2P Exchanges
Just like regular crypto exchanges, P2P platforms have their own upsides and downsides. Here is the gist.
Advantages of P2P Exchanges
Instant crypto swaps. BTC and other altcoins can be purchased in a fast manner.
Cost-saving. Most P2P platforms offer cryptocurrency exchange with no or low commission fees.
Availability. BTC can be acquired anytime and anywhere.
A wide range of payment options. Bitcoin can be bought with a credit card, cash, Western Union, PayPal, and so on.
Security. As peer-to-peer platforms are not run by a single organization or group of people, they are more tolerant of any interference from outside. Moreover, decentralized platforms do not store or interact with users’ funds. Your assets cannot be lost or stolen from a P2P exchange, as there aren’t any. In these terms, P2P markets are just connectors between a seller and a buyer.
Disadvantages of P2P Exchanges
Low liquidity. Despite being on the market for a long period of time, P2P platforms are still relatively new to users. Low liquidity and lower trading volume are interdependent, as a result, such exchanges can’t provide better rates to users.
P2P exchanges are not currently suitable for large buyers and sellers.
New P2P services often do not work for crypto novices as UX and UI are not intuitive.
If there are any issues between a buyer and seller, the platform is not able to resolve these problems.
How to Choose a P2P Exchange
You have to choose a P2P exchange wisely. Do your own research about the exchange. Examine reviews on a P2P exchange preferred (pay attention to the negative ones).
Look closely at FAQ and study all pitfalls. A P2P exchange might not charge any fees when you buy cryptocurrency. However, if you like to transfer your funds to another wallet, an exchange might charge extra fees. There also can be additional fees in case you choose a certain payment option.
Every exchange provides a certain amount of liquidity and volume. The more transactions a P2P exchange has, the more liquidity there is and as a result, better rates are provided.
Most Popular P2P Exchanges in 2020
LocalBitcoins and Paxful have been providing a P2P exchange service for a considerable period of time and they have a certain reputation in the crypto community. These platforms allow you to buy BTC without fees.
LocalBitcoins is a veteran of the crypto industry. Launched in 2012, this P2P platform has been offering Bitcoin purchases in a fast and private manner for almost a decade. Today, the service is available in 248 countries including Canada and the United States. A P2P LocalBitcoins platform enables escrow to protect users’ funds and support over 60 payment methods such as PayPal, Western Union, etc.
LocalBitcoins allows you to sell and buy BTC without any fees. Notably, transactions to other LocalBitcoins’ users are commission-free also. However, if you want to transfer your BTC to any other wallet, fees will be charged according to Bitcoin Network Fees.
There is a comprehensive guide on how to buy BTC via LocalBitcoins.
Paxful is a peer-to-peer market that provides over 300 payment methods to sell and buy BTC. The platform was launched in 2014 and since then its user base has grown up to 3.30 million users. Paxful offers you to think about your personal Paxful account as a financial passport because it allows users to buy and sell cryptocurrency without any borders and limits. An opportunity to buy BTC with an Amazon gift card distinguishes Paxful from any other cryptocurrency exchange platform.
Paxful provides every user with a free wallet to store Bitcoins. The platform charges fees to users who sell Bitcoin. However, if you are willing to buy BTC via Paxful, you will be free of any fees. Even if you are going to buy BTC with PayPal, you don’t need to pay PayPal fees.
Note, that Paxful, just like LocalBitcoins, charges fees if you want to withdraw your funds or transfer them to another address outside the platform. Transfers between Paxful users are commission-free.
Instant crypto exchange Changelly allows you to buy over 150 cryptocurrencies with USD, EUR and GBP. Credit cards accepted.
P2P exchange platforms are gaining popularity. Today, they are aimed at providing the crypto community with a secure and decentralized cryptocurrency exchange. Enabling conventional payment methods along with extraordinary ones, P2P platforms attract more users around the globe to finally bring the day of mass adoption closer.
Changelly is a secure instant crypto exchange that has 150+ cryptocurrencies available to be swapped and bought at market-best rates. Operating since 2015, the platform and its mobile application attract over a million visitors monthly, who all enjoy quick and simple exchanges, low transparent fees, and 24/7 live support.