At the first steps in cryptocurrency trading, users are faced with commissions. At first, the section describing fees on Binance may scare you off with its length. This material talks about basic concepts – why the service deducts commissions and in which transactions they are charged. Readers will learn that makers and takers on Binance are traders, but their importance in the market is different. To understand the peculiarities, it is worth starting with an explanation of how supply and demand form the price.
About liquidity in trading
Users come to the exchange to buy and sell cryptocurrencies. It seems as if they are just exchanging coins among themselves. At the same time, the trading process is not as simple as a literal transfer of money (like a cash transaction). Exchanges need to attract interested investors, provide them with assets, and ensure a favorable rate. If the cost is too high – no one will buy. If the volume is insufficient, there will be nothing to buy.
The greater the turnover of digital currency on the exchange, the more interesting it is to conduct transactions. For this purpose, services attract clients’ funds.
The volumes of such assets for transactions on the exchange are called liquidity.
This term is used in two meanings. The first has a financial meaning and is found in textbooks on economic theory. In this interpretation, liquidity means the ability to quickly turn into money. For example, real estate is an asset. However, small-sized apartments are bought faster (on average in 2-3 months). Options with a larger area can be on the market for years. Assets that take a long time to turn into money are called low-liquid assets.
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The second meaning is to trade in the context of asset volume. In this interpretation, liquidity plays an important role in exchanges and financial markets. The platforms raise funds in different ways. However, the main part is made up of transaction fees between sellers and buyers.
From service fees, the exchange gives loans to traders. Borrowed assets are used in margin trading and operations with futures. This helps the exchange to increase the trading turnover, which means additional commissions.
Why we need makers and takers
Exchange platforms create an opportunity to earn money and keep their share for it. The commission accompanies the deposit and withdrawal of funds, as well as any trading operations. The fee is usually calculated as a percentage of the exchange amount. There are 2 names of traders used. Makers and takers on the Binance exchange, as on other trading platforms, are buyers and sellers.
Taker in translation from English means “performer”. This is the name of participants who take assets without trading (at the offered price). Makers (from English Maker – “maker”) sells or buys at the desired rate.
Takers buy at the market. Makers form the offer on the market and use limit orders (trades).
About makers
Traders are called so in different spheres of trading – spot, futures, P2P-market. They are considered to be the most valuable participants of operations that create a supply. In this case, the trader wants to get the best price, so he is ready to wait. In this case, he places a pending order or transaction.
The order is reflected in the stack. The more offers (liquidity) on the market, the higher the competition and stronger the interest of buyers. Therefore, the exchange incentivizes users to place limit orders:
- Customizes the interface to make pending transactions easier to execute.
- Reduces trading commissions.
About takers
Such traders place their orders at the current market price. As a result, selling and buying are executed instantly. Instant transactions are almost not reflected in the stack. This means that they cannot influence the demand. For exchanges, taker transactions are less valuable, so commission fees are higher in this case.
Conditions and differences between makers and takers on Binance P2P
The principle of linking the interest of buyers with the offer works on any financial market, including peer-to-peer services, where users buy and sell assets for fiat money and cryptocurrencies. The main difference from the exchange market is that participants exchange funds directly between themselves.
Takers on P2P are a kind of guests. Regardless of whether you need to buy or sell cryptocurrency, they simply respond to someone else’s ad.
Makers are, by analogy, the receiving party. Publishing an ad creates supply – hence liquidity.
The large number of bids on listings forces the makers to quote a rate that is more attractive to buyers. This ensures healthy market competition.
Binance is one of the most popular exchange platforms. It offers P2P, spot and futures trading. The size of commissions is specified in the section of the same name. It is located at the bottom of the site (column “Support”).
Commission amounts
Users should check the relevance of the information on the exchange’s website. Data on fees may change. The commission amounts are different for makers and takers. Example – data for September 2023.
On Binance, P2P traders can obtain merchant status. It is assigned to any user who has met certain conditions. For example, he/she has reached the required number of successfully completed transactions or trading volume, has been trading for a long time, etc.
After that, the trader is assigned a special marker in the form of a tick. It appears next to the nickname. Binance gives merchants a discount on service commissions – from 20 to 50%. The amount will depend on the monthly trading volume and the percentage of successfully completed transactions.
Popular misconceptions
There are several misconceptions about P2P cryptocurrency exchanges. Among the popular ones are:
- Insecurity of P2P transactions. Customers may feel that sending money to an unknown recipient is insecure. However, most platforms, including Binance, provide security mechanisms. These include verification, arbitrage, and reputation systems.
- Complexity of P2P transactions. At first transactions, peer-to-peer exchanges seem more difficult than exchanges. In fact, the platforms help novice users. For this purpose, intuitive interfaces, video guides, instructions and a Frequently Asked Questions (FAQ) block are created. P2P is one of the popular ways to exchange cryptocurrency to fiat money and back.
- High commissions. There are no fees when buying from an already published listing. For maker offers, the maximum commission is 0.35%. In terms of fiat, it is $3.5 for every $1 thousand.
- Unfavorable exchange rates. In reality, everything works the other way around. The more offers on the site, the higher the competition. This means a favorable rate.
- Lack of technical support. If you suspect fraud or bad faith on the other side of the transaction, clients file a complaint (appeal). It is considered by the exchange staff and an arbitration decision is made. If the terms of the exchange were violated, the unscrupulous participant will be blocked. The money will be returned to the owner.
- Limited volume of transactions. There is another opinion that P2P-exchange is suitable only for large or, conversely, small transactions. However, the platforms place offers with any volume of assets. The minimum limit is from 500 rubles, the maximum reaches hundreds of thousands.
Despite common misconceptions, the exchange of cryptocurrencies on P2P platforms is a reliable and profitable way to conduct transactions.
FAQ
💳 What payment instruments are used for fiat in P2P transactions?
Money can be received or entered from the balance of the exchange account, bank card or EPS account – for example, QIWI.
🛒 Is P2P only available on the Binance exchange?
Peer-to-peer exchange platforms are available on centralized exchanges (Huobi, OKX, Bybit), as standalone services and even in the format of bots in Telegram.
âš¡ What is C2C trading?
It is an acronym for Consumer-to-consumer. It is considered synonymous with P2P.
🔔 What does escrow system mean?
It is an agreement between the seller or buyer for a third party to be present. The intermediary locks the assets in their possession pending confirmation that the parties have met the terms of the exchange.
📱 Do I have to verify my account when transacting on Binance?
Yes. Any actions are available only after verifying your identity with documents (passport photo or driver’s license).
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Author: Saifedean Ammous, an expert in cryptocurrency economics.
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