On the lookout for a quality peer-to-peer (P2P) crypto trading platform?
LocalBitcoins is one of the best-known P2P crypto trading platforms which offers relatively competitive exchange rates on Bitcoin (BTC). On the other hand, Paxful is a good option if you’re looking for a slightly larger selection of supported cryptocurrencies (and the ability to place trades using cash).
But which is better: LocalBitcoins or Paxful?
In this LocalBitcoins vs Paxful match-up, I’ll compare and contrast these two P2P crypto trading giants. I’ll discuss each platform’s features, fees, pros, and cons so you can decide which one you like best.
Let’s get started.
Quick Comparison
| LocalBitcoins | Paxful | |
|---|---|---|
| Best For | Crypto investors that want relatively good exchange rates on P2P trades funded using UK bank transfers | Peer-to-peer crypto traders that want access to more cryptocurrencies and a wider range of payment methods, including in-person cash |
| Year Founded | 2012 | 2014 |
| Headquarters | Finland | United States |
| Supported Cryptocurrencies | BTC | BTC, ETH, USDT |
| Major Payment Methods | UK bank transfer PayPal Credit & debit cards Transferwise Moneygram Western Union Skill Crypto transfer | UK bank transfer PayPal Gift cards Credit & debit cards Moneygram Western Union In-person cash Crypto transfer |
| Trading Fees | 1% (charged only if you create a buy or sell advertisement) | Buyers: Free Sellers: 0.5% to 5% |
| Minimum Identity Verification Requirements (UK Investors) | Name Phone number Email address Country of residence | Name Phone number Email address Photo ID |
Overview: LocalBitcoins vs Paxful
Paxful and LocalBitcoins are two of the most popular P2P crypto trading services on the market.
Let’s kick off our comparison with a look at the history of each company.
What is LocalBitcoins?
LocalBitcoins was founded in 2012 by software developer Nikolaus Kangas.
Kangas wanted to make it easier for anyone to buy and sell Bitcoin (BTC) outside of a centralised exchange so he created LocalBitcoins as a P2P crypto trading network. The company is currently headquartered in Finland, but it offers crypto trading services in nearly every country.
LocalBitcoins has long been one of the world’s leading Bitcoin (BTC) marketplaces. It hit its all-time high in user activity in December 2017 when it had a weekly trading volume record of around US$130 million (£95.2 million), though this number has been on the decline in recent years.
What is Paxful?
Paxful is a US-based P2P crypto trading platform that was founded in 2014 by Ray Youssef and Artur Schaback. The company’s mission is to “empower the forgotten four billion unbanked and underbanked” through its P2P marketplace.
Currently, Paxful claims to have more than 4.8 million registered users across the globe, though most of their trading activity is based in the US.
What sets Paxful apart from the competition is its huge number of accepted payment methods and its support for in-person cash transactions.
Supported Cryptocurrencies
Both LocalBitcoins and Paxful have relatively short lists of supported cryptocurrencies that you can trade on their platforms.
With LocalBitcoins, you can only buy and sell Bitcoin (BTC).
Meanwhile, Paxful lets you trade Bitcoin (BTC), Ethereum (ETH), and Tether (USDT).
Neither LocalBitcoins nor Paxful is a particularly great place if you want to trade altcoins (consider LocalCoinSwap or Bisq instead if that’s your main goal). But Paxful has a slight advantage since it also supports ETH and USDT.
However, LocalBitcoins and Paxful both let you buy BTC (or ETH and USDT in Paxful’s case) using other cryptocurrencies.
For example, on LocalBitcoins, you can buy BTC using USD Coin (USDC) or Chainlink (LINK) so long as you can find a seller that’s willing to accept your offer. Paxful also lets you use other cryptocurrencies as payment in trades, too, but you won’t get escrow protection for that cryptocurrency.
Winner: Paxful
Payment Options
UK residents using LocalBitcoins can buy Bitcoin (BTC) with dozens of payment methods.
Some of the most popular payment methods on LocalBitcoins include:
- UK bank transfer
- PayPal
- Credit & debit cards
- Transferwise
- Moneygram
- Western Union
- Skill
- Crypto transfer
Paxful currently supports more than 350 payment methods. I can’t list them all here, but some of the most common payment methods on the platform include:
- UK bank transfer
- PayPal
- Gift cards
- Credit & debit cards
- Moneygram
- Western Union
- In-person cash
- Crypto transfer
If you’re primarily looking to buy and sell crypto using a bank transfer, credit card, online payment service, or a crypto transfer, you won’t find much of a difference between LocalBitcoins and Paxful.
But if you want to buy or sell crypto using cash, you have one option: Paxful.
Paxful is the only one of these two platforms that supports both in-person cash payments and cash bank deposits. LocalBitcoins used to offer the option to buy BTC using cash, but it removed this feature in 2019.
