P2P DEX

A P2P DEX is a decentralised exchange on which individual users find each other and trade directly, rather than trading against a pooled liquidity contract or a company's order book. The best-known example is Bisq, open-source software for exchanging bitcoin with national currencies: buyers and sellers post offers, both lock a security deposit in a multi-signature arrangement, the fiat payment is made by bank transfer or another method outside the software, and the bitcoin is released when the seller confirms receipt. Disputes go to mediators. Because the operator never takes custody of funds, such platforms often do not perform the identity checks that centralised exchanges must, which appeals to privacy-minded users but also raises anti-money laundering concerns and the risk of payment fraud such as reversed transfers. P2P DEXs are usually slower and less liquid than centralised venues. Also see P2P trading and crypto OTC.