P2p trade: Why do you need escrow when you create bitcoin exchange of your own?
When it comes to create bitcoin exchange there is a different concept of a trading website like decentralized, centralized, and hybrid. Now, Peer 2 Peer bitcoin trading software is the perfect solutions for all traders its works like a decentralized platform idea we can call shortly P2P crypto exchange.
Let us learn about how Peer Peer cryptocurrency exchanges work and what are the advantages they bring.
P2P crypto exchanges were created for the number of traders where transactions and trade are carried out effectively with the help of escrow or smart contracts.
Peer to Peer Cryptocurrency Exchange
To increase the magnitude of trust in the cryptocurrency exchange platform then, P2P exchanges are introduced, which involves direct trade between traders without the need for any intermediaries.
How does the P2P bitcoin exchange works?
In a P2p bitcoin exchange, those who wished to trade the digital currency will have to post an order with details such as the location, amount of coins, and price.
These details that are posted would be added and shared in a ledger named the order book.
On the other end, users who would wish to buy with those conditions would select an order.
The buyer and seller can initiate the trade once they check the feedback scores and begin the trading process.
The users can negotiate with each other directly without involving an intermediary or third party, making the entire process simple and effective.
However, the transactions can sometimes involve third-parties helps to avoid any scam.
Yeah, before starting the chat seller wants to submit the bitcoin to the escrow wallet or need to agree to the terms condition of a smart contract.
When the seller receives the notification about the payment as “… is paid” the escrow will release the funds to the buyer’s wallet.
On the other side, the smart contract conditions match both sides the required cryptocurrencies will release to the buyer’s wallet. This feature helps to prevent the traders from spammers and any unauthorized activity.
The Benefits Trading in P2P Exchange
Security – In a peer to peer platform, all the transactions held on the public ledger of blockchain and KYC (know your customer)/AML (Anti-money laundering) details remain in synchronization to the database. Therefore, this is the possibility to avoid any hack, unauthorized activity, or fraud.
Encrypted data – The complete information about the transaction is recorded and stored in a distributed network and embedded with an encryption mechanism. Therefore, it is quite not possible for anyone to trace the information.
Cost-effectiveness – Without any intermediary, the transaction fees in the p2p exchange platform is less when compared to other exchanges.
No limits for Deposit/withdrawals
The traders can easily add or move their cryptocurrencies at any time without any restriction. You can use traditional currency or local money for buying a digital coin. Users can also buy the cryptocurrency with their cards and various payment options make trading so easy.
What is an escrow service?
An escrow service is provided by a trustworthy third party, who can temporarily hold on to the funds and regulate the payment in a transaction, ensuring that both involved parties stick to the terms of their arrangement and conditions.
Once all terms of the transaction have been met, the escrow service provider will process the payment. Escrow also exists to ensure that large payments are processed in a timely manner and completely according to pre-agreed terms. Earlier, traditional systems like banks and other financial institutions provided escrow services. In the present, you can also find a large number of escrow service providers.
Why is the escrow service so important?
The escrow service protects Binance’s users from scammers. If a user tries to convince you to make a deal outside the Binance P2P platform, ignore the suggestion and open an appeal. If the deal is made outside the platform, the security features cannot protect you.
Imagine that you want to buy bitcoins or any altcoins and you find an offer at a very competitive price but the seller seems new to the platform, with no completed orders or feedbacks. How can you be sure that the trader is genuine and will transfer the cryptocurrency to your wallet?
The escrow services as a cryptocurrency exchange solution to solve this type of situation, by holding the cryptocurrency in a deposit. You can also create your own crypto exchange with the smart feature that will analyze both the buyer’s and the seller’s conditions and progress then trading accordingly.
A leading cryptocurrency exchange platform development company, Shamla tech provides white label decentralized exchange to help you launch your platform with robust security features in no time. The cryptocurrency exchange consultants here also offer White label exchange platform solutions for all popular exchanges to develop cryptocurrency exchange of your choice easily.
How does bitcoin escrow work?
As the transactions are irreversible, it should come as no surprise to learn that escrow service in the exchanges is now becoming increasingly popular.
How does escrow service work when you create your own bitcoin exchange?
Step 1: Place your order
Place an order to buy or sell cryptocurrency. The crypto coins will be held by create bitcoin exchange temporarily until the trade is successfully completed.
Step 2: Start a conversation
Start a conversation with the seller or buyer. When you are trading with the other end user that you do not know, we recommend that you use the direct chat option to communicate with him/her. The chat history will be of great help if there is a dispute with your buyer or seller and you make an appeal.
Step 3: Make the payment or release the digital assets
If you are a buyer, make the payment and notify the seller that you completed the payment. Click the “Confirm” button to let the seller know that you made the payment. When the trader sells the cryptocoins, wait for the buyer’s payment confirmation before releasing the crypto.
Step 4: The transaction was successful or the counterparty was not responding
When you start a bitcoin exchange of your own, in most cases, everything goes smoothly. With new users, what happens if the buyer pays and the seller releases the crypto, but the counterpart was not fair? In other words, the buyer did not send the confirmed money or the seller did not release the agreed crypto after the buyer made the payment. In these situations, you can open an appeal, click on the “appeal” button. Now is when the escrow service comes into play and this is why the crypto was temporarily held.
How does escrow service help crypto sellers when you create bitcoin exchange?
If the digital currency buyer did not make the payment, the P2P’s escrow service will return the agreed amount to the seller when the time for negotiation is over.
While the exact steps vary slightly depending on how you want to create own bitcoin exchange and provider to provider, bitcoin escrow generally works as follows:
- After all aspects of a transaction have been agreed upon, the two involved parties choose an escrow service they want to use to make the bitcoin payment.
- The conditions of the transaction are met and both parties agree that the terms have been fulfilled.
- The seller releases the funds that are held in escrow.
- The recipient receives their bitcoin payment.
Why choose Shamla tech’s for P2P cryptocurrency exchange platform development?
Here are some solid reasons to choose Shamla tech for Peer-to-Peer Exchange Development
- P2P Exchange Script comes with admin and traders, merchant dashboard, trader dashboard.
- Security features like DDOS, SSRF, CRF, HTTPS Authentication, etc.
- Special add-ons like Initial Exchange Offering (IEO), Cryptocurrency Price Ticker API, Rest API
- Multi-currency wallet support.
- Digital Marketing Services for your exchange
Create bitcoin exchange
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