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However, there are risks involved with P2P. You can’t be sure that the other party will act in good faith; they may as well be fraudsters hunting for an opportunity to rip people off their cash or assets. Without the safeguards of an official intermediary, you are brought face-to-face with these ill-intentioned persons. What follows is a list of things you can do to protect yourself from being defrauded by such actors.
Choose Reputable Platforms
While there are benefits to trading off-platform, you should only do that as a last resort. The safety of a reputable exchange is something you may struggle to replicate outside of it. Here’s the good news: there are lots of legitimate apps to choose from. If you aren’t happy with the conditions imposed by some, there are likely others that offer rules you can live with. Just be sure that they are at least fairly well known and provide escrow and dispute resolution mechanisms.Verify Trading Partners
Don’t initiate any trade until you’ve verified the trustworthiness of the other party. You can use the platform’s verification procedures and check their trading history and reputation within the community. Communicate directly with potential trading partners through the platform’s messaging system to establish trust and clarify transaction details.Utilize Escrow Services
Escrow services hold funds in a secure account until both parties fulfil their obligations in a transaction. When trading cryptocurrencies peer-to-peer, always opt to use escrow services provided by the platform you’re on. This ensures that neither party can abscond with the funds without completing the transaction as agreed upon.Sign up for the Connect Nigeria daily newsletter
Conduct Due Diligence
Not all cryptocurrencies are created equal. Some are safe; others are little more than fraudulent conduits set up by bad actors. Try to understand as much about your digital asset, its technology, market trends, and any potential red flags or vulnerabilities as you can. In addition to this, scrutinize the terms of the trade, including exchange rates, payment methods, and transaction fees. And be wary of deals that seem too good to be true or involve high-pressure tactics.Secure Communication Channels
When engaging trading partners, you should prioritize privacy and security. Use encrypted messaging apps or communication channels provided by the trading platform to safeguard sensitive information. Don’t share personal or financial details outside of secure channels to prevent phishing attempts or identity theft. These are real risks you’ll need to consciously avoid.Stay Informed about Common Scams
Some of the more frequently perpetrated scams in P2P cryptocurrency trading include chargeback fraud, fake payment confirmations, and phishing schemes. Stay vigilant for warning signs of these acts, such as unusual payment requests, unverified identities, or attempts to bypass platform safeguards. Decline any attempts by the other party to take the transaction off the platform, and report suspicious activity to the platform administrators immediately.Exercise Caution with Unverified Traders
Be extra careful when dealing with unverified or new traders, especially those with limited trading history or ambiguous identities. Everyone indeed deserves a chance to establish themselves in the community, but they shouldn’t do so at the expense of your funds’ security. If you must engage new traders, you’re better off starting with smaller transactions before scaling up to larger trades with them.Register to attend the CN Business Mixer
Final Words
P2P cryptocurrency trading offers individuals the opportunity to transact directly with one another without the need for intermediaries. But, as we’ve already pointed out, this decentralized approach also exposes participants to various risks, including fraud and scams. Follow the precautionary measures we’ve discussed here to mitigate the likelihood of being defrauded and protect your cryptocurrency investments.Got a suggestion? Contact us: editor@connectnigeria.com
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