To buy cryptocurrency, you must convert government fiat currency into digital tokens. You can do this using Centralized Exchanges (CEX) or Peer-to-Peer (P2P) markets.
### Centralized Exchanges (CEX)
Platforms like Luno, Quidax, or Coinbase act as third-party custodians.
* **Custody:** When you deposit cash, they hold it. Your tokens sit in their exchange wallets, and they update your dashboard balance.
* **Risk:** ‘Not your keys, not your coins.’ If the CEX goes bankrupt or experiences regulatory action, your withdrawals can be suspended.
### Peer-to-Peer (P2P) Escrow
In regions with banking restrictions, platforms cannot connect directly to banks. Instead, they run a P2P marketplace.
* **How it works:** You transfer bank cash directly to another user’s personal bank account.
* **The Escrow System:** The platform automatically locks the seller’s crypto tokens in a smart contract. Once you pay the cash and prove the transfer, the platform releases the tokens to you. If the seller tries to run away, the escrow holds the funds until a dispute officer reviews bank receipts.