Paxful is a peer-to-peer exchange platform established in 2015 by a team of developers whose goal was to simplify access to Bitcoin. The platform provides a direct exchange where buyers and sellers of cryptocurrencies can meet and transact with each other directly.
The buyer deposits cash through Paxful’s payment methods such as prepaid VISA, Gift Card Code, or Western Union to the seller’s account. Once the seller confirms receipt of funds from Paxful’s escrow service, they release Bitcoins to the buyer directly. Sellers can accept over 300 different payment methods, not to mention a capacity to accept over 85% of international buyers.
The platform is available globally, and the minimum purchase amount in Paxful is only $10. Another advantage of Paxful over centralized exchanges is that users do not need to create a username or password to access the marketplace – they only need their email address.
How Paxful works
Paxful is a peer-to-peer cryptocurrency exchange offering Bitcoin, Ethereum, and Tether. It allows buyers and sellers to connect by posting and responding to ads.
Cryptocurrency is kept in Paxful’s escrow account during the trade. After the buyer and seller confirm the completed payment, Paxful transfers the crypto to the buyer. Paxful has its own crypto wallets where it stores crypto you purchase by default, but you can also transfer it to your own external wallet.
There are a few ways you can use Paxful:
- View all the buy or sell offers for the cryptocurrency you want.
- Find offers using Paxful’s search tool, which lets you filter by the type of cryptocurrency, accepted payment methods, and the amount to buy or sell.
- Post an offer to buy or sell a specific cryptocurrency.
To trade on Paxful, you need to register for an account and provide identity verification. Your trading limits are determined by how much verification you provide.
Pros
- Peer-to-peer crypto trading
- No fee for buying crypto
- Wide variety of payment methods
- Sleek design
- Reputation system
Cons
- Small cryptocurrency selection
- Risk of scams
- Trading can be difficult
- Limited support options
Top perks
Peer-to-peer crypto trading
Paxful is one of the best options for peer-to-peer crypto trades, which is when the buyer and seller connect directly. It offers Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) trading.
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If you want to buy or sell one of those cryptos, you can check out offers people have posted — or post one of your own. On every trade, Paxful keeps the cryptocurrency in an escrow account. After the seller confirms that they’ve received the payment, Paxful releases the crypto funds to the buyer.
Some people like peer-to-peer crypto trading more than buying through one of the big centralized exchanges. We should note, however, that peer-to-peer trading platforms also tend to attract more scammers.
No fee for buying crypto
This exchange doesn’t charge a fee for buying crypto. Sellers pay a fee that varies based on the payment method. It costs between 0.5% and 1% with most payment methods, or 3% to 5% with gift card payments.
Does this mean it’s cheaper to invest in cryptocurrency on Paxful than on other exchanges? Not necessarily. Each seller decides on the price they’re willing to accept. Sometimes you’ll find crypto prices on Paxful that are competitive with what other major exchanges offer, but other times, they’ll be more expensive.
Over 350 payment methods
No matter how you want to buy crypto, it’s probably an option on Paxful. The exchange offers over 350 unique payment methods, from traditional options to digital currencies.
Here are a few of the most popular ways to pay on Paxful:
- Bank transfers
- Payment apps, such as PayPal
- Gift cards
- Other cryptocurrencies
- Cash
To clarify, when Paxful says that it accepts over 350 payment methods, it’s counting every unique way to pay. For example, all the payment apps it accepts count as separate payment methods. The same is true with gift cards, where every type of gift card (such as Amazon, Walmart, and AMC Theaters) is counted separately. Even taking that into consideration, Paxful gives you plenty of ways to pay.
Sleek design
The design on peer-to-peer crypto exchanges can be hit or miss. Some of them have very basic layouts and clunky interfaces.
Fortunately, that isn’t the case with Paxful. It looks good, it’s fast, and it’s easy to use. You could jump right in and start searching for crypto offers fairly quickly.
Reputation system
Paxful uses a reputation system where users can leave feedback after trading with one another. If you’ve used eBay, it’s the same concept and style.
Before you trade with someone, you can view the amount of positive and negative reviews they’ve gotten, check what kind of identity verification they’ve completed, and read feedback from other users. This might make it easier to find trustworthy trade partners and avoid scams.
What could be improved
Only offers three cryptocurrencies
There aren’t many types of cryptocurrency you can trade on Paxful. It offers the two market leaders in Bitcoin and Ethereum. Outside of that, the only other crypto it has is Tether, a stablecoin designed to maintain a value of $1.
If you’re hoping to build a portfolio of different cryptos, Paxful’s selection won’t cut it. Even if you don’t mind sticking to Bitcoin and Ethereum for now, you may want more options later.
Risk of scams
The biggest problem with peer-to-peer crypto trading is that it attracts scammers. When using Paxful, you need to be aware of common scams and check people’s reputation before trading with them. Those are things you don’t need to worry about on crypto exchanges that process trades for you.
If you’re planning on using Paxful to buy or sell crypto, here are some scams to watch out for:
- A seller asks you to trade outside of Paxful. Never accept this, even if they offer you a discount. If you don’t use Paxful, you don’t get its escrow protection, which means the seller can take your money and run.
- A seller asks you to cancel the trade after payment. Scammers often do this with gift card payments, although it can happen with other payment methods, too. If you cancel after you’ve already paid, the scammer could take your money.
- A buyer pays with a reversible payment method and initiates a chargeback. For example, a buyer could use credit cards or PayPal and then do a chargeback after getting the crypto. This is one of the biggest risks for sellers. You can report the chargeback to Paxful, but the exchange doesn’t guarantee it can get your money back.
Trading can be difficult
Buying and selling crypto on Paxful can be a chore. You need to sort through offers to find one at a reasonable price, with a payment method that works for you, and from a seller with positive feedback.
Once you’ve found an offer, you need to read through the instructions and communicate with the other user. It’s worth mentioning here that a large portion of Paxful’s users are outside the U.S., so in some cases, there can be a language barrier.
Those are all manageable issues if you want to use Paxful. But if you’re looking for something quick and easy, there are better crypto exchanges available.
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Limited support options
The customer support process at Paxful isn’t the best. For starters, there are only two support options: Use a chatbot or submit a ticket. You can’t live chat with a representative or call.
If you want to submit a ticket, you need to open the chatbot first, and then submit your ticket through that. This can be frustrating, because it means you need to go through multiple prompts with the chatbot before you get to write about your issue and send it to Paxful.
Unavailable in three states
Due to regulatory restrictions, Paxful is unavailable in the following states:
- New York
- Washington
- West Virginia
It’s also prohibited from offering Tether trading to users in Texas.
Bottom Line
Paxful is generally a safe place to buy, sell, and store cryptocurrency. The escrow system protects buyers and sellers, although you do need to watch out for scams. For crypto storage, Paxful uses BitGo as its wallet service provider. BitGo is a leader in digital asset custody that’s used by over 150 crypto exchanges. It has state-of-the-art security and carries a $100 million insurance policy on the crypto it protects.
