The traditional financial system has been entrenched in the global economy for hundreds of years. It facilitates the circulation of money, spurring growth and new developments, but it is also the main source of greed and financial crises.
Despite the system’s flaws and many instances of outdated measures, there has not been a contender to challenge the convention. That is, until the Great Financial Crisis in 2008 that led to the birth of Bitcoin. Which, in turn, sparked the advent and expansion of the Bitcoin trading platform, Paxful.
What is Paxful?
Paxful was a crypto platform that focused on Bitcoin transactions. The company’s ambition was to provide financial vehicles “empowering the forgotten 4 billion unbanked and underbanked,” claimed Artur Schaback, the co-founder of Paxful.
Paxful owed its explosive success to the platform’s ease of executing buy, sell, and send Bitcoin. Users were also able to generate revenue from Bitcoin transactions. And the marketplace functioned on a review system that highlighted trustworthy partners.
Thanks to its innovative assortment of services, Paxful became one of the most important entities in the crypto-verse – especially in struggling economies. However, as of April 5, 2023, the platform has indefinitely shuttered its operation, blaming staffing issues and regulatory pressures.
But before we delve into that, let’s wind back the clock a bit.
The Story of Paxful
Paxful was the brainchild of Ray Youssef and Artur Schabach. The two founded the platform in 2015 after having met at a Bitcoin event a year earlier. Bitcoin was not a force to be reckoned with, then. But Youssef and Schabach had the vision to take advantage of the technology and disrupt the conventional financial system.
“They were looking for solutions for how to buy Bitcoin. They met each other, and they had this great idea to develop a marketplace where you can buy Bitcoin with whatever payment method you want. Back then, you could only buy it with bank transfers or credit cards,” said Jan Strandberg, Vice President of Marketing at Paxful.
Paxful was initially launched as a chat system for Bitcoin users. Its services quickly gained traction and increasingly garnered popularity. That led to the launch of Pay with Paxful in 2016, which allowed users to transact with Bitcoin.
Fast forward to 2018, the platform sprouted to include more than 300 payment methods. Paxful also forayed into new markets, such as New York, the Philippines, and Hong Kong. Interestingly, the most popular transactional avenue on the platform at the time was gift cards, by which 64% of the trades were executed, and more than $880,000,000 worth of Bitcoin was traded hands.
In the same year, Venezuela became the latest opportunity for the platform – which had 2 million users at that moment. Youssef, in an interview with CoinDesk, described his plan to take advantage of the vast number of unbanked individuals in the country and the growing usage of mobile phones.
However, despite its exploding success, the brand was also increasingly facing regulatory challenges and internal conflicts. All of which culminated in the platform’s implosion and shut down in April 2023.
The downfall of Paxful
The collapse of Paxful didn’t happen overnight, and it would take too long to delve into all the details. But here’s a rundown of some of the internal conflicts, lawsuits, and misconducts:
- Allegations of drug-related activity, including drug usage at work and illegal drug purchases made by Youssef.
- Accusations of erratic dismissals of employees, leading to lawsuits from former employees
- The public feud between Co-founders Ray Youssef and Artur Schaback, with Youssef firing Schaback for “incompetence and bad behaviour”
- And, both Youssef and Schaback have been arrested at least once since 2016 for improper displays of a firearm, possession of cocaine, and other counts.
And the list goes on. So it is no wonder that after the collapse, the co-founder Youssef put out a statement, saying, “We, unfortunately, have had some key staff departures. Also, regulatory challenges for the industry continue to grow, especially in the peer-to-peer market and most heavily in the US.”
Its impact on the community
Though the platform is out of business, it’s worth revisiting some of Paxful’s innovative achievements, which might serve as a springboard for the crypto community to draw inspiration from:
- One-stop app: Paxful allowed its users to perform all the tasks in one single app, be that selling, buying, sending, or chatting with the counterparty.
- Strong customer support: Crypto firms tend to overly focus on the technical aspect of a project, and they completely neglect the fundamentals of a business. Paxful understood this, so they enhanced their services by offering 24/7 customer service.
- Earning income: one of the main appeals of Paxful was that it shared a part of its fees with the users through affiliate programs. You would earn commissions on transactions made by someone you referred to. Also, Paxful Kiosk enabled you to earn a fee when other people use your customized link to purchase Bitcoin
- Entering emerging markets: Youssef and Schaback knew the gold mine residing in small economies, like Venezuela. Those were the countries that experienced hyperinflation and unstable financial market and were very much in need of new transacting currency.
A new contender
The collapse of Paxful, a prominent Bitcoin trading platform, has caused uncertainty and concern among crypto enthusiasts. However, the HiRiBi exchange offers a promising alternative with its user-friendly interface, top-notch security features, and extensive range of supported cryptocurrencies. Whether you’re a seasoned trader or a beginner, HiRiBi provides a secure and convenient platform to buy, sell, and exchange Bitcoin. With its robust security measures and commitment to customer satisfaction, HiRiBi is well-positioned to emerge as a leading crypto exchange in the market.
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