What are peer-to-peer (P2P) transactions?

Peer-to-peer (P2P) transactions

Peer-to-peer (P2P) transactions refer to direct financial transactions between individuals or entities without the involvement of a central intermediary or authority.

Here are the key points about P2P transactions:

Direct Exchange

• In P2P transactions, buyers and sellers interact directly with each other to exchange goods, services, or financial assets.
• There is no central institution, such as a bank or payment processor, facilitating the transaction.

Decentralized Nature

• P2P transactions are decentralized, meaning they are not governed or controlled by a single entity.
• The network of participants maintains and validates the transactions through a distributed ledger or blockchain technology.

Reduced Intermediaries

• By eliminating the need for intermediaries, P2P transactions often have lower fees and faster processing times compared to traditional financial transactions.
• This can be particularly beneficial for cross-border transfers or in situations where access to traditional financial services is limited.

Peer-to-Peer Marketplaces

• P2P marketplaces, such as the one mentioned in the context of Airtm, allow buyers and sellers to directly connect and exchange goods or services, including fiat currencies and digital assets.
• These marketplaces provide a platform for participants to find and negotiate with each other without the involvement of a centralized authority.

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Increased Flexibility

• P2P transactions offer more flexibility in terms of payment methods and options, as participants can use a variety of payment methods, including cash, digital wallets, or even cryptocurrencies.

Learning Curve

• Engaging in P2P transactions may require a steeper learning curve for some users, as they need to understand the process of finding suitable counterparties, negotiating terms, and completing the exchange securely.

Potential Risks

• While P2P transactions can be fast and secure, they may also carry certain risks, such as the potential for fraud or disputes between participants, which may not have the same level of protection as in traditional financial transactions.

Overall, peer-to-peer transactions offer a more direct and decentralized approach to financial exchanges, with the potential for lower fees and faster processing times, but may also come with a learning curve and potential risks that users should be aware of.