Winner: Paxful
Fees
Trading fees are a fact of life when you buy and sell crypto. Let’s take a look at the fees that LocalBitcoins and Paxful charge to users of their platforms.
Trading Fees
LocalBitcoins charges a 1% fee for each successful trade you complete.
However, you’re only charged this fee when you’re the one who creates a buy or sell advertisement. If you simply respond to advertisements to buy or sell Bitcoin (BTC), you’re not on the hook for any fees.
Paxful doesn’t charge any fees to crypto buyers on its platform.
But if you sell crypto on Paxful, you’re charged a fee between 0.5% and 5% based on the payment method that you accept. These fees include:
- Bank transfers: 0.5%
- Credit and debit card: 1%
- Crypto transfer: 1%
- Cash: 1%
- Gift cards: 3%
- iTunes and Google Play gift cards: 5%
This means that if you’re primarily looking to buy crypto, there’s no difference in fees between LocalBitcoins and Paxful. For people who want to sell crypto, LocalBitcoins offers a simple fee structure, but you’ll save slightly on fees with Paxful if you’re only looking to accept bank transfers.
Winner: Tie
Exchange Rate
Comparing the exchange rates on Paxful and LocalBitcoins isn’t straightforward.
Since Paxful and LocalBitcoins are both P2P crypto trading platforms, the price you’re quoted to buy crypto is decided by each seller. This is different from when you trade on a crypto exchange like Coinbase Pro or Kraken, where the quoted price is determined primarily by trading action and the exchange’s order book.
I’ve generally found that LocalBitcoins has more competitive exchange rates than Paxful in the UK. LocalBitcoins also tends to have more trading volume and active offers in the UK than Paxful, which could be part of the reason behind its more competitive rates.
But in my mind, Paxful has one key feature that gives it a slight edge over LocalBitcoins as far as exchange rate transparency is concerned.
That’s because Paxful shows you the markup on all cryptocurrencies sold on its platform.
Each Paxful selling advertisement shows the real exchange rate of BTC, ETH, or USDT and compares it to the offer price so you can see if you’re getting a good deal.
This transparency is a huge advantage for buyers because it helps you quickly weed out offers that aren’t even remotely competitive. But despite their transparency, you’ll still likely get a better exchange rate in the UK on LocalBitcoins.
Winner: LocalBitcoins
Account Verification & Limits
LocalBitcoins and Paxful both have systems in place that limit your account activity and trading ability based on your verification level.
For LocalBitcoins, the account verification requirements and limits are as follows:
| Tier 0 | Tier 1 | Tier 2 | Tier 3 | |
|---|---|---|---|---|
| Additional Identity Verification Requirements | Name Country of residence Email address Phone number | Physical address Photo ID KYC questionnaire | Proof of residence | Additional ID verification |
| Maximum Annual Trading Volume | €1,000 | €20,000 | €100,000 | Unlimited |
| Extra Benefits | Buy and sell BTC Send BTC to external wallets | Create buy and sell advertisements Access LocalBitcoins wallets Create Business accounts | N/A | N/A |
Paxful has a similar account limit and verification system, which you can check out in the table below:
| Tier 0 | Tier 1 | Tier 2 | Tier 3 | |
|---|---|---|---|---|
| Additional Identity Verification Requirements | Phone number | Email address Photo ID | Physical address | KYC questionnaire |
| Per Trade Limit | $1,000 | $10,000 | $50,000 | Unlimited |
| Maximum Annual Trading Volume | $1,000 | $10,000 | Unlimited | Unlimited |
| Extra Benefits | Ability to trade crypto (excludes cash trades) | Access to all payment methods (including cash) Ability to create buy and sell offers (minimum offer size of 0.002 BTC) | Ability to create buy and sell offers of any size | N/A |
However, if you’re a UK-based investor using Paxful, you’re required to submit a copy of your photo ID before you can trade crypto. In other words, all traders in the UK need to verify to at least Tier 2 to use the platform.
It’s tricky to compare Paxful and LocalBitcoins’ verification and account limits, but I think Paxful comes out on top here.
Although you can technically trade on LocalBitcoins without providing photo ID, you’re limited to just €1,000 worth of trades. You get a higher annual trading volume with LocalBitcoins at Tier 1 than you do at Paxful’s Tier 2.
But at Tier 3 on Paxful, you end up with an unlimited lifetime trading limit, which is more than you’d get by providing the same information for Tier 2 at LocalBitcoins.
In other words, you’ll need to provide more or less the same amount of information to both LocalBitcoins and Paxful if you want to frequently trade on either platform. But Paxful gives you more bang for your buck as far as trading limits and account benefits are concerned.
Winner: Paxful
Security & Escrow
When you use a P2P crypto trading platform like Paxful or LocalBitcoins, security is of the utmost importance.
Both Paxful and LocalBitