Paxful, which operates a peer-to-peer bitcoin (BTC) marketplace, recently topped $4.6 billion in trading volume, marking a significant milestone in its 5-year history.
Paxful runs a marketplace where people come to sell and buy bitcoin. It is a platform for people to trade bitcoin directly with others. In its first year in 2015, Paxful recorded $5.9 million in trading volume. It hit $500 million trading volume in 2017 and hit its first billion-dollar volume in May 2018. The marketplace achieved a volume of more than $1.6 billion last year, which nearly tripled to the $4.6 billion volume in the first half of 2020.
Developing Countries leading The Uptake of P2P Bitcoin Trading
Developing countries have played a central role in fueling the rapid growth of Paxful. The peer-to-peer bitcoin marketplace operator singles out Nigeria, Ghana, India, and Kenya as its leading markets.
People in developing countries turn to cryptocurrencies like bitcoin because of weak local fiat currencies and high inflation rates that are destroying the value of traditional assets. Generally, cryptocurrencies have had a strong appeal among people trying to escape the traditional financial system that is not only outdated and doesn’t serve everyone’s needs but also subject to government controls.
Paxful trading volume has also benefited this year from the coronavirus outbreak. Notably, the pandemic’s economic uncertainty is driving more people to explore alternative investment opportunities outside traditional assets.
Moreover, online transactions have generally spiked globally in the wake of coronavirus as brick-and-mortar businesses closed, and people sheltered in place to curb the spread of the coronavirus. Consequently, the pandemic situation has increased interest in cryptocurrencies that let people pay for purchases without going out. And that is, in turn, driving transactions on marketplaces like Paxful.
Paxful’s Average Amount Per Trade More Than Doubles
The growth in Paxful’s trading volume has come on the back of a rising number of users and an increase in the size of transactions. In its first year, Paxful had 97,000 registered wallets. The marketplace now hosts more than 4.5 million wallets. While Paxful has been adding an average of a million wallets annually, it will add 2.0 million wallets in 2020.
The value of the average transaction on Paxful’s bitcoin marketplace has also grown alongside the number of wallets. The average transaction on the platform was valued at $45. Now the average trade is worth $102, representing more than double growth from where it all started.
“We built Paxful to help the little guy and create wealth for those who need it most. Some people live with restrictions and limitations we cannot imagine. For true financial inclusion to happen, it requires a free market for money transfers,” says Paxful co-founder and CEO Ray Youssef.
Paxful Keeps Marketplace Disputes Low, Boosting Trust In The Peer-To-Peer Bitcoin Marketplace
At one point, peer-to-peer cryptocurrency marketplaces were seen as fraught with scamming activities. But that has changed, and Paxful’s under 1% dispute proportion speaks to that change.
Paxful points out that the average dispute rate for countries with at least 1,000 trades fell to 0.025% in 2019. Indeed, the low dispute rate leads to faster transactions and, in turn, encourages the adoption of peer-to-peer bitcoin marketplaces. More than 44.4 million trades have taken place on the Paxful platform. Then, of course, faster business is helping people overcome the restrictions in the traditional financial system.
Paxful has launched a charity initiative to build schools and support families. And in this pandemic, it is helping developing countries fight the coronavirus disease.
So, Who is Next?
Paxful metrics indeed show a success story. But it is not the only game in town. Other peer-to-peer bitcoin marketplaces have emerged to help people cut out the middleman in bitcoin trades.
One particular P2P exchange that is shaping up to be the next Paxful is NeuronEx a decentralized exchange that offers a convenient and fast way to buy/sell and exchange several cryptocurrencies with minimal fees charged. Currently, the exchange supports BTC, ETH, LTC, XRP, EMC, DASH, and DOGE and plans to add EOS, BCH, BSV, EURT, USDT, CNHT, and XAUT in the middle of August, after it launches its Decentralized Neuron Wallet. For the first month, new traders are charged no fees at all, and through its affiliate program, users get the chance to increase their profits.
The exchange is part of the Neurochain payment network, a fourth-generation blockchain with incredible speeds and scalability. There is also a Neuron Wallet that allows users to trade on the NeuronEx exchange directly from the wallet. And NRON coin which acts as a tool for payments with traders getting 50% discounts on their fees if they pay using the token. If you choose to use the Neuron Master Card set to launch in January of next year, you can get up to 70% reduced fees compared to other fiat cards. Additionally, Neurochain revolutionizes the existing payment systems by disintermediation of the current centralized structures and clearing processes.
Like Paxful, NeuronEx peer-to-peer exchange is built for the ordinary people, not an exclusive club of billionaires. Of course, at the center of Neuronex’s mission is to help everyday people attain financial freedom.
Paxful’s big break in developing countries can be attributed to its support for multiple payment methods and letting people buy bitcoin of any amount they can afford. Even though Neuronex has a few similar features to Paxful, it’s quite unique since it boasts a built in exchange from the wallet, has dCards with decentralized processing and combines the P2P market with an exchanger. Also, unlike many other P2P platforms, Neuronex is licensed to offer transfers in cryptocurrencies as well as exchange fiat currencies. That means Neuronex transactions take place in a legitimate environment.
Addressing Financial Inclusion Issues With Cryptocurrency
The growing interest in cryptocurrencies and activity on peer-to-peer bitcoin trading platforms is that more people realize the potential of decentralized digital currencies like bitcoin to address financial inequality.
Nearly 2 billion adults in this world are unbanked. That speaks to a large segment of the human population currently excluded from the formal financial system, unable to access credit to start or grow their small businesses or store up cash securely for future use. Cryptocurrencies like bitcoin promise to fix the financial inclusion problem by lower the barrier to access financial services that can transform lives. It is no wonder that Twitter and Square CEO Jack Dorsey is a big fan of bitcoin. Even PayPal CEO Dan Schulman owns bitcoin in his account.
Facebook is also building a new cryptocurrency called Libra to solve the global financial inclusion problem. For example, with Libra, even small traders will have a chance to advertise on Facebook platforms. Moreover, Libra promises to advance the bitcoin mission of making payments transactions faster and cheap.
Disclaimer: This is a paid post.