Paxful is the leading P2P bitcoin exchange in Africa. But is it safe to use? This Paxful review will explore all the exchange’s features to provide you with insight into this popular bitcoin marketplace.
What is Paxful?
Paxful is a peer-to-peer (P2P) bitcoin exchange that Ray Youssef and Artur Schaback founded in 2015. According to a report from Arcane Research, ‘The State of Crypto – The P2P Market,’ Paxful thrives in the US, Sub-Saharan Africa, and Asia.
The exchange supports bitcoin and tether and over 350 payment methods. Gift card trading is the most popular payment method on Paxful, contributing to 48 percent of the total volumes as of July 2020.
In just five years, users on the platform have grown to millions making Paxful one of the largest P2P players in the global crypto market alongside Localbitcoins. The US market contributed to Paxful’s initial growth, the Arcane report states. However, its expansion to Sub-Saharan Africa and Asia and intense marketing efforts have made it the dominant P2P exchange globally in terms of trade volume.
One of the projects that have made Paxful popular in Africa is the #BuiltWithBitcoin initiative. The goal of this initiative is to build 100 schools, entrepreneurial incubators, and water facilities with bitcoin. Currently, Paxful is building the fourth school.
Paxful provides its users with a wide range of features that makes its platform easy to use. For instance, the platform accepts more than 350 ways to buy and sell bitcoin. Furthermore, Paxful has several features that make it safe to use. Below are those features.
New users on Paxful undergo the Know-Your-Customer (KYC) process, where they verify their personal details. Paxful requires users to verify their email addresses, phone numbers, IDs, and residential addresses. The bitcoin exchange could also ask for video verification. This is an extra identity check which is not mandatory.
Different verification levels have different privileges. For example, to make trades worth $50,000, you need to have verified your address. Conversely, for trades above $50,000, you require to undertake the enhanced due diligence verification. Users have to verify their ID cards to access all payment methods.
Bear in mind that users from certain countries require mandatory ID verification to withdraw funds or use their Paxful wallets. Some of these countries include Austria, Barbados, Brazil, Colombia, France, Greece, Italy, Netherlands, Russia, Zimbabwe, and the UK.
Once you submit all your documents, Paxful will review them and either approve or reject your details. If you fail the compliance review, then you have probably submitted false information, you are operating more than two Paxful accounts, or your account is linked to illegal activities.
Paxful has an AML policy and complies with the Office of Foreign Assets Control (OFAC) sanctions. Moreover, the exchange is regulated.
OFAC is a division of the US Department of Treasury that enforces economic and trade sanctions against certain countries, terrorists, narcotics traffickers, among other threats.
Some of the OFAC banned countries that cannot use Paxful include Somalia, Burundi, Cuba, Iran, Iraq, and North Korea.
To give your account added security, you should enable two-factor authentication (2FA) using Google Authenticator. You can also enable this feature for your Paxful wallet.
Paxful recommends using Google Authenticator over enabling 2FA through SMS because hackers could access your SMS messages via SIM swapping.
Buy and Sell Guides
Paxful has provided security tips through its buy and sell guides. For instance, if you are selling bitcoin to a buyer who is paying through PayPal, Paxful advises that you do the following:
- Request the buyer to send a selfie holding their ID and a note indicating the amount, the email address they are sending the funds to, and the real name of the recipient.
- Confirm that the buyer has enough funds in their account to make payment.
- Use PayPal for small trades.
- Limit new buyers to one trade per day or week to avoid the risk of chargebacks.
Trader Reputation and Feedback
Paxful has created a section where traders can leave feedback. This feedback determines the reputation of all Paxful users. As a result, you can find out if it is safe to buy from a seller based on the positive and negative feedback they have received. Also, the feedback feature helps users trade with reputable sellers or buyers to reduce the risk of being scammed.
Once a trade is complete, traders should leave feedback to help others make safe trades in the future. If you forget to leave feedback, you can open the trade later.
Paxful offers an escrow feature to protect both the buyer and seller. Once a trade begins, the platform automatically moves the bitcoin from the seller’s wallet to a temporary safe deposit account, which acts as escrow. The buyer receives the bitcoin after sending payment and once the seller confirms receipt of the funds.
If the seller fails to release the bitcoin after the buyer has sent the payment, the bitcoin will remain safe until the moderators resolve the dispute. On the other hand, the seller can easily get their bitcoin back if the buyer fails to complete the payment.
Bear in mind that Paxful charges a fee for offering the escrow service.
Paxful allows users to file a dispute if a trade goes wrong. This feature reassures users that they could still get their crypto, thereby allowing them to trade with peace of mind.
Moderators handle dispute resolution on Paxful. These are third parties that investigate and settle disputes by looking at the trade terms, proof of payment, user reputation, offer instructions, the trade chat, and past trading history. Users should provide as much evidence as possible to help the moderators to make the best decision.
Dispute resolutions could take up to three weeks. To obtain the best help possible, users should file disputes as soon as they happen. Also, the platform allows users to report a scam, a trade problem, a chargeback, or an offer.
Paxful uses BitGo as its wallet service provider. The exchange claims BitGo provides the most secure services in the market. Also, the exchange uses secure servers. However, Paxful acknowledges that a wallet is only as secure as the user makes it.
To keep your wallet secure, you should do the following:
- Enable two-factor authentication
- Avoid phishing sites by entering the right Paxful URL
- Use a strong password
- Do not share your password with anyone
Paxful has provided a lot of resources in the FAQ section to help traders use the platform as safe as possible. Nevertheless, you can contact customer support if you cannot find the solution to a security problem you are facing. The customer support option that is available is a contact form. Click the “Contact Us” button at the bottom of the page to fill the contact form.
Paxful also has an active online community, especially on Telegram, where users can ask questions and get advice.
Is Paxful Legit?
Yes, it is.
Paxful is one of the most reputable P2P bitcoin exchanges in the world. The exchange has created a good reputation by providing an escrow and dispute resolution service. However, it is easier to apply caution when trading than risking getting into a dispute.
To trade bitcoin on Paxful, click here. To learn more about Bitcoin, download the Bitcoin Beginner’s Handbook for free.