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How can you stay secure during P2P trading?

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calendar 05-10-2023

Today owners of various assets can directly exchange them in digital space. P2P-type of trade is chosen for buying and selling the cryptocurrency, products, services, fiat currencies or other values. Even if P2P platforms do everything possible for security of sellers` and buyers` assets, some risks still exist. Here we would like to tell more information about P2P cryptocurrency trading, which features it has, and how secure P2P trading is, so keep reading. 

What is P2P trading? 

P2P trading (peer-to-peer) is a decentralized type of asset trading between users without the participation of exchange stocks, currency exchanges, governmental financial institutions, or other intermediaries. Peer-to-peer cryptocurrency trading (another name for P2P asset exchange in the digital space) has several benefits but also comes with some risks. Users are often afraid of fake payment confirmations, phishing, false transactions, and attacks on intermediaries in order to intercept the information and use it for theft, extortion, etc.  

Why is a P2P exchange needed? 

Peer-to-peer trading is supported by international P2P exchanges that offer various payment methods and relatively low commissions. The purpose of such services is to help the participants in the market find each other, create secure conditions for a deal, and resolve disputes. Escrow services, reviews and ratings are used for that. Escrow services hold payments from buyers and transact them with sellers only after the confirmation of a deal. Conditionally, they are a guarantee that an asset, product or service meets the requirements. In cases of disputes between users, escrow services act as a neutral intermediary and help them resolve disputes, taking into account the terms of a deal and proofs from both sides.

For instance, you want to sell bitcoin directly for fiat currency. Your BTC will be held by an escrow service, and they will be transferred to the cryptocurrency wallet of a buyer only after becoming a fiat currency and receiving a confirmation of an operation. When one of the sides has claims, the P2P support service will solve the problem (when you appeal while the order is pending).  


How can you choose a P2P stock exchange? 



The choice of a P2P platform depends on your needs and goals. Before choosing a P2P platform, you should definitely know which cryptocurrency you would like to exchange, which payment methods you want to use, and which opportunities a platform offers (for instance, multi-currency wallets or some security functions). If you plan to use it for cryptocurrency purchases, you should take into account several important factors: 

  • Security.

Pay attention to the security measures provided by a platform. It is important that platforms use two-factor authentication, hold assets in cold wallets, use data encryption, and useother tools for reliable protection from fraud. 

  • Commissions and additional fees. 

The size of deal or withdrawal commissions  depends on different P2P services, and it can influence your overall costs for operations with cryptocurrency. You should find out which commissions or fees are charged while using a platform before selling or buying cryptocurrency there. 

  • Convenience of using the service. 

Pay attention to the interface of the P2P platform - it should be intuitively understandable in order to make the process of transactions easy and fast. Check for additional functions, for example, multi-signing. P2P exchange should generally be convenient for you and meet your requirements. 

  • Reputation in digital space. 

Check for the reputation of the platform and the ratings among users. It can give you an understanding of the security of P2P trading with this service. You can also ask for some recommendations from other users and experts in the P2P trading sphere.

  • The quality of support. 

It is important to have the opportunity to receive proper support in the event of problems or questions. You should check the quality, availability, responsiveness, professionalism, and politeness of the support service.  

  • Regulatory requirements.

You should take into account regulatory requirements and the legislation regarding P2P cryptocurrency operations that function in your country or region. Some P2P platforms may have restrictions depending on the location of the user. 

  • Integration with payment systems. 

Check whether the payment methods you would like to use are available on the platform. 

  • Localization.

Pay attention to the availability of the platform in your region and whether it uses a language appropriate to you. 

  • Limits and volumes of transactions. 

Check whether the platform allows the volumes and limits of transactions you would like to operate with. 


The choice of an appropriate P2P platform requires careful analysis and matching your needs with the functions of the platform. Before starting to trade large amounts of cryptocurrency, conduct a test transaction in order to understand how the platform functions and whether it is convenient for you. 

Common P2P fraud schemes with cryptocurrency 

Here are some of the most common scammers` fraud schemes in P2P transactions to make you more aware of their functioning and be ready for them.

Fake proofs of messages 

Scammers can make fake electronic receipts that confirm the sending of a payment and ask for the completion of a transaction from a counterparty. The same action could be taken using fake SMS with a notification that the payment was received. 

What can you do: confirm a deal only after checking for the receipt of a transaction on your wallet or bank account.

“Fake” transaction

The scheme is easy: scammers write to their bank and tell them that the operation was wrong or accidental, and ask for the cancellation and return. Scammers often use intimidation tactics in order to avoid taking responsibility for their actions. For instance, they can make the victim believe that operations with crypto are illegal. 

