The decline of peer-to-peer (P2P) exchanges such as Paxful and LocalBitcoins has raised the question of how to buy or sell cryptocurrencies without the use of centralized exchanges (CEXs). The failure of FTX in 2022 triggered a significant growth in self-custody, with many cryptocurrency investors transitioning from CEXs to hardware or software wallets. Self-custody has become increasingly popular, and Binance CEO Changpeng Zhao suggests that it could potentially erase the need for centralized exchanges one day. This article will discuss the most straightforward exchange methods to shed some light on buying or selling crypto without using a centralized crypto trading platform.
One of the easiest ways to exchange fiat money for crypto and vice versa is through Bitcoin-enabled automated teller machines (ATMs). Bitcoin ATMs allow users to deposit and withdraw money using cash or a debit card. However, instead of a bank account, a Bitcoin ATM requires users to have a Bitcoin wallet address to deposit or withdraw money. While providing a simple way to exchange money against cryptocurrencies, Bitcoin ATMs suffer from limited global adoption. According to data from CoinATMRadar, there are roughly 34,000 Bitcoin ATMs in 80 countries worldwide, with almost 85% of all crypto ATMs in the United States.
Peer-to-peer (P2P) Bitcoin exchange marketplaces are among the most common crypto exchange options alongside Bitcoin ATMs. Such platforms allow users to trade digital currency directly with each other without the need for a centralized third party to facilitate the transactions. Unlike CEXs, P2P exchanges do not rely on automated engines to complete transactions, allowing users to manually choose their preferred offer, trade directly with a counterparty, and transact funds using a self-custodial wallet. Many industry executives believe that P2P crypto marketplaces are likely to be the future of crypto due to their unique features.
Another common way to buy or sell crypto without a CEX is using an on-ramp or an off-ramp solution provided within a self-custodial wallet through a third-party payment provider. Software wallets like Exodus and hardware ones — like Ledger and Trezor — offer several methods to deposit or withdraw Bitcoin using default software through various payment integrations. Such wallets often allow users to buy crypto or cash out their coins using bank transfers, debit or credit card payments, Apple Pay, and other options, depending on the country of the user’s bank location. However, wallet exchange integrations are currently accompanied by issues like limited coverage due to the low adoption of crypto payment partnerships worldwide.
One doesn’t necessarily need to use online exchanges to buy or sell cryptocurrencies. Offline P2P exchanges are another option. They involve meeting with a person in real life and exchanging cryptocurrencies for cash. While this method may provide more privacy, it also poses security risks. It is essential to take precautions when meeting strangers to avoid scams or theft.
In conclusion, buying or selling cryptocurrencies without a CEX is possible, but it requires additional research and may involve higher fees or limited coverage. Bitcoin ATMs, P2P Bitcoin exchange marketplaces, wallet exchange integrations, and offline P2P exchanges are some of the most common ways to exchange cryptocurrencies without using centralized exchanges. It is crucial to consider the pros and cons of each method and take precautions to ensure security and privacy. As the popularity of self-custody continues to rise, it will be interesting to see how the crypto industry evolves and whether centralized exchanges will become obsolete.
