- September 12, 2017
- Posted by: admin
- Categories: Bitcoin, Bitcoin Everything, Exchanges, Investing, Markets, Trading
Peer-to-peer exchanges are one of the most popular ways to buy Bitcoin. These decentralized exchanges are maintained and operated exclusively by software. For example, two platforms that operate P2P exchanges are Localbitcoins and Paxful.
In this blog post, I will concentrate on Paxful, as I had problems with creating an account to Localbitcoins (never received the confirmation letter).
Basically, P2P exchanges allow you to trade directly with other people without any third party to process all trades. Parties on P2P exchanges are directed by pre-programmed software, with no need for human middlemen.
P2P exchanges have different advantages over more centralized “traditional” exchanges (lower fees are one of them), but there are definately downsides as well, as you’re dealing with other people that you can never trust 100% (rating system helps though).
Let’s look at some of the features of Paxful P2P exchange, to give you a better idea of how it works.
Account setup is easy. Username and e-mail is sufficient. Later, they will ask you to confirm your phone number as well plus few other usual questions like name etc.
The minimum amount Paxful allows any vendor to offer is 0.001 BTC, no matter their verification level. If you are a buyer you do not pay Paxful anything. Paxful does not take fees from the buyer. The buyer does, however, pay a fee to the seller for converting their Cash, gift card or PayPal money etc… into bitcoin. Each seller has a different price so it is up to you to select the best one. For example, most vendors may charge a 30% fee to convert your Amazon Gift Card to bitcoin. This means you give them a $100 Amazon gift card and get back 70% of bitcoin to your Paxful bitcoin wallet. Of course, the fee is not that much with cash or Paypal payments.
The seller of the bitcoin has to pay 1% fee to Paxful.
Paxful has an internal repuration system which allows traders to rate their experience with each other during a trade. Once you have 50 trades with more than 20 different partners, you can apply to become a verified vendor. Basis for that is high responsiveness and success score over 33%. Verified vendor feature is available to Europeans, Americans, Canadians and Australians. The requirements change over time, so before applying, check their policies to be sure you can get the verified status.
Buying Bitcoin On Paxful
There’s a wide variety of ways to buy Bitcoin on Paxful.
Gift cards – Amazon, iTunes, Walmart, Target and other major brands. Private.
Cash Deposits – Western Union, Bank of America, Wells Fargo, SEPA etc. Pricate.
Online Wallets – Paypal, Skrill, Neteller and other major online wallets. ID may be required.
Credit/Debit cards – VISA, MasterCard or AmEx. ID required.
On Paxful website, you can enter the amount that you want to buy and search for offers. Pick the best offer from a vendor with a good rating and preferred payment method. With Paxful account you’ll get your Bitcoin wallet, where purchased bitcoins will be stored. There are special navigation menus for buying bitcoin dependent on your location (India, China, Nigeria, USA, Russia) as well, which can be really helpful.
P2P exchanges are definately worth checking out, as they give you a lot of opportunities to buy Bitcoin. While there has been buyers who got ripped of in all P2P exchanges, it has gotten a lot better, as exchanges have developed decent rating systems and volume to identify quality vendors.
For Paxful, their customer support has gotten a lot better compared to the early days, together with the safety of doing the trades. The downside is still the high fees with some payment methods (like gift cards).