Today I’m going to look at the platform that provides this type of service: Paxful (Bitcoin’s “Uber“). It got that name for its versatility, simplicity, and affordability.
Today, when it comes to buying Bitcoin, you usually go to a Bitcointrading platform (e.g. Bitstamp and Kraken) or a Bitcoin exchange (e.g. Coinbase and Coinmama). However, some of these crypto exchanges simply don’t cut it, either because of their geographical restrictions (e.g.
Coinbase doesn’t accept people from many countries) or their accepted payment methods.
In this case, you can always use networks of Bitcoin sellers from all over the world that allow almost everyone to buy Bitcoin. This network can best be described as “the eBay of Bitcoin buying“.
The company was founded by Artur Schaback and Ray Youssef in the summer of 2015 and is headquartered at 3422 Old Capitol Trail, Wilmington, Delaware. Paxful is a peer-to-peer Bitcoin marketplace that became widely known after helping sex workers accept Bitcoin as a payment system after MasterCard and Visa stopped lending their services to Backpage.
|seat:||, New York|
|Founders:||Ray Youssef, Artur Schaback|
|customer service:||Tel. +1 (865) 272-9385|
What Is Paxful? At its core, Paxful is very similar to Localbitcoins, where anyone in the world can trade fiat for Bitcoin or vice versa. The state of New York is the only exception and jurisdiction in which they cannot operate because they do not have the required BitLicense.
As I mentioned, the site is not focused on a specific region. However, some countries such as the United States, Russia, India, Nigeria and China are highlighted on their homepage, in the sections “How to buy Bitcoin in…“.
Paxful helps connect buyers and sellers to easily exchange Bitcoin, accepting more than 300 varieties of paymentmethods that include Facebook Messenger, Apple Pay, gift cards, and more traditional methods like your debit card, online wallet, or cash.
How to create an account on Paxful?
Creating an account on the
site is a very simple process and can be done in two ways: by directly filling out the registration form available on their website, or automatically, after providing an email not yet registered in their database during checkout in a purchase process. Users are also asked to click on the confirmation link sent to the registered email and set two security questions.
It is important to note that users can alternatively verify their mobile number and activate SMS notifications. They can choose to be informed of a wide range of activities related to their account via email. However, only alerts about critical movements are sent via SMS.
Notifications sent by email are not encrypted. They even send passwords as plain text. An automatically assigned password is given to users who register while buying Bitcoins. In addition, they are not forced to change it after logging in for the first time.
Ease of use
I found the user interface completely intuitive and clean. It offers intuitive distribution of options and a minimalist menu and fits seamlessly to any screen size.
Every important feature is clearly labeled, so there’s no confusion about how to get started, whether you want to buy Bitcoins or sell them.
Within your account dashboard, you’ll find easy-to-read buttons that will direct you to where you need to be to set up 2-factor authentication or buy BTC, send or receive them.
Paxful has a couple of quirks when it comes to fees. First, Bitcoin buyers on Paxful don’t pay any fees. Instead, fees are charged to Bitcoin sellers. Second, Paxful doesn’t charge any fixed fees. Instead, the commission is determined by the seller. And then Paxful charges the seller 1% of the transaction amount.
It is also crucial to pay attention to exchange rates because the fee can be very high. In fact, sellers set exchange rates at higher rates than centralized exchanges like Binance and KuCoin. They use the method to recover part of the 1% charged for selling their coins on the platform.
It is also important to be alert because exchange rates may change before completing the transaction. Therefore, compare the exchange rate and make sure you only work with seller charging a lower fee.
Bitcoin is a digital currency, so all transactions are delivered to your Paxful e-wallet.
You can use one of over 300 payment options to buy Bitcoin, including:
- E-wallet balances
- Gift cards
- Credit or debit cards
- Cash deposits
- Bank transfers
- Money transfer services such as MoneyGram and Western Union
To see the full list of payment methods sellers can choose to accept, visit the Paxful website.
How does buying on Paxful.com work?
Technically, you can shop with any currency and pay with a wide variety of methods ranging from credit cards/debit cards and bank transfers to a large number of cash deposits and gift cards. Perhaps, in practice, there are no offers for all possible combinations because the site works in a P2P way. For example, a quick search for offers in Korean won or Fiji dollar returned no results.
The site is open for purchase with any digital currency. However, only Bitcoin can be sold. The seemingly interesting thing about Paxful is that there are no commissions for the buyer. However, it’s a bit naïve to say that there are no transaction fees because most sellers portray these fees within their exchange rate. It should be taken into account that for uncommon payment methods the conversion rate is usually much lower than the market price. In other words, this means that the buyer pays a commission to the seller.
