Paxful today announced that 3 million wallets have been opened on its peer-to-peer crypto marketplace, over 800,000 of which were opened in the past 12 months.
Paxful, established in 2015, simplifies the process of buying cryptocurrencies, with sellers able to accept over three hundred forms of payments, including mobile phone refills, gift cards for World of Warcraft, and dollar bills in the mail.
Artur Schaback, Paxful’s Co-Founder & COO, told Decrypt that a lot of this year’s growth comes from “arbitrage”: cryptocurrencies are sold from places where they are easy or cheap to buy, like the US and Europe, to buyers in countries where it is harder to purchase or more expensive, like Nigeria and Colombia.
So great is this effect, that trading in USA, Nigeria, and Ghana has reached 15 million trades over the past year, marking a 65 percent increase from last year. And trading in Kenya and India has already reached close to $100 million this October.
In a press statement earlier this year, Paxful said that 45 percent of its active users are from Africa. And its African market is growing: in another press statement, Schaback said that Paxful’s user base in Africa doubled in 2018. Its user base grew once again this year: its Kenyan user-base doubled in the first half of 2019, and the number of trades increased by 400 percent compared to the first half of 2018.
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“From Uber, to Airbnb, it was only a matter of time before finance becomes peer-to-peer and we're excited to watch the industry flourish,” Schaback said.
But Paxful has attracted artful dodgers hoping to launder money or conduct fraudulent transactions. Schaback told Decrypt that “dishonest users” account for just a small number of users, but, of course, it’s impossible to know the true scale of the issue.
Schaback said that, to prevent fraud amidst such growth, it’s tripled its customer support and dispute management teams, which “now make up nearly half of our global staff”. Paxful has also hired a Chief Compliance Officer, who’s helping it comply with anti-money laundering laws, and it introduced know-your-customer (KYC) protocols in April this year, teaming up with third-party providers like Jumio, a digital identity and address verification company.
Schaback is also convinced that younger traders are interested in peer-to-peer trading. He points to a study conducted by Paxful that found that 56.16% of millennials and Generation Zs are interested in peer-to-peer trading. To encourage youth toward peer-to-peer trading, Paxful this year took to African universities to educate them about bitcoin and peer-to-peer finance.