Crypto glossary
Peer-to-peer (P2P)
Peer-to-peer (P2P) describes a network or market in which participants deal directly with each other instead of going through a central server or intermediary.
In a peer-to-peer network, every participant, or peer, can both send and receive data, and there is no central server that everyone depends on. Bitcoin's whitepaper presented it as a peer-to-peer electronic cash system: nodes relay transactions and blocks to each other directly, so the network keeps running even if many nodes go offline.
In trading, P2P refers to marketplaces where users buy and sell crypto with each other, paying by bank transfer, mobile payment apps or cash. The platforms, often run by large exchanges, match offers and hold the seller's crypto in escrow until the buyer's payment is confirmed. P2P markets are especially active in countries with capital controls, high inflation or limited access to exchanges.
P2P trades depend on the honesty of the counterparty. Common risks include fake payment confirmations, reversed bank transfers and receiving money linked to fraud, which can lead banks to freeze accounts. Using escrow, checking ratings and never releasing coins before the payment shows up in the bank account reduce those risks.
Example
On a P2P marketplace, a seller lists 100 USDT at $1.02 each; the platform locks the USDT in escrow, the buyer sends $102 by bank transfer and the seller releases the coins once the money arrives.
