Tuesday, February 18, 2020

How to Stay Safe When Buying & Selling Cryptocurrencies on a P2P Exchange

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Grace Joseph
Freelance Writer, Blogger, and Crypto Enthusiast. Studied Computer Science in University and Undergoing a Masters Degree Programme in Computer Engineering Contact@ reigngracia@gmail.com

One of the perks of owning Bitcoin and other cryptocurrencies is that you can easily sell them off for cash. If you’ve taken advantage of an arbitrage opportunity by buying cheap from an exchange to sell high on another, the next step may be to sell off on a peer-to-peer exchange.

Peer-to-Peer exchanges are operated by software and they hold a promise of enabling you to receive fiat currency within a few minutes to your Bank or Paypal account. This is because a buyer and seller can transact directly without an intermediary.

Nonetheless, they come with their own challenges which you have to be wary of. These problems make it necessary to be armed with some information before trying these platforms for the first time. Want to stay safe while buying or selling from peer-to-peer exchanges such as Paxful, LocalBitcoins, Bitsquare, Hodl Hodl etc. keep the following in mind:

For Buyers:

Before choosing a platform you’ll like to buy cryptocurrency from, ensure that you have read user reviews and recommendations on reputable sites on the net. Keep in mind that you will be transacting with a stranger out there, and as such, you need a platform that can serve as a reliable escrow. By escrow, we mean a reliable software that will hold the cryptocurrency you’ve requested while you make payments to the potential seller.

Next, supply all the necessary documents required before you start trading. A platform like LocalBitcoins, for instance, will request either for a passport or national Identity card. No matter how much you may be tempted, use a document that is actually yours and is in the same name as that on your bank account.

Here’s why:

There may be cases where you may have paid for Bitcoin, but the seller claims your payment was not received. This can only lead to a dispute which the admin has to act as a mediator. In such cases, you’ll be required to provide an identification document, a bank statement and other relevant information.

If you’ve put all these in place and also verified your phone number, be selective of who you buy from to avert scam. Some of these platforms have a reputation-based system and you can also see how many people have vouched for your potential seller and how many trades they have made.

That being the case, only settle for those that have been there a couple of months and even up to a year. Nevertheless, how long they’ve been on the platform should not be used as a yardstick to trust them entirely.

For Sellers:

While buyers may be on the receiving end of some of the problems of Peer-to-Peer platforms, sellers are not also exempted. There have been reported cases where a buyer who has made a bank transfer payment goes back to their bank to reverse the transaction. In such cases, not even the admin can bail you out since Bitcoin transfers are non-refundable.

A preventive measure is to define how you want to receive payments. Is it face to face with the buyer, bank transfer from an application, USSD code transfer, or a payment made directly from the banking halls. Among these, the latter is the best option while accepting payments using USSD shortcodes is not really encouraged.

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