Disadvantages of Peer to Peer Trading

  • Low liquidity

Peer to peer trading is still relatively new and has lower liquidity than centralized exchanges.

  • Slower trading speeds

Unlike traditional trading, where there’s no wait time with transactions for the buyer/ seller, P2P exchanges incur slower trading speeds. While the transaction is near-instant once both parties confirm the transaction, there may be delays from one party — slowing down the whole trade.

  • Lack of regulation

While the lack of rules that dictates trade activity is seen as one of the main benefits of P2P trading, it can also pose some challenges. Peers are responsible for managing their own transactions and are accountable for completing trades with the potential risk of unreliable buyers and sellers.

  • Attract borrowers with poor credit histories

The network’s freedoms attract those who no longer qualify for traditional loans and trade.

  • Possibility of scams

Accessing file sharing applications can raise security concerns, such as scams and malware.

A peer-to-peer exchange is known for the decentralized network, transparency and highly secure transaction mechanism.

While there are many advantages and disadvantages, peer-to-peer trade can be used to a buyer’s advantage.

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