Last two weeks, the Central Bank of Nigeria (CBN) placed an immediate ban on all Crypto-based transactions, hindering banks and other financial institutions from providing liquidity in the form of Naira to any Centralized crypto exchange. Does this mean the end of Crypto trading in Nigeria?
Crypto trading can be said to be the bedrock of the cryptocurrency market. In order to complete the four critical aspects of crypto trading; including capital deposits, order books, order matching, and asset exchange, you need to use a cryptocurrency exchange platform. Most typical exchanges use a centralized white-label crypto exchange to process transactions.
While centralized exchanges are quick and pretty straightforward, they are often vulnerable to technical failures, cyberattacks, and theft. This is often where peer-to-peer (P2P) or decentralized crypto exchanges come in to save the day. They permit the seller and therefore the buyer to complete a transaction directly without the necessity of a trusted third party.
P2P exchanges are steadily gaining momentum within the crypto community. Following the CBN ban on Crypto based transactions, we can all expect to see an increase in the adoption of P2P exchanges as many centralized exchanges will go back to P2P exchanges.
How P2P Exchange Works
A P2P crypto exchange does not need a third-party service to carry the customer’s funds. As buyers and sellers can directly exchange cryptocurrencies, there is no need for a private or institutional middleman. It is a striking example of the blockchain idea.
A P2P system runs primarily as cryptocurrency exchange software that provides a marketplace for crypto traders to meet for the sole purpose of crypto trading. Usually, transactions are completed automatically by a programmed set of instructions.. Unlike a centralized exchange, a P2P exchange matches the people behind buy/sell orders rather than matching buy/sell orders within a ledger.
So, when the software finds an identical buy/sell order, it connects the respective traders with one another. They will process the transaction without an intermediary. You may decide to involve third-party arbitrators only just in case of a dispute. However, by default, there’s no human intervention on behalf of the exchange.
The Transition from Centralized Exchange to P2P Exchange
Although centralized exchanges (CEX) provide a gateway between the real-world market (fiat currency) and crypto economy, they’re susceptible to frauds and cyberattacks. You may need to put in a considerable amount of time, money, and labor to make paperwork and perform daily transactions. Essentially, traders need to buy this infrastructure in the form of transaction fees and repair charges.
The transition from centralized exchanges to P2P exchanges happens to supply a far better alternative to the normal centralized trading system. They’re far more simplified, trustless, transparent, and cost-effective compared to the CEXs.
Cryptofully is a cryptocurrency exchange platform with a mission to make cryptocurrency less difficult and more accessible, so that everyone can use it for everyday transactions — remittances, bill payments, airtime and even commercial business purchases.