Paxful Review [2024]: Legitimate Exchange or Scam?

INVESTING - CRYPTOCURRENCY
Paxful is a peer-to-peer cryptocurrency exchange that could appeal to scammers. Here’s what to watch out for.
Updated April 3, 2023
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If you’re looking for a peer-to-peer cryptocurrency exchange, Paxful could be a suitable option. The exchange lets you use more than 350 payment methods to buy and sell cryptocurrency. Additionally, you can also trade in unused gift cards for cryptocurrency.

This Paxful review will ‌look at what to expect from the platform as well as what you need to know to avoid scams.

In this Paxful review

What is Paxful?

Paxful was founded in 2015 by Ray Youssef and Artur Schaback and boasts four offices around the world with its headquarters in Wilmington, Delaware. More than 6 million people use its platform, and there are over 12,000 trusted vendors on Paxful as well. Because it’s a peer-to-peer crypto exchange, Paxful lacks regulation and is set up to help you connect with others who want to buy and sell cryptocurrency.

Additionally, Paxful is known for its support of El Salvador’s adoption of Bitcoin (BTC) and has launched a Bitcoin Educational Center in El Salvador.

Paxful

Mobile app iOS, Android
Fees

No fee to buy crypto

Sell fees:

  • Bank transfer: 0.5%
  • Other bank transfer: 1%
  • Credit/debit card: 1%
  • Digital currency: 1%
  • Online wallet: 1%
  • Cash: 1%
  • Goods and services: 1%
  • iTunes and Google Play gift cards: 5%
  • All other gift cards: 3%
Available cryptocurrencies
  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Tether (USDT)
Buy/deposit methods

More than 350, including:

  • Bank transfer
  • PayPal
  • Amazon gift card
  • Credit card
  • Various digital currencies
  • Zelle Pay
  • ApplePay
Sell/withdrawal methods

More than 350, including:

  • Bank transfer
  • PayPal
  • Amazon gift card
  • Credit card
  • Zelle Pay
  • ApplePay
Order types Peer-to-peer market
Other features
  • Free digital wallet
  • Cash payment
  • Trade goods and services
  • Affiliate program
  • Escrow
Best for... Those interested in transacting business using cryptocurrencies and connecting with other crypto users

What does Paxful offer?

Paxful is a peer-to-peer cryptocurrency exchange that helps you find others who want to use crypto to complete transactions. There are several features that make it attractive to those who are interested in using a bankless method for various financial exchanges.

However, it’s important to note that Paxful isn’t as robust as some of the decentralized finance (DeFi) applications and choices you might see elsewhere. Paxful also offers a mobile app for iOS and Android.

Features

  • Free digital wallet: When you sign up with Paxful, you get a free lifetime Bitcoin crypto wallet app maintained by BitGo. You can also connect to crypto wallets from a number of providers, which makes it easy to move or exchange your tokens.
  • Cash payment: You can receive cash for your Bitcoin or pay for your tokens using cash. You can also use payment options at trusted pickup and dropoff locations or even complete the cash exchange at your door.
  • Trade goods and services: Paxful makes it possible to buy goods and services using Bitcoin. It’s similar to the long-standing service LocalBitcoins in that way, where you can find people and stores willing to accept cryptocurrency as payment.
  • Affiliate program: If you’re hoping to earn income as well as use Paxful for crypto transactions, you can join the affiliate program. This way, you can receive your payouts in tokens and begin creating ongoing passive income.
  • Escrow: Paxful offers a secure escrow system so that assets are held until the transaction is completed. This is a step that can reduce your chances of falling victim to a scammer.

Security

In order to help cut down on fraudulent transactions, Paxful makes use of different verification levels to determine how much you can use in a single trade. It recently instituted security deposits to increase the security of trades. The platform also offers an escrow feature designed to help protect assets until the transaction is complete.

Paxful’s crypto wallet is secured by BitGo, a well-known wallet provider known for security. You also have to use two-factor authentication when you send crypto from your Paxful wallet to a different wallet, exchange, or recipient. Paxful complies with the Office of Foreign Asset Control (OFAC), which means it doesn’t operate in or accept users from banned countries.

What cryptocurrencies are available on Paxful?

Because Paxful focuses on a handful of popular cryptocurrencies, it’s one of the easiest places to learn how to buy Bitcoin. The only other currencies you can buy on the platform are Ethereum and Tether.

However, even though those are the main currencies on the exchange, if you dig into different payment methods, you will see 39 choices, including other members of the Bitcoin and Ethereum families, and other altcoins like Dogecoin (DOGE). In short, if you want Bitcoins, you can trade tokens you already have in and receive BTC in return. If you want to know how to buy cryptocurrency and access more coins, you may need to use a different exchange.

Who is Paxful best for?

Paxful is likely to work best for someone who is interested in completing online transactions, or who wants to purchase cryptocurrencies without paying a fee. However, whenever dealing with a new asset class like crypto, it’s important to assess your risk tolerance.

Someone who engages in cryptocurrency trading or investing needs to have relatively high risk tolerance. Additionally, it could be a good idea to limit your exposure to cryptocurrency by limiting how much of your portfolio is used to invest in cryptos.

