OTC (Over-The-Counter) crypto exchanges and P2P (Peer-to-Peer) crypto exchanges are both popular cryptocurrency trading methods, however they have some fundamental differences in how they work. activities, advantages and disadvantages. Below is a detailed comparison between these two types of exchanges:
OTC crypto exchange:
1. How it works: The OTC floor operates through a broker or a company specializing in OTC transactions. Cryptocurrency buyers and sellers come into contact with each other through brokers and execute trades directly, often in large quantities.
2. Advantages:
- High security: Transactions through brokers help protect the information of both parties, limiting security risks.
- Suitable for large transactions: OTC floors often serve large transactions, helping buyers/sellers of cryptocurrencies to make transactions without affecting the market price.
- Stable price: The transaction price is often agreed in advance between the two parties, helping to minimize the risk of price fluctuations during the transaction process.
3. Disadvantages:
- Difficult to access: OTC floors often require relationships and access to brokers, which can make it difficult for those new to trading.
- Transaction fees may be high: Due to transactions through brokers, transaction fees may be higher than P2P exchanges.
4. Suitable for subjects:
- Large investors and organizations: OTC floor is suitable for investors and organizations who want to trade large amounts of cryptocurrency without affecting market prices.
- People with relationships with brokers: OTC floors often require relationships and access to brokers, so those who have access to brokers will have an advantage.
5. Liquidity and impact on the market:
- OTC floors help minimize the impact on market prices when making large transactions, thus helping to maintain market liquidity.
P2P crypto exchange:
1. How it works: P2P exchange operates as a direct connection platform between buyers and sellers of cryptocurrency. Buyers/sellers can post their transaction information, find suitable trading partners and make transactions directly with each other through the platform.
2. Advantages:
- Easy to access: P2P exchanges are often easier to use and more accessible for cryptocurrency trading beginners.
- Low transaction fees: Transaction fees on P2P exchanges are often lower than on OTC exchanges.
- Many payment options: P2P floors often support many types of payment, helping buyers/sellers of cryptocurrencies have many suitable options.
3. Disadvantages:
- Security risk: Due to direct transactions between individuals, the risk of security of personal information and transactions may be higher.
4. Suitable for subjects:
- Individual investors: P2P exchanges are suitable for individual investors and those new to cryptocurrency trading, thanks to their ease of access and many payment options.
- People who want to trade locally: P2P exchanges often support trading with national currencies, helping buyers/sellers of cryptocurrencies to trade with local users.
5. Liquidity and impact on the market:
- P2P exchanges can help increase liquidity in the cryptocurrency market, because buyers/sellers can easily find suitable trading partners.
- However, large transactions on P2P exchanges can cause market price fluctuations, because there is no regulation by brokers like OTC exchanges.
In short, OTC and P2P crypto exchanges both have their own advantages and disadvantages and are suitable for different audiences. While OTC exchanges are often suitable for institutional investors who want large transactions and stable prices, P2P exchanges are convenient for individual investors and cryptocurrency trading beginners.