We received this generous offer because we weren’t able to buy with FJD: barely receiving 61% of what we would have paid in USD.
How does Sell Work on Paxful.com?
0.001 BTC is the minimum amountthat Paxful allows any provider to offer, regardless of their verification level. The site takes 1% of the total sale amount from the seller, automatically taken from the user’s wallet and sent to escrow along with the amount to be purchased by a customer during an exchange.
The site has an internal reputation system. This system allows users to evaluate their mutual experience during an exchange. Once a particular supplier hascarried out 50 trades with more than 20 different partners and if it has high responsiveness and its success score is above 33%, it can apply to become a verified supplier. The feature is only available for Europeans, Australians, Canadians, and Americans. The verification process takes up to seven days. In addition, the requirements have undergone minor changes since the launch of the platform. Check out the corresponding entry in the Paxful knowledge base here to learn more about the process.
Paxful operates in more than 100 countries around the world, giving you plenty of options when it comes to currencies you can exchange for Bitcoin.
Paxful Customer Service
There is also an ever-present “Help” section that is clearly visible, within which a relatively comprehensive FAQ is included. Additional user help includes a 24/7 live chat and a support forum.
The forum itself seems quite active, and forum discussions often receive responses. However, perhaps some of the answers are not as relevant as one would like.
As for Paxful’s live chat support, a small caption indicates that responses take an average of 10 minutes. However, it’s not actually a live chat, you wait much longer for a rep to respond.
Paxful offers a secure escrow service for Bitcoin transactions. Once you choose a seller you want to use and the offer is accepted by the Bitcoin seller, the coins are automatically moved to escrow.
This means that the seller can no longer cancel the transaction and that the buyer has a certain period of time to make the payment. If payment is made within the stipulated time period, the coins are transferred to the buyer.
Sometimes buyers do not execute the trade within the time frame. If this is the case, all that happens is that the seller gets his Bitcoin returned to their wallet.
In the event that the transaction is confirmed by both the buyer and the seller, the swap is completed. Also, you should know that you can open a case if you believe there is something wrong and this will be reviewed by Paxful, who will act as moderator and award the bitcoin to anyone who is right.
Is Paxful legitimate and safe?
Paxful has put in place robust security measures to safeguard the Bitcoins in your wallet and has also partnered with BitGo in order to protect its hot wallet using multi-sig.
These measures, which are standard in most reputable Bitcoinexchanges, include security questions, two-factor authentication, SMS verification, and heavily encrypted servers.
Keep in mind that these measures are not impenetrable, and that a talented and motivated hacker can still potentially break into your account. There are no reports that the site has ever been hacked. However, according to Cointelegraph, one of its founders was recently arrested on charges of weapons and drugs.
The site also has a review system, which is similar to those used on Amazon and eBay. This system is a good way to identify trustworthy and trustworthy sellers because you can tell, at a glance, how many transactions a seller has completed, as well as the number of positive and negative comments left by buyers.
The Paxful forum is full of accusations of scam against other users. Someone even posted a thread on Bitcointalk, warning about the modus operandi of those scammers.
There are also some allegations on Bitcointalk against the site itself that claim that the funds disappeared from wallets without any reason provided by customer support. Here is one started by legendary users irfan_pak10, and a second started by legendary user kashish948, both active members of the forum. Someone suggested on one of those threads that it was BitGo’s fault, yet Paxful’s reputation seems to be mixed.
Paxful has added a “reviews” section to its site as a strategy to improve its image. This section highlights the positive reviews of its users. The page is just another page of testimonials. Its credibility is no greater than that of the company itself.
Paxful vs Localbitcoins
Localbitcoins is the platform that popularized this type of peer marketplace for buying cryptocurrencies and is Paxful’s main competitor. The gap between the two is narrowing as Paxful grows at a faster rate than LB.
Paxful offers a better pricing structure, has more payment options, and offers a higher purchase limit for unverified customers ($1500 vs $1000 on LBC).
LocalBitcoins charges a 1% trading fee to users who create advertisements, in other words, manufacturers pay a 1% trading fee. Buyers do not pay any commission.
Paxful charges a trading fee of 0.5-5% depending on payment methods (0.5% for bank transfers) to sellers. There are no commissions for buyers. However, the withdrawal fee or fee for sending BTC to external wallets is 0.00005 generally on LocalBitcoins while 0.0005 on Paxful.
Paxful has made a name for itself through a particular niche and has been true to its vision. All in all, Paxful is a pretty powerful platform and is considered a fair alternative for “normal people” to buy and sell Bitcoin.