- Peer-to-peer (P2P) trading is growing increasingly popular among cryptocurrency traders, but it, like any other sort of trading, carries dangers.
- Knowing about these risks helps traders protect themselves from potential losses and have a better understanding of the process.
- There are several measures people may take; continue reading to learn about them, as well as how and when to use them.
- Keeping yourself secure in P2P trading requires care and alertness. Always emphasise security, and if something doesn’t feel right, err on the side of caution.
To stay safe in Peer-to-Peer (P2P) trading, it is crucial to exercise caution and follow some essential guidelines. Firstly, opt for reputable and well-established P2P trading platforms with positive user reviews and a history of successful transactions. Before engaging in any trade, thoroughly research your potential trading partner’s profile, ratings, and feedback from other users to verify their credibility. Use the platform’s secure communication channels and avoid sharing personal information such as email addresses or phone numbers to minimise the risk of scams.
Start with small trades to assess the reliability of the platform and the counterparty, gradually increasing trade amounts as trust is established. Make sure to read and understand the trade terms thoroughly and clarify any doubts with the other party to avoid misunderstandings. Consider using P2P platforms with escrow services, as they can hold funds until both parties fulfil their obligations, reducing the risk of fraud.
Is P2P Trading Safe?
Always verify payment details with the counterparty before sending or receiving funds to ensure accuracy. Be cautious of suspiciously attractive offers or high-risk transactions, as scammers may use these tactics to deceive victims. If an in-person meetup is necessary, choose safe public locations with security cameras and consider bringing a friend or family member along for added security.
Report any suspicious behaviour or potential scams to the platform’s support team immediately. Keep your personal and financial information secure, by using strong passwords and enabling two-factor authentication whenever possible. By adhering to these safety measures and exercising vigilance, you can safeguard yourself while engaging in P2P trading and have a more secure and positive trading experience.
To keep users safe, a prominent P2P exchange today often includes an escrow service, regular security updates, and a tough identity verification process, among other things.
Some Common P2P Scams
Peer-to-peer (P2P) scams can take various forms, targeting individuals in online marketplaces, on social media platforms, or even through direct messaging. Here are some common P2P scams and tips on how to avoid them:
Non-Delivery of Payment Scam:
In this scam, the scammer claims to have made the payment but provides fake transaction details or manipulates the payment process to create the illusion of payment without actually transferring funds.
Always verify the payment in your account before proceeding with the transaction. Avoid sharing sensitive payment information outside of the secure payment platform.
Fake Payment Scam:
Scammers pretend to be genuine buyers or sellers and produce fake payment confirmations or receipts. They may use falsified screenshots or emails to trick the victim into thinking the payment has already been made.
Always verify the payment received in your account before proceeding with the transaction. Avoid relying solely on emails or screenshots provided by the other party. Use secure and trusted payment platforms that offer buyer and seller protection.
When a bad actor receives your assets, they may use the chargeback feature on their chosen payment platform to reverse their payment. They frequently attempt to pay using a third-party account. Some payment mechanisms, such as checks and online wallets, facilitate chargeback requests.
Avoid this scam by refusing to accept payments from third-party accounts. If this occurs, file an appeal with the platform and request a refund to the buyer’s account.
Attacks by a man-in-the-middle
A man-in-the-middle attack occurs when a bad actor places himself between a user and an application, organization, or another individual and communicates on their behalf to steal assets or sensitive information such as private keys. Romance, investment, and e-commerce scams are the three main types of man-in-the-middle attacks.
- Scam romance
In this scenario, a fraudster pretends to form an online friendship with their victim. Once they’ve acquired the victim’s trust, they deceive him into assisting him with his financial troubles, providing money or cryptocurrency, or sharing sensitive information like private keys, only to cut all communication once they’ve accomplished their nefarious intentions.
- Scam investment
An investment scam involves a criminal approaching a victim and successfully enticing them to invest in a certain business. The fraudster, as the “man in the middle” between the victim and the investment opportunity, can direct the user’s cash wherever they want under the pretence of “investing” it.
- Scam on the internet.
E-commerce fraud involves a scammer posing as an online seller and providing attractive things at reduced costs. They demand that their victims pay in cryptocurrencies to their wallets, and then they disappear without delivering the things they promised.
Avoid this scam by refusing to react to trading requests on any social networking platform. Before and during a transaction, limit your interactions with your counterparty to the official platform.
In a triangulation or triangle scheme, two bad actors take two orders from the same seller almost simultaneously, causing the seller to release more cryptocurrency than has been paid for.
Buyer A accepts an order for 5,000 TUSD worth of crypto (Order A), while Buyer B accepts an order for 6,000 TUSD worth of crypto (Order B).
Buyer B then wires the vendor 5,000 TUSD, while Buyer A marks Order A as paid. The vendor then transfers the cryptocurrency to Buyer A, thereby completing the 5,000 TUSD order. Buyer B sends the vendor an extra 1,000 TUSD, affords evidence of charge for the 5,000 TUSD plus 1,000 TUSD received from Buyer A, and compels the seller to release digital assets under Order B.
When the dust settles, it becomes apparent that the vendor has released 5,000 + 6,000 = 11,000 TUSD worth of cryptocurrency, but has only been compensated 6,000 TUSD.
Always confirm that you have received the entire payment for all pending P2P transactions by checking your bank account or digital wallet.
