Binance, one of the largest cryptocurrency exchanges according to crypto price tracker CoinMarketCap, has launched peer-to-peer (p2p) trading, a form of trading where the buyer and seller exchange their crypto and fiat assets directly through an online marketplace or escrow platform. Separate to the Binance’s order book exchange, in P2P, the individual buyer and seller negotiate and trade cryptocurrency directly on the Binance marketplace.
Simply put, when you buy Bitcoin or USDT on the Binance P2P platform, you are directly buying from a seller — an individual who could be anywhere in the world — who will exchange their cryptocurrency for your fiat. This is just as you would in any P2P marketplace today. The purpose of the platform, in this case Binance, is to provide escrow, meaning it protects both the seller and the buyer by keeping the crypto or the fiat and only release it once both parties have fulfilled their obligation to each other.
Register on Binance here.
Table of Contents.
P2P versus Spot Trading and Direct Exchanges
A P2P marketplace is different from spot exchanges, like Binance’s main cryptocurrency exchange, as well as direct exchanges like Coins.ph in the following ways:
In P2P, the buyer negotiates directly with the seller. The platform acts as an escrow that keeps the funds until both the buyer and seller fulfilled their obligations with each other
In spot exchanges like Binance’s main exchange, the user’s “buy” order at a specific price is combined with other users buying on the same price and put in an order book where it will be matched with sellers looking to sell at that same price. This is done electronically and the user and buyer do not directly interact with each other.
In direct exchanges like Coins.ph, the user buys or sells the cryptocurrency based on the price set by the platform.
This article will focus on buyers, not the sellers, and also does not constitute investment advice, merely information on how the process of buying through the platform happens. BitPinas does not give investment advice and readers are highly encouraged to do their own research.
Things to Note
Before proceeding with buying through Binance P2P, take note of the following:
- You must be registered and verified on Binance.
- You have adequate funds to proceed with the transaction.
- You have sufficient knowledge of how trading works.
- To manage the risks, read through the “Tips When Doing P2P Trading in Binance” at the latter portion of this article.
Buying Through P2P
Users normally buy USDT through P2P to take advantage of the full Binance platform. Once USDT is bought, that cryptoasset is parked in the user’s P2P wallet, which can then be transferred to the user’s spot wallet. Because Binance is an order-book style exchange, USDT will be used to buy Bitcoin at the rate that the user can set.
For example, if the current price of 1 bitcoin is USDT 10,000, and the user has USDT 1,000, they can then set a buy order at a lower price, for example, USDT 8,000 instead of buying immediately at the current higher price of USDT 10,000. At the rate of 1 BTC = USDT 10,000, the user’s USDT 1,000 can purchase 0.1 BTC while at the rate of 1 BTC = USDT 8,000, the user’s funds can purchase 0.125 BTC. On steps on how to trade on cryptocurrency exchanges like Binance, click here.
Payment Methods Accepted
Sellers in BitPinas P2P offers to exchange their cryptocurrencies like USDT for PHP. These sellers normally accept these payment methods:
- Bank Transfer (normally through InstaPay)
There are other payment methods but these are the ones one would likely see that the sellers are offering. For bank transfers, I noticed many of the sellers use UnionBank.
Steps to Buy Using Binance P2P
1. On the Binance homepage, hover on “Buy Crypto” on the upper left then click “P2P Trading:
2. Click “I want to Buy” then click “USDT”. (Note that you need to be on Fiat: PHP as seen below)
3. Browse through the offers
The offers vary depending on the seller. Take note of their prices as well as limitations and maximum available amount the seller can accommodate. For example, some sellers have a minimum of Php 1,000, meaning you cannot buy anything lower than that.
4. Click “Buy USDT” on your selected offer
5. Indicate how much you will buy then click “Buy Now”
6. Follow the instructions from the seller
7. Once you transferred the amount, mark it “Paid” by clicking “Transferred, Next.”
8. Wait for the seller to confirm it on his end.
9. Once the seller confirms, the cryptocurrency will be transferred to your P2P wallet.
10. Go to your P2P Wallet, then transfer the funds to your spot account. The spot account is your main wallet inside Binance. If you trade on the Binance platform, it will be using the cryptocurrencies on your spot account.
Binance P2P Advantages
- You can make a purchase using bank transfer or mobile wallet transfer
- You can choose from different sellers who you think has the best rate
- Escrow means both the seller and buyer are protected in case of a dispute
- The agreement is between the buyer and seller and the platform only acts as an escrow
- Access to trade to Binance, a highly liquid cryptocurrency exchange
Binance P2P’s escrow service protects the seller and the buyer from each other and makes sure they both fulfill their obligations.
When a seller posts an offer (called an “Ad”,) the amount of cryptocurrency posted is automatically reserved from their fiat wallet. So just in case the seller chooses to run away with your money without releasing the cryptocurrencies the buyer purchased, Binance’s Customer Support can release it from the seller’s reserved funds.
Binance P2P Disadvantages
Sellers can set minimum amount and maximum amounts that you can purchase and it’s possible that either is outside your scope
For example, I have encountered an instance when I wanted to purchase worth Php 1,000 but there was no seller at that particular moment offering to sell at that minimum.
Tips When Doing P2P Trading in Binance
Here are some tips and things to watch out for when doing P2P trading on Binance.
Verify the person’s identity
Before starting any transaction with the seller, verify his identity by checking if the payment details they asked matches with their identity on Binance. This is to avoid any triangulation fraud, where the scammer might use another person’s payment account so that the scammer can claim that the buyer never sent any to their own account.
Transact with reputable sellers
Binance obviously requires every seller to verify their identities. Still, first time buyers are encouraged to transact with reputable sellers, or those who have the most number of successful transactions. These sellers have transacted with multiple buyers already in the past and their track record could give the first time buyer a peace of mind.
Always Check the Going Exchange Rate
USDT is pegged to the U.S. dollar. To make sure you are getting the most USDT out of your PHP, check the current global Peso-Dollar exchange rate and go to sellers whose offers are closer to the going rate you found online.
Make the Deal Only Inside Binance
There is a chat system within Binance P2P that allows the buyer and seller to contact each other. That said, if either party tries to convince the other to make a deal outside the platform, open an appeal immediately to report them.
While the on-ramp that the P2P facilitated made the transfer of funds as fast as possible, the buyer, who will eventually use the funds to trade cryptocurrencies, is ultimately responsible for their own trades and actions on the platform. Binance is a sophisticated platform that has not typically been designed for beginners in the cryptocurrency space. The user must make sure they have done their thorough research before considering to trade.
This article is first published on BitPinas: How to Use Binance P2P to Buy Bitcoin, USDT in the Philippines