There are two ways of involving yourself in the cryptocurrency markets. The first is to purchase crypto coins and tokens, storing them in wallets for the long term. The second method of investing in crypto comes in the use of exchanges that providing a market for traders.
Trading the crypto markets can be a lucrative career if you know what you’re doing. Those speculator traders that capitalized on the rise of the Bitcoin bubble in 2017/2018 made and lost huge sums of money in a mania period that lasted for months before the collapse of the price in early 2018.
Still, the bursting of the bubble didn’t kill the crypto market. Prices continue to rise and consolidate higher into the May 2020 halving event, with crypto drawing plenty of interest from institutional investors in 2020.
If you want to get your hands on the currency of the future before prices skyrocket to the moon, you don’t need to trade Bitcoin on an exchange. Swapping some of your monthly earnings for crypto is a great way to diversify your investment portfolio into decentralized assets.
Some exchanges allow you to purchase Bitcoin and other cryptos using wire or bank transfers, and some even accept credit card payments for crypto purchases. In this review, we’re going to look at two of the most popular exchanges for buying and selling crypto – LocalBitcoins and Paxful.
What Do You Need to Know About Paxful?
Paxful is one of the early exchanges to come out of the second bitcoin bubble of 2013. The company has multiple offices in countries around the globe, and more than 100-employees. Paxful state, the organization’s goal is to be the “Uber” of the Bitcoin community, making it easy to buy and sell crypto.
Paxful lets users register on the platform as merchants to sell their crypto online. As a result, it’s a peer-to-peer system, where users transact with each other, and Paxful acts as the referee in the exchange, ensuring everything goes to plan.
Paxful is a US-facing exchange. While it had incorporation in the US in 2014, it doesn’t fall under any regulatory authority. What does that mean? It means you might face some limitations on deposits and withdrawals from the platform, depending on your country of residence.
Paxful might be an unregulated exchange, but you’ll need to provide them with your KYC information to satisfy AML policies.
What Do You Need to Know About LocalBitcoins?
Bitcoin is one of the earliest “brokerage-style” exchanges that offers a peer-to-peer market where users sell coins and tokens to each other. Founded in 2012, it runs the same model as Paxful, but it’s the leader in the space. LocalBitcoins was the preferred Bitcoin broker until it started introducing KYC policies.
As a result of its stringent KYC and AML policies, as well as its compliance with US regulatory authorities, LocalBitcoins is now the biggest regulated Bitcoin brokerage in the world. LocalBitcoins also works with financial regulatory bodies in all countries of operation to ensure a transparent crypto and fiat environment.
As a result, it’s possible to trade fiat currency for Bitcoin on this platform. LocalBitcoins rely on its competitive edge, being the simplicity it offers its customers when purchasing crypto online.
Paxful Or Localbitcoins Market Is Bigger?
Both Paxful and LocalBitcoins focus on trading in Bitcoin. However, Paxful also allows you to use altcoins to trade for Bitcoin.
Both sites don’t hold the money from either party. The platform provides an escrow service that acts as an intermediary in the deal, ensuring both parties adhere to the transaction criteria, and no one gets a raw deal.
Which One Is Cheaper? Paxful Or Localbitcoins?
Buyers ON Paxful don’t pay any transaction fees to the platform. However, they may have to pay a premium to the seller, and that’s not always clear. Sellers on the Paxful exchange pay 1% for listings. Senders will also have to pay the network fees for processing the transaction on the Blockchain.
Both LocalBitcoins and Paxful require you to produce KYC documentation when using services. Credit card and PayPal transactions are particularly expensive on these platforms.
LocalBitcoins charges the same 1% fee to sellers posting adverts on the site. The good news is that all transactions to LocalBitcoins wallets are for free. When you use site merchant invoicing services, they deduct a 0.5 fee from deposits.
Is Paxful More User Friendly Than Localbitcoins?
Paxful offers users access to the Bitcoin market in two formats.
- Through the website using a form
- Via “virtual kiosk links.”
The virtual kiosk is the platform for the Paxful affiliate program, where affiliates can generate commissions from other people’s purchases when they get them to sign up for the service. Paxful’s affiliate commissions are currently at 2% of the transaction, but check back for policy changes.
Some trades may execute faster than others on the platform. The transaction speed depends on whether the seller is online, and the type of payment processor you’re using in the deal. For example, a wire transfer can take a while to clear, while gift cards and PayPal payments are instant.
What is Escrow?
Paxful and LocalBitcoins run the same model for processing transactions on the platform. Escrow services provide an intermediary in the deal. Escrow keeps everyone honest, ensuring that nobody runs away with anyone’s money.
When you want to purchase Bitcoin on the Paxful or LocalBitcoins platform, you find your seller and review their deal information. After selecting your preferred seller, you contact them and arrange the deal for the set amount of Bitcoin. The seller then moves the coins into escrow, and the buyer then has 24-hours to place the funds in escrow to release the coins.
If the buyer fails to meet the terms of the agreement, the escrow account returns the Bitcoins to the seller. Therefore, when the buyer deposits the money, they have the backing of the escrow that they will receive the Bitcoin, or they get the money returned.
Dealing on the Platforms as a First-Timer
You might find it intimidating to find the right seller on the platform and start your first deal. However, it’s easier than you think, and it only takes a few minutes.
Look for the seller that offers the rate you want, and then make contact through their profile.
Traders on the platform have a ranking, and you can work with the top-rated sellers to select trustworthy sellers that you can rely on to process your transaction promptly.
Then send your money to the escrow account and wait for the reply from the seller. As soon as they have confirmation of your deposit, they’ll release your coins to your nominated wallet on the platform, which you can then move off-site to another wallet.
LocalBitcoins and Paxful both have a huge number of payment processors onboard. You get access to any money sending service, wire transfer, credit cards, cash deposits, and more.
Can We Trade Via Mobile In Paxful And Localbitcoins?
Both Paxful and LocalBitcoins have mobile apps available for download to Android and iOS devices. There’s all the functionality of the desktop app on your mobile device, making it easy to buy and sell your favorite crypto wherever you go.
Personalize your wallet, safely store your BTC, and check your account balance in real-time. Share your wallet address with customers, friends, and family, or use the QR code system within the app.
With both apps, you get updated pricing in real-time for BTC to fiat conversions, and you can receive push notifications about your offers and trades.
Paxful Or Localbitcoins Has Better Support?
Paxful has a 24-hour support ticket system, and you can reach them via email if anything goes wrong with your transaction. The support team is helpful and will resolve your query if it’s possible. Paxful also has a useful knowledge base with FAQ and articles on other frequently encountered issues on the platform for new users.
LocalBitcoins offers the same customer service model, with a comprehensive knowledge database, and support through ticketing or email.
The Verdict By Bitcoin Tester
Paxful is a convenient, user-friendly platform for purchasing crypto in developed markets. If you live in Europe or the US, the Paxful app can have crypto in your hands with a few clicks of your mobile device. We like that Paxful is more friendly to the use of altcoins, allowing you to buy BTC with your favorite altcoins.
However, with LocalBitcoins, you don’t have the option of trading in anything other than fiat currency and BTC. Still, it’s a useful service, and considering BTC is 64% of the market, we can understand why LocalBitcoins want to stick at doing what they do best. LocalBitcoins do have a better fee structure, and they serve more people in more markets around the globe where Paxful doesn’t reach.