There are many ways to trade digital assets, but the most common practice is to use centralized exchanges like Binance. Alternatively, you can transact with fellow digital asset holders and swap assets without having to track charts and orders. This is what we call Peer-To-Peer (P2P) trading.
P2P trading is a relatively straightforward process that involves direct transactions between users without the need for a centralized exchange and the order matching engine to facilitate trades. Sellers have the freedom to set the price and choose how they want to be paid, while buyers have the flexibility to buy digital assets at their preferred prices from counterparties.
In the past few years, there has been an uptrend in the number of P2P trading in many markets due to various advantages such as global accessibility, many payment options, zero transaction fees, and the ability to personalize offers. However, there are also risks associated with such deals, such as threats of violence, theft, or scams. In this article, we outline some ways to protect P2P merchants from these threats.
Identify Common Scams and Scams
It is important to recognize that all trading activities have risks, and P2P is no exception. The best protection for users of any P2P trading platform is to know the most common scam tactics, so they can better equip themselves to avoid falling for such scams.
Some of the most common P2P scams include fake customer representatives and receipt scams. Users can fall for fake customer representative scams when scammers create security alerts about an account via email and text messages or pretend to be a helpful representative of a P2P exchange. Users can be redirected to a site that looks like the real thing, and risk leaving important account details or digital asset wallet credentials. Similarly, fake receipt scams are instances where scammers digitally manipulate screenshots to trick users into believing they’ve completed their part of the deal – forcing them to do the same.
Chargeback scams have also become a cause for concern. This happens when fraudsters file a chargeback request after a P2P transaction, and report that they never authorized the transfer of funds. This may result in a reversal of the initial payment, resulting in the loss of digital assets and money.
Protecting Yourself from P2P Scams and Scams
In addition to being aware of common P2P scams, it is important that users educate themselves on ways to protect themselves while doing peer-to-peer business. Other steps that users can take include making it a habit to take screenshots of transactions as proof that they have been completed. Screenshots serve as primary evidence and help build your case on the P2P platform when you file an appeal. Other tips include maintaining on-platform communication and verifying the completion of transactions before authorizing transfers.
When using any P2P platform, users should not only pay attention to the offer, but also learn to check the reliability of a person’s potential counterpart. Binance offers a P2P ranking feature, which quantitatively and qualitatively evaluates the reliability of each P2P participant. Each rating summarizes the user’s history on the site, including their transaction volume, results, and reviews from other users. It allows users to understand the track record, behavior, and reliability of potential counterparts, resulting in more responsible marketing in the P2P market.
If P2P merchants are unable to resolve an issue with their counterpart amicably, they can also contact customer support for assistance. At Binance P2P, the customer support team will offer immediate responses to help resolve any issue our users may face while using the platform.
How Exchanges Increase User Protection
The goal of P2P exchanges should go beyond connecting buyers and sellers, but also to provide them with a layer of protection by securing transactions and reducing the risk of fraud. Buyers and sellers can browse digital assets ads and post their own ads while enjoying this protection, made possible by feedback and rating systems.
Since the launch of Binance P2P in 2019, Binance has remained committed to improving the trading experience and user safety. In 2022, Binance launched the Fund Password feature, a security mechanism that makes transactions on the P2P exchange platform faster and safer. If users enable this function in their account, they can avoid the problem of delayed authentication text messages caused by subpar connection or issues with local mobile carriers. This will also facilitate faster release of orders and reduce the chances of users falling victim to phishing SMS messages.
To help P2P users improve their trading strategy over time, helping users gain a more comprehensive understanding of their cash flow and trading activity. This year, Binance has developed a profit and loss (P&L) statement function in an effort to provide users with an in-depth overview of their trades on Binance P2P. By having the ability to view and download historical records of their buy and sell orders, sellers or traders can check their financial performance or access their trade history for tax purposes.
In addition to implementing complex and strong security measures in our ecosystem, Binance also welcomes opportunities to interact with policy makers. Together, we can ensure that regulation adequately protects consumers while continuing to foster innovation and progress. When doing business peer-to-peer, it is important for users to know the most common scam tactics in order to recognize them. Ultimately, the first line of defense against fraud and scams is the user himself. Information and education is the best defense against scams and frauds.