Bitcoin OTC

Bitcoin over-the-counter (OTC) is a Bitcoin transaction that occurs outside the exchange, where buyers and sellers directly enter into transactions. OTC trading involves several steps, including finding counterparties, matching transactions, confirming orders, transferring funds, and completing the transaction. OTC trading offers the advantages of privacy, flexibility, and large-volume transactions, but low liquidity, fraud risks, and price fluctuations are also disadvantages.

What is Bitcoin OTC?

Bitcoin over-the-counter (OTC) refers to Bitcoin transactions conducted outside of exchanges, where sellers and buyers enter into transactions directly.

How is OTC trading conducted?

1. Find buyers and sellers:

• Sellers can place orders to sell Bitcoin through OTC trading platforms or intermediaries.
• Buyers can place orders to buy Bitcoin through the same channel.

2. Matching transactions:

• The platform or intermediary will match the orders of buyers and sellers.
• Both parties to the transaction determine the transaction price and quantity through private negotiation.

3. Confirm order:

• Buyers and sellers confirm transaction details, including price, quantity and payment method.
• Both parties will usually sign a contract to ensure the terms of the deal.

4. Fund transfer:

• The buyer will transfer funds to the seller's account (bank transfer, third-party payment, etc.).
• After the seller receives the funds, he transfers the Bitcoin to the buyer’s wallet address.

5. Complete the transaction:

• After both parties have received funds and Bitcoins, the transaction is completed.

Advantages of OTC trading:

• Privacy: Trading is conducted outside the exchange, and the buyers and sellers are not disclosed personal information.
• Flexibility: Buyers and sellers can negotiate flexible transaction terms, including price, quantity and payment terms.
• Large Transactions: OTC trading is suitable for large Bitcoin transactions as the exchange may not be able to handle such volume.

Disadvantages of OTC trading:

• Low liquidity: The liquidity of OTC trading is usually lower than that of exchanges, As a result, buyers and sellers may need more time to find matching counterparties.
• Fraud risk: There are risks of fraud and money laundering in OTC transactions, and buyers and sellers should be vigilant.
• Price Fluctuation: The price of OTC transactions may be different from the exchange price, causing the buyer or seller to face the risk of loss.

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