As Indian crypto exchanges stop Unified Payments Interface (UPI) services and restrict access to online banking services, crypto users are stuck with their digital assets seeking solutions and new opportunities to start trading.
This comes after a circular from the National Payments Corporation of India (NPCI) said it was not aware of any crypto payments through UPI. This has led to crypto exchanges such as Coinbase withdraws its UPI installation, the addition of a roadblock that allows users to start trading on exchanges.
In this week’s column, we discuss how users can trade on crypto platforms in the absence of UPI and banking services.
Peer-to-peer (P2P) trading
Peer-to-peer (P2P) trading makes it possible to buy and sell cryptocurrencies without the need for a third party or intermediary. Although you technically need a platform where buyers and sellers can connect, you do not necessarily have to trade with the platform, all transactions take place between the two parties – the seller and the buyer.
Unlike crypto exchanges, P2P trading gives you more control over who buys your crypto assets. For example, if you want to sell a cryptocurrency that you have on a cryptocurrency exchange, you use charts to determine the optimal time to buy, sell, or hold cryptocurrencies. But when you decide to sell, the final price of the asset depends on the market price of the stock exchange.
On the other hand, P2P trading gives users full control over the process. You decide who you want to sell your assets at and at what price, but it can involve some risk when no ‘intermediary’ monitors the transaction. This is where platforms like Binance and Paxful become essential.
“By giving people the opportunity to trade freely around the world, peer-to-peer platforms open access to the global financial system. Everyone has the freedom to choose the deals, trading partners and margins they want,” said Ray Youssef, co-founder and CEO of Paxful, to indianexpress.com.
Step by step instructions
There are many things you can do on P2P platforms including buying, selling and trading cryptocurrencies like Bitcoin, Ethereum, Litecoin and more. Here is a step by step guide on how to buy Bitcoins on the P2P trading platform. (For demonstration purposes, we used the Paxful P2P trading platform)
#You must first open an account by registering on the platform.
#The platform does not charge any fees to the buyer. The amount of Bitcoin in trading is exactly what you get in your Bitcoin wallet.
# When deciding to buy, the three most important things to consider are payment method, amount and currency. You can buy Bitcoin by creating a purchase quote or by offering to buy Bitcoin from a seller on your terms. Read the seller’s instructions and come up with an offer that has a reasonable chance of converting.
# When you are ready to buy, you can then choose your preferred payment method. Make sure that when you use a payment method, it has the same identification as the account you are transferring money from.
# The seller will confirm your payment and your Bitcoin will be released.
It is important to understand that traditional providers may charge high fees or offer unfavorable exchange rates when completing a transaction. Compared to peer-to-peer platforms, these fees are expensive and inefficient.
Ensuring security and anonymity of transactions
To ensure transaction security, P2P trading platforms often use security features such as encryption and two-factor authentication. This gives users the confidence to trade on these networks.
P2P makes it easier to trade globally and opens up a world of opportunities as it allows you to trade in any currency or asset you like. Once a transaction has been initiated and your crypto has been deposited, the seller cannot undo the transaction; it can only be canceled by the buyer or automatically canceled by the system if the payment is not made by the buyer within the payment window.
In terms of anonymity, crypto is pseudonymous in the sense that your name is not directly related to the transactions you make. It should be noted that most P2P platforms implement standard-know-your-customer (KYC) and anti-money laundering (AML) processes before trading. All users go through KYC processes; however, these security procedures may vary on other financial platforms.
P2P platforms make it easier to find buyers and sellers for the desired crypto at any time, which means it is easier to find buyers or sellers for the desired currency at any time. However, scammers are also increasingly taking advantage of P2P trading with new platforms that promise zero trading fees. It is important to do your research before choosing a platform, and always be careful when shopping online.