What Is Paxful? How Does It Work?

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What Is Paxful? How Does It Work?

As more retail traders join the crypto market, peer-to-peer (P2P) crypto trading has grown increasingly widespread. While centralized cryptocurrency exchanges provide venues for this, there are also separate markets dedicated to exchanging assets directly between buyers and sellers.

Paxful is one of the most popular platforms for P2P crypto trading. Do you want to purchase or sell cryptocurrency without going via an exchange? Paxful could be what you’re searching for, so keep reading to find out more.

What Is Paxful?

Paxful, one of the main markets in the field, must be included while discussing P2P crypto trading. It is a decentralized platform, which means that there is no centralized control, as there is with a centralized exchange. It is not, however, the same as a decentralized exchange.

Users of Paxful mostly exchange cryptocurrencies for fiat currency or vice versa. Trading takes occur directly between the seller and the buyer, with no third-party involvement. Furthermore, as we shall see momentarily, there is a mechanism in place to verify that no one commits fraud throughout the process.

Payment mechanisms such as Payoneer, which conventional centralized cryptocurrency exchanges do not accept, are one differentiating feature of marketplaces such as Paxful. As a result, it is a favorite location for trading cryptocurrencies with more freedom.

While it is most known for selling Bitcoin, Paxful now allows you to trade Tether USDT and Ethereum. Users from any supported country may exchange any of these assets with users from their own or other nations.

How Does Paxful Work?

To access the marketplace, Paxful users must first register and be confirmed. While Paxful is decentralized, with no central supervision, the system assures that no one cheats, giving it a trustworthy location to trade without knowing who you are dealing with.

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This is made feasible through an escrow account, which locks cryptocurrencies to be sold so that the seller does not get fiat money and the digital asset is not released. If a dispute arises during a transaction, you may register a complaint and present documentation, such as payment proof, to support your argument. If the Paxful team determines that your complaint is legitimate, they will either release the cryptocurrency to you as the buyer or retain the cryptocurrency as the seller who has not received fiat payment for the assets.

Once you’ve registered and been confirmed, you may post an ad if you want to sell or submit information about the cryptocurrency you want to purchase and how much you want to spend, as well as the fiat currency you’ll be paying with and the payment method you’d want to use.

With this information, you may browse for available offers and choose the vendor from whom you want to purchase. If you accept the conditions, you may pay them and they will release the asset to you.

The length of time it takes to execute a transaction is determined by the trader, the payment method utilized, and other variables such as the time it takes for the transaction to be verified.

Which Countries Does Paxful Support?

Paxful is available in the majority of nations throughout the globe. Based in the United States, it serves consumers from the nation as well as many other countries across the world.

Paxful is presently unavailable in just 35 nations and areas, including the Solomon Islands, Christmas Island, Cook Islands, Greenland, and others.

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Is Paxful Secure?

Because Paxful is a decentralized marketplace, it is normal for prospective users to be worried about its security. Paxful, on the other hand, is more secure than you may imagine.

Indeed, the decentralized structure is a security benefit in and of itself, since no Paxful team member can steal and flee with your cash.

Second, Paxful provides an escrow service, which is intended to temporarily retain assets that are for sale so that the seller does not defraud the buyer. Finally, all platform users must be vetted before they can engage in any transactions to guarantee that only legitimate people may purchase or sell.

One precaution to consider is to never retain money in the marketplace wallet for an extended period of time if they are not intended for trading. Hackers may target the marketplace and steal cash if they are held in your online wallet since it is online. As a result, as soon as you purchase a cryptocurrency, you should move it to your own wallet, ideally a cold wallet, which is more safe than a hot wallet.

What Are Paxful’s Fees?

Paxful charges a variety of fees, including crypto trading fees, escrow fees, sending and receiving fees, Lightning Network costs, and conversion fees.

Trading Cryptocurrency

Payment GroupSellBuy
Bank Transfer0.5%no fee
Other Bank Transfer1%no fee
Credit/Debit Card1%no fee
Digital Currency1%no fee
Online Wallet1%no fee
Cash1%no fee
Goods & Services1%no fee
Gift Card5% iTunes and Google Play cards 3% for all other gift card typesno fee

The escrow cost is only paid after the transaction is completed, and certain kiosk trades may demand a fee in addition to Paxful’s escrow fee.

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Sending and Receiving Bitcoin

Wallet TypeSendReceive
External Wallet$0 – $9.99 = 0.00008 BTC fee $10 – $19.99 = 0.00016 BTC fee $20+ = 0.0004 BTC feeno fee
Internal WalletUp to 1,000 USD per month for free (between all cryptocurrencies) After 1,000 USD is reached, a fee of 1 USD or 1% of the amount being sent, whichever is greater, is appliedno fee

Sending and Receiving Tether (USDT)

Wallet TypeSendReceive
External WalletDynamic Ethereum or Tron network fee + Paxful Wallet fee Paxful Wallet fee breakdown: $0 – $9.99 = 1 USDT fee $10 – $19.99 = 2 USDT fee $20+ = 5 USDT feeno fee
Internal WalletUp to 1,000 USD per month for free (between all cryptocurrencies) After 1,000 USD is reached, a fee of 1 USD or 1% of the amount being sent, whichever is greater, is appliedno fee

Please keep in mind that although Tron does not charge for transfers utilizing the TRC-20 USDT, Paxful costs still apply.

Sending and Receiving Ethereum (ETH)

Wallet TypeSendReceive
External WalletDynamic Ethereum network fee + Paxful Wallet fee Paxful Wallet fee breakdown: $0 – $9.99 = 0.0005 ETH fee $10 – $19.99 = 0.001 ETH fee $20+ = 0.002 ETH feeno fee
Internal WalletUp to 1,000 USD per month for free (between all cryptocurrencies) After 1,000 USD is reached, a fee of 1 USD or 1% of the amount being sent, whichever is greater, is appliedno fee

Lightning Network

Wallet TypeSendReceive
External Wallet1% of the amount being sentno fee

Converting Cryptocurrency

Conversion TypeFee
All cryptocurrency conversions0.5%

Pros and Cons of Paxful

Paxful, like any other product or service, has advantages and disadvantages. The following are the advantages and disadvantages of utilizing Paxful for P2P crypto trading.

Pros

  • Multiple assets available
  • There is no central control over a decentralized platform.
  • Safe for P2P trades
  • There are several payment methods available.

Cons

  • Long-term storage of crypto assets is not secure in a wallet.
  • In comparison to centralized exchanges, fees are quite hefty.

Should You Use Paxful?

Paxful provides a platform for peer-to-peer trading with payment choices not accessible on centralized systems. This is its main advantage, therefore it is an excellent place to purchase and sell crypto if you want to go out beyond controlled exchanges like Binance.

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