Scammers send emails or messages that appear to be from a reputable P2P platform, tricking users into clicking malicious links or providing login credentials. This grants the scammer access to the victim’s account.
Be cautious of unsolicited emails or messages, especially ones with urgent requests for login information. Always access P2P platforms directly through official websites or mobile apps rather than clicking on links in emails.
How To Identify Risks
Identifying risks is an important stage in any risk management process, whether for personal decisions, businesses, or other kinds of activities. Here are the steps to efficiently identifying risks:
Check the profiles of P2P advertisers: Screen potential trading partners before engaging in a transaction with any of them. Consider the following when reviewing a P2P profile:
- Low numbers are not inherently bad, but a high number of completed transactions may indicate a trustworthy P2P party.
- If the completion rate is below 80%, it may indicate that the trader tends to back out of transactions.
- A very few positive comments or a large number of negative comments can indicate a larger trading risk.
Check advertisements attentively: Determine whether each P2P advertisement meets your demands and objectives. Consider the price, quantity, payment methods accepted, restrictions (such as trading limits), and other terms and conditions. For instance, a disparity between the P2P price and the market price on other trading platforms that is too great is dubious
- When communicating with a P2P buyer, keep your guard up. The following are red flags:
- The buyer is pressuring you to release the cryptocurrency.
- The buyer demands needless information.
- The buyer has stopped responding.
- The buyer is requesting a loan from you.
- The buyer pays less than the amount agreed upon in the order.
- The buyer pays more than the agreed-upon amount in the order.
- The buyer requests communication outside of the P2P platform.
- The buyer wishes to pay through a third party.
- When interacting with a P2P seller, keep your guard up. The following are red flags:
- The merchant requests that you cancel the order after you have already paid.
- The seller requests communication outside of the P2P platform.
- The seller requests that you exchange outside of the P2P platform.
- The seller requests an extra commission.
Red signs to look for when communicating with a P2P buyer include:
- You have not yet received the asset for which you paid.
- Receiving a bounced check from a buyer.
- After receiving payment from a buyer, your bank account is frozen.
- After you’ve transferred your cryptocurrencies to them, the buyer files a chargeback through their bank.
General Tips to Protect Yourself Against Scams
Protecting yourself against scams is crucial in the digital age where online fraud and deception are prevalent. Here are some general tips to help you stay safe:
Trade on reputable platforms
Select prominent P2P systems that provide their users with effective security features. Common characteristics include:
Features for risk management: A platform that imposes specified standards before buying or selling can aid in the reduction of inactive, untrustworthy, or low-quality ads. Even better, there should be sophisticated order-matching logic in place to only match customers with trustworthy traders and certified merchants, as well as risk management algorithms in place to monitor suspicious activity.
Some algorithms are even tailored to restrict prospective criminal actors’ trading operations. Furthermore, withdrawal limits or delays can aid in the protection of user cash.
KYC protocols (Know Your Customer): By requiring user identity verification, P2P systems with KYC protocols can assist beginners in finding trustworthy trading partners. This enables new traders to execute transactions with verified merchants who have a proven track record and dependable sources of funding.
Escrow services are available: Escrow services allow buyers and sellers to trade items or assets securely. To ensure safety and fair trade, a trusted third party, often the P2P platform, oversees the exchange of funds between transacting parties.
Customer service: While P2P trading typically occurs without the need for a middleman, a P2P platform’s customer service team can step in if a user encounters difficulties with a trade.
Payment automation: New automated payment techniques allow P2P platforms to process the release of crypto held in escrow without the need for manual intervention. Buyers can obtain their freshly purchased assets immediately, and sellers do not need to manually check each order payment or release assets.
The block feature; You can use the block option to block suspected users; for example, if you had a bad encounter with someone, you can block them and prevent them from trading with you again.
Only use the platform to communicate.
Avoid contacting possible trading partners through dodgy websites, and be wary of prices that appear too good to be true. Furthermore, contacting you through external means makes it easier for a scammer to file a fraudulent dispute against you and deny the transaction ever occurred.
Check your transactions twice.
When transacting with a peer, remember to check all the information from the counterparty. Examine all receipts and transactions for digital alterations. Here are some ways to spot fraudulent payment proof:
- Text that is overlapping
- Various colours
- Various typography
- Size distinction
You can also utilize an online, free image forensics tool. Look up undefined.
Keep documentation of all communications and transactions in case you need to launch an appeal.
Make use of tailored advertisements
If you have a well-established crypto network, make certain that your advertisements only reach those with whom you wish to trade. Hide your ad and only share it with people you know and trust, or with users you’ve already interacted with effectively. Hiding adverts might also be beneficial if you want to do a significant trade.
Block suspect parties
Proactively block users with whom you’ve had poor dealings to protect yourself from fraud or other potentially disruptive behaviour.
Make a formal appeal
If you run into a problem, contact customer service and file an appeal. Remember to submit all essential transaction evidence so that customer service can better assist you.
Staying aware of the potential risks involved with P2P transactions is critical for protecting your valuables. This involves reading the terms and circumstances of any agreement, staying alert for red flags, and using platforms with effective safety protections.
When engaging in any P2P transaction, exercise caution and contact customer support if you have any issues. You may fully enjoy the benefits of P2P transactions by being mindful and taking the required measures.