What can you do: don't react to such intimidations. In order to protect yourself from the provocations, take screenshots of transactions and correspondence with scammers. 

The attack of intermediaries

An attack in cryptography and cyberspace, also known as MITM(man-in-the-middle attack). A scammer gets between two sides and intercepts the data they exchange. The purpose of an attack is to get access to confidential information - passwords, contacts or other personal data. 


Main methods and scenarios of the intermediary attack: 

Eavesdropping - interception of information on public Wi-Fi networks or other unprotected Internet spaces. 

Change of data - modification of data that were exchanged by two sides. For instance, the change of a sum of money in a financial transaction or a message in a chat box. 

Imitation - one of the sides communicates with the other, imitating a counterparty, in order to get confidential information needed for the scam. 

Attack on SSL/TLS connection - when a cybercriminal bypasses a secured SSL/TLS connection, he will receive access to data that was sent by this connection. 

Network Layer Attack - various methods for data interception at the network layer, such as ARP poisoning or DNS spoofing.


What can you do: in order to protect yourself from intermediary attacks, take the following steps: 

  • Use SLL/TLS encryption while exchanging confidential information. 

  • Check the certificates - their validity and compliance with the domain with which you exchange the data.  

  • Avoid public networks while exchanging confidential information, or use virtual private networks (VPN) for a secure connection. 

  • Don`t trust unknown sources, unknown users or unknown devices. 

  • Use two-factor authentication (2FA). 

  • Update software - operating systems and apps. 

  • Monitor your networks for the presence of suspicious activity and the functioning of security tools, such as firewalls or antivirus software. 


Scheme with parallel orders for the same sums 

We can demonstrate with an example: two scammers simultaneously open two orders for the same seller, for instance, one for 4000 BUSD and the other for 3000 BUSD. The second buyer transacts 3000 BUSD to a seller, and the first buyer tells him that the order was paid. A seller sends cryptocurrency to the first buyer according to the order for 3000 BUSD. The second buyer transfers 1000 BUSD, confirming the payment of 3000 BUSD (he already received a cryptocurrency + 1000 BUDS), and after that, he asks for the transfer of cryptocurrency according to another order. Thus, while confusing the seller, the scammers received not 4000 BUSD, but 7000 BUSD. 

What can you do: check the P2P wallet in advance in order to be sure that you received the right payment 

Phishing 

This is a creation of a fake profile in order to get personal data or assets of a user while messaging. For instance, scammers can pretend to be a representative of a support service of a current P2P platform and send messages about a threat to the security of an account.  

What can you do: don't follow links in such messages, until you check the source. Receiving such a letter, contact the official representative of a platform. 

General recommendations for secure P2P trading 

Look at some more tips on how to avoid cryptocurrency scams in P2P operations: 

Before making any type of operation, check the profile of a counterparty. In a P2P profile, check the feedback about the seller, the number of trades and their completion rate (if it is lower than 80%, it means that the counterparty often cancels transactions, and it should warn you). Carefully read the advertisement - check its compliance with your needs and opportunities, compare the P2P price with the market price, and when the first one is significantly lower, it is suspicious.  

While conducting a trade, you should be careful. It is suspicious when a P2P buyer: 

  • induces you to transfer the cryptocurrency; 

  • asks for additional information;

  • transfers a sum that doesn't correspond to the order;

  • tries to take the communication out of the platform; 

  • doesn’t respond to the messages;

  • asks for a loan; 

  • offers to transfer a payment from a third party; 


Also a list of suspicious actions by seller: 

  • asks for an order after receiving a payment;

  • wants to communicate or exchange the cryptocurrency outside the P2P platform;

  • induces to pay a commission;

After a P2P trade with scammers, it often happens that the cryptocurrency for which you have paid is not transferred to the wallet, is canceled or  is rejected and the counterparty initiates a refund and account blocking. Immediately contact a support service and collect all the possible data concerning the interaction with a counterparty. 


So, to protect yourself from the scammers` schemes: 

  • Choose reputable and reliable P2P stock exchanges with advanced risk management algorithms and useful security functions (KYC protocols, escrow services, payment automatization, and the opportunity to block suspicious users) 

  • Don`t communicate with counterparties outside the P2P platform, and take screenshots of correspondence on the platform. 

  • Carefully check all the receipts and money received in the wallet. Fake receipts can be distinguished by mismatching colors, fonts, text style and text overlay, or by using online tools for image analysis.

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