How does a Peer-to-Peer exchange development work?

A peer to peer exchange is a transfer of assets, information, currency etc. over the internet without the involvement of a third party. The reason of elimination of a middlemen is to reduce costs as a middlemen would look for his profit as well. Apart from eliminating the intermediary it also reduces various constraints that are present in these exchanges ,thus they are also known as 'decentralized exchanges'.

The acceptance of bitcoins as a medium of exchange was very rare in the markets and not entertained by a lot of people.Thus the establishment of an online interface for direct transactions was highly required. This led to the introduction of a software which connects prospective buyers with the seller based on the terms of transaction.

Through the conventional process, an order book was created and the demand of the buyers were matched with the offers. This process consumed a lot of time and in some cases the transaction of fiat money took several days. To eliminate this constraint, the P2P software matches the parties behind the transaction rather than matching the orders. Instead of initiating the transaction, a connection is made between the buyer and the seller allowing them to strike a deal without any interference.

In these cases, involvement of third parties may be present in the form of arbitrators in case of disputes. However, the software is quite capable in conducting these trades of decentralized manner. This kind of transaction gives a lot of benefits. This mode is efficient, easy to use and less costly. It also offers high resistance to transaction censorship.