One of the major limitations in today’s crypto ecosystem is the lack of seamless fiat conversion, which restricts users to participate and reap benefits freely.
And, the exchanges that support fiat transactions don’t thrive much either due to geographical restriction, high deposit/withdrawal fees, or restricted payment modes.
In such scenarios, peer to peer platforms performs the best and are also regarded as the platform of the future. Peer-to-peer platforms use the network of bitcoin buyers and sellers around the world that enables anyone to exchange bitcoin using traditional payment channels. In short, peer to peer network is best described as the eBay of purchasing bitcoins.
Two popular platforms lead the space, Localbitcoins, and Paxful. But, today, in this blog, I’m going to review Paxful and how does it stand out.
Paxful Review 2020
Paxful is also known as the Uber of bitcoin, is a US-based peer-to-peer platform and was founded in 2015 by a group developer to create a simple and secure platform for individuals to trade value. Paxful acts as a mediator between buyers and sellers and allows communicating after placing the trade orders.
The site acts as a global peer-to-peer payment logistics platform that facilitates Bitcoin trades, in the same way, eBay promotes trading of goods in its platform. In its website, Paxful states itself as PayPal + Uber and the peoples’ Wall Street.
Paxful provides the most user-friendly way of exchanging bitcoins, offering over 300 payment options, including cash exchange, bank transfers, credit cards, PayPal, digital wallets, gift cards, etc.
How does Paxful work?
Buying bitcoins in Paxful is quite straightforward and involves only a few steps. You need to create a free Paxful account by providing your email id, username, and password. Verify your email address to start buying bitcoins.
Now, enter the value of bitcoin you want to buy and your local currency. Then click on “Search for offers.” Next, the screen will get populated with all the offers, payment modes, and ask rate of the vendor. And, if you’re satisfied with the price, seller’s feedback rating and payment mode, click on “Buy” to proceed.
Following this, it will open up an escrow service and chat account to communicate directly with the seller and discuss the trade-in detail. Once the trade is finalized, and payment is made, click on “Mark as Paid” and wait for the bitcoin transfer to happen
After the bitcoin is credited to your Paxful wallet by the seller, you are free to use it as you want or transfer it to a safer wallet.
So, was there any transaction fee involved in the whole process? And, the answer is yes. When you click on the buy option, the seller mentions the ask-rate for the given transaction. The asking rate differs with every payment mode and is generally highest for the gift cards.
The seller is charged a 1% fee on the transaction and a small mining fee to send the bitcoin to the buyer’s address.
Paxful doesn’t support anonymous trading and exchange of bitcoins; Users need to go through different verification processes for getting enhanced buying limits.
- Level 1: The trade limit is up to $1,500. Requires email and phone verification
- Level 2: The trade limit is up to $10,000. Requires Level 1 + ID verification
- Level 3: The trade limit is up to $50,000. Requires Level 2 + address verification
- Level 4: No trade limit and requires enhanced due diligence
How does Paxful ensure the safety of funds?
Paxful has integrated several features into its platform to help secure trading operations:
- Paxful wallet: While you create an account, by default, Paxful creates a wallet to be used to store and transfer funds on the site. The wallet is designed and maintained following the highest banking specification.
- Escrow service: During a transaction, the funds are held in an escrow account until all the part of the transaction is confirmed. This helps to protect the interest of both buyer and seller, facilitating the trustless nature of the transaction.
- Two-factor authentication (2FA): The 2FA helps to provide an extra layer of security and keeps your wallet protected from unauthorized access.
- Seller’s reputation rating: The rating is given based on the seller’s past activity and trading history. A good rating helps in gaining the confidence of the buyer for a smooth trading experience.
How good is Paxful for bitcoin vendors?
Apart from facilitating peer to peer bitcoin transactions, Paxful also provides a conducive environment for vendors to grow and succeed. Paxful allows selling a minimum of 0.001 BTC through its platform with zero verification.
The website has an internal rating system for vendors, which lets users rate their experience after every transaction. Once the vendor has reached a total of 50 trades with 20 different trading partners and has a success score of over 33%, then he/she can apply to become a verified vendor. The facility is available for vendors located in Europe, Australia, Canada, and America.
The verification process takes 3-7 working days, which enables them with enhanced limits.
Supported payment options
As mentioned earlier, Paxful offers the broadest range of payment solutions in the industry, giving users hundreds of options, including:
- Bank transfer
- Credit cards
- Money transfer services like Western Union and MoneyGram
- Amazon gift cards
However, always keep in mind, different payment option has different exchange rates. For example, the non-refundable payment option (bank transfer, cash) has the lowest fees. Whereas payment option that includes chargebacks like PayPal, credit card has the highest exchange rate.
Paxful is supported worldwide but limits its operations in countries with economic sanctions and no clear regulations. The list of exempted countries are:
Burundi, Central African Republic Sanctions, Cuba, Crimea region, Iran, Iraq, Lebanon, Libya, Somalia, South Sudan-related Sanctions, Sudan and Darfur, Syria, Yemen.
Paxful offers a wide range of customer support solutions to its users. Apart from a knowledge base and FAQs to assist users in starting and solve common issues, Paxful can be reached via email, 24/7 chat option, and social media to get issues resolved.
Using Paxful safely
Being a peer-to-peer exchange platform that mimics some features of the decentralized exchanges, it doesn’t mean Paxful is entirely safe. Users need to be careful while making a trade. The following are some points to keep in mind while using Paxful:
- Always use the recommended sellers or sellers with high reputation ratings
- Never settle trade outside platform or conduct communication outside of Paxful. In case of any dispute, Paxful moderators can resolve your case.
- Release payments from escrow only when you have received funds or bitcoins in your wallet
- Being a hot wallet, always transfer your bitcoins from Paxful wallet to other safe wallet options like a hardware wallet
Pros and Cons
- Easy to use and responsive platform
- Lots of payment options
- Lowest fees
- Seller’s reputation rating
- Excellent support
- Secure exchange operations
- The high exchange rate for multiple non-conventional payment options like gift cards
- Mixed reviews
- Can attract potential scammers
Paxful looks a decent and useful platform for buying bitcoins at a meager rate using fiat currencies. The platform can be used both by new as well as experienced traders. It has placed many checks and balances to ensure users are not duped and have a high transaction success rate.
Despite some mixed comments in several review platforms, Paxful still a preferred option among many users. Also, its number speaks volumes. To date, it has served over 3 million users, more than 480,000 bitcoin bought, and with over 7,300 trusted vendors.