P2P crypto exchange is a platform that unites buyers and sellers of the cryptocurrency. It acts as an intermediary, guarantees the execution of the transaction, and receives income from transfers. In this article, we will look at how you can develop such a service yourself and why it is better to turn to a fintech platform development company to create a P2P service.
Features of the P2P services
There are many P2P exchanges, but they all work on the same principle. One user places an offer to buy/sell a digital asset or fiat money, and the second one chooses the appropriate option and makes a deal. The operation is carried out according to the following rules:
- Mandatory verification when withdrawing a large amount. Sometimes, proof of income is required to identify the user.
- Collection of commission in the amount of 1% of the transaction amount.
- Performing the functions of a regulator and independent arbitration. Technical support intervenes in disputable situations or when one of the participants tries to pull off a fraudulent scheme.
The main difference between P2P exchangers is that on such a platform, buyers and sellers are selected by an intermediary, and on exchanges – by a system.
Pros and cons
Like all services for exchanging data and money, the P2P service has its advantages and disadvantages.
Advantages of P2P services:
- Transaction security, users can leave feedback after the transaction. The presence of negative comments will lead to the fact that no one will work with a person.
- When transferring, the P2P platform freezes the funds until the transaction is confirmed by the user. As a result, the parties are protected from fraud.
- Access to P2P representatives of different countries. The geography of platform participants is not limited by anything, which contributes to an increase in the number of users.
- Low commission or no commission. The transfer fee is lower than in standard exchange offices or exchanges.
- Large selection of conversion directions. With the help of a P2P exchanger, you can convert cryptocurrencies, withdraw them into fiat money, or use an electronic wallet.
But there are also disadvantages:
- The risk of system failures and fraud remains.
- Little platform liquidity.
- The owner of a P2P exchange also faces difficulties in identifying and verifying customers, controlling payments, and resolving disputes.
Steps to create a P2P exchange
Making your own P2P service is not easy. To do this, you need to analyze the market and competitors, choose the appropriate jurisdiction, and rent or buy network equipment. Plus it, you need to develop or purchase a ready-made solution, and then start promoting the project. Let’s consider all the steps in more detail.
Analyze the market
Before creating a P2P exchange, it is important to assess the situation and see what services are in demand among users. Pay attention to the following points:
- the presence of rare directions of conversion;
- the size of the commission or its absence;
- convenience and simplicity of the interface;
- transaction speed;
- support service work, etc.
It is important to analyze the market, collect the existing shortcomings of existing P2P exchangers, and then eliminate the shortcomings. Competitiveness and the ability to lure customers depend on the convenience, accessibility, and simplicity of the service. Market analysis can be done independently or entrusted to experts.
Decide on jurisdiction and collect documents
After analyzing competitors and choosing a base, resolve the issue of jurisdiction. In each country, the position of legislation regarding digital assets is different.
Buy or rent equipment for work
The main expenses are the acquisition of the equipment necessary for organizing the server. There are two ways here:
- Rent. A more affordable way in terms of costs. For a financial institution, such a step is dangerous, because you will have to trust the personal data of customers to a third party. The risk of shutdown due to sanctions or other reasons remains. Difficulties in work and payment for services are possible. An additional disadvantage is difficulty in choosing equipment specifically for creating a P2P exchanger.
- Purchase. A solution for the long term. It is more secure, allows you to maintain the confidentiality of customers, and protect yourself from blocking. The disadvantage is high costs.
The decision is made taking into account the financial capabilities and plans of the entrepreneur. If there is a lack of funds, you can start with a lease, and later buy your own servers and switch to them.
Create your own or buy a ready-made solution
After choosing a jurisdiction, preparing documentation, and setting up a server, proceed to the software part. It consists of the following elements:
- exchange site;
- mobile application for Android or iOS;
- bot for Telegram (preferably);
- wallet;
- protection against hacker attacks;
- trading engine, etc.
The specified set of tools can be developed independently or you can buy a ready-made project. The first way is more flexible and allows you to create the right software for yourself. The project will require more time, its own team of specialists, and a clear understanding of the strategy.
The second option will allow you to launch your own P2P in a short time. The downside is that it will have limited functionality. The decision is made taking into account the available time and start-up capital.
Benefits of ordering P2P service development from professionals
- Quick start and project setup.
- Lack of difficulties with software development and promotion.
- Full product testing.
- Support for a large number of cryptocurrencies.
- Providing liquidity.
- Technical support after the transfer of the project.
- Promotion
Organize promotion
A ready-made P2P exchanger does not guarantee a stable profit. People are critical of everything new, so the project needs to be promoted, and users should be attracted to use the platform. To achieve recognition, it is important to use several tools:
- promotion in social networks;
- writing affiliate articles;
- advertising on thematic blogs and in the media;
- targeting;
- collection of targeted traffic through thematic articles on the site, etc.
The result can be achieved only with an integrated approach.
Final thoughts
Creating a P2P cryptocurrency exchange is a promising idea that requires financial costs, careful analysis of competitors, choice of jurisdiction, etc. It is difficult to implement such a project alone, so it is worth acquiring a team of specialists. The best solution is to contact a blockchain development service provider, such as Aleph One. The company has been developing fintech solutions using secure innovative technologies for seven years, offering customers support from the start of an idea implementation to supporting the finished product.
