There are different ways to buy or trade bitcoin and other cryptos, each with its advantages and disadvantages.
Some of the most popular are traditional centralized exchanges (CEX), P2P platforms, bitcoin ATMs, and decentralized exchanges (DEX). Here we are going to focus on two:
A. Traditional exchanges (CEX)
Operated by companies and financial institutions, like Binance, these platforms allow you to buy bitcoin and other cryptocurrencies with a range of traditional payment methods, such as credit and debit cards, bank transfers, or via third-party providers.
You can also trade bitcoin against other assets. You submit your buy or sell order to the order book, and an automated engine executes the trade as soon as the market conditions match your order. Everything happens behind the curtains, and you don’t know who’s on the other side of the trade. The exchange does everything for you.
But nothing’s perfect, and traditional exchanges come with a few trade-offs.
Disadvantages: Some local regulations, lack of infrastructure, or other challenges result in a lack of payment methods, limited range of assets, or a smaller range of accessible products in specific regions.
B. P2P marketplaces
Peer-to-peer (P2P) marketplaces are usually operated by smaller entities than the traditional exchanges, and with the emergence of major global exchanges, a new model of P2P marketplaces appeared.
P2P trading is the complete opposite of traditional exchanges. Instead of using an automated engine to complete your transactions, you manually choose (or post) your preferred offer and trade directly with a counterparty.
This comes with great freedom to choose between different rates and payment methods and with lower fees.
P2P marketplaces often allow cash transactions, where you’re required to meet the trading counterparty and complete cash transactions in person.
The main disadvantage of P2P marketplaces is the lack of high-quality offers, decreased user-friendliness, and increased security risk for certain transactions (primarily cash transactions in person).
Because of the peer-to-peer element, completing transactions also takes a bit longer and can get time-consuming.