When engaging on a decentralized, peer-to-peer exchange like Paxful, it’s especially important to look for ways to limit your risk, including the possibility of being scammed by other Paxful users. This is especially true of cryptocurrency for beginners. Learn the platform before placing a trade.

Pros and cons of Paxful

Pros

  • No fees for purchasing cryptocurrency
  • More than 350 ways to pay or to receive payment when you sell Bitcoin
  • Earn extra income through the affiliate program

Cons

  • There are some scammers, so you have to be on the alert for fraud
  • You’re limited on the types of crypto you can buy
  • Steep learning curve

Who can open an account with Paxful?

You can open an account with Paxful from anywhere in the U.S. As a peer-to-peer exchange, it’s subject to different regulations than what you might see with a more centralized exchange.

Paxful is banned in certain countries, so if you’re in a country that’s on the list of banned countries, you won’t be able to participate. However, all U.S. residents except those living in the state of New York should be able to use Paxful.

How much can you earn with Paxful?

As with any other method of investing money, how much you can earn with Paxful depends on various factors. The type of cryptocurrency token you choose to purchase can make a difference, as well as market movements and types of transactions you choose. In some cases, you could lose money if you are scammed, or if the token you buy loses value.

Paxful offers opportunities, such as the affiliate program, to earn more crypto. If you get more people to participate, you could earn more money over time.

It’s important to note that cryptocurrencies represent a new alternative asset. The future is uncertain and there’s no way to tell whether crypto will become fully mainstream. Crypto is more volatile than many other asset classes, with wide swings in prices.

FAQs about Paxful

Can you get scammed on Paxful?

Yes, it’s possible to get scammed on Paxful. Paxful does use tools like escrow and a security deposit, as well as verifying some participants to cut down on fraud. But with any peer-to-peer cryptocurrency exchange, there’s the chance of being scammed. You need to be careful when completing transactions and do your due diligence to find verified users.

Is Paxful a good wallet?

Paxful works as a decent Bitcoin wallet and is compatible with other coins. It’s not as user-friendly as some other wallets, like Metamask, which can be connected to your browser.

Which is better: Paxful or Coinbase?

Whether Paxful or Coinbase is better depends on your situation and goals. If you’re looking for a platform that offers you a lot of payment options and provides you with a way to buy crypto without worrying about fees, Paxful can be a good choice. However, Paxful can be a little harder to learn and use, and you might need time to get used to the trading platform.

Coinbase is intuitive and easy to use. Additionally, because you are trading with the exchange and not peer-to-peer, Coinbase is more liquid. There are also more crypto choices available on Coinbase. In addition to a referral program, Coinbase also offers a way to earn crypto rewards and earn through staking.

For those who want a user-friendly experience that is less prone to scams, Coinbase can be a good choice, even though you’re likely to pay more in fees. If you’re more interested in decentralized exchanges and hope to use crypto as a medium of exchange in addition to a way to see asset appreciation, Paxful might be a good choice.

How to open a Paxful account

In order to sign up, you need to provide a phone number and email address and create a password. Once you’ve completed this step, you have access to your free wallet. Next, you need to go through a verification process.

The level of verification you use determines your limits for trading on Paxful:

Verification level Type of documentation Trade limit amount Trade volume lifetime limit Send from wallet lifetime limit
1 Phone $1,000 $1,000 $1,000
2 Email and government-issued ID $10,000 $10,000 $10,000
3 Address $50,000 Unlimited Unlimited
4 Enhanced due diligence Higher than $50,000 Unlimited Unlimited

The level one verification is almost instant, and you can begin using Paxful as soon as you can connect a payment method. It takes longer to receive verification at other levels, especially at level four, where extra steps are taken to verify your identity.

Other platforms to consider

Coinbase

As a centralized platform, Coinbase is one of the best cryptocurrency exchanges and offers more liquidity than Paxful. You can trade Bitcoin and crypto instantly, buy crypto using fiat currency, or exchange tokens you already have. The fees are higher with Coinbase, however.

Paxful offers more payment options, and will even let you turn in unused gift cards ‌for Bitcoin. Paxful is designed more for those who believe in crypto as a medium of exchange as well as an investment vehicle, whereas Coinbase is aimed more at those who want to invest and trade crypto.

Read our full Coinbase review to learn more.

Kraken

Although both Coinbase and Paxful offer wallet services, Kraken does not. Kraken is a more advanced trading platform that allows for futures trading and the ability to trade on margin. Like Coinbase, Kraken is a centralized platform and not peer-to-peer like Paxful.

Kraken has competitive fees, but might not always be the lowest. Additionally, Kraken doesn’t accept PayPal or credit cards for U.S. dollar transactions. For crypto traders looking for more advanced features, Kraken could be a good choice.

Read our full Kraken review to learn more.

FinanceBuzz is not an investment advisor. This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.

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Author Details

Miranda Marquit Miranda Marquit has covered personal finance for more than a decade and is a nationally-recognized financial expert and journalist, appearing on CNBC, NPR, Forbes, Yahoo! Finance, FOX Business, and numerous other outlets.

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