What does it mean to be outside the currency circle?

Cryptocurrency over-the-counter (OTC) is a transaction in which cryptocurrency is bought and sold outside of an exchange. Its advantages include: larger transaction size, low transaction costs, higher anonymity, flexibility, and privacy. OTC trading works as follows: finding counterparties, negotiating terms, transferring funds, and transferring cryptocurrencies. However, OTC trading also involves risks such as hedging risks, price fluctuations, and fraud.

Coin Circle OTC Trading: Detailed Explanation and Advantages

What is Coin Circle OTC Trading?

Over-the-counter trading (OTC) refers to cryptocurrency trading outside of exchanges. It happens directly between buyers and sellers without going through a central trading platform.

Advantages of OTC Trading

• Larger Transaction Size: OTC trading usually involves larger transaction size and is not limited to the liquidity of the exchange.
• Low Transaction Costs: OTC trading may incur lower fees than exchange trading because there are no exchange fees or liquidity provider fees.
• Greater anonymity: OTC transactions are usually conducted anonymously and the parties to the transaction do not have to reveal their identities.
• Flexibility: OTC trading allows both parties to negotiate the terms of the transaction, including price, quantity and settlement method.
• Privacy: OTC trading avoids the monitoring of exchanges and provides a higher level of privacy for both parties to the transaction.

How OTC Trading Works

OTC trading is typically conducted through the following steps:

1. Finding Counterparties: Buyers and sellers can use social media, forums, or specialized OTC trading platforms to find counterparties .
2. Negotiation terms: Both parties negotiate the transaction terms, including price, quantity and settlement method.
3. Funds Transfer: The buyer transfers funds to the seller via bank transfer or other methods.
4. Cryptocurrency Transfer: The seller transfers the agreed cryptocurrency to the buyer’s wallet address.

Risk of OTC trading

• Hedging risk: Due to the lack of centralized supervision, OTC trading has higher hedging risk. Both parties to a transaction must carefully assess each other's creditworthiness.
• Price Volatility: The cryptocurrency market is highly volatile, and parties to a transaction should be aware that prices can move significantly before a transaction is completed.
• Fraud: There is a possibility of fraud in OTC transactions, and both parties to the transaction should take appropriate measures to protect themselves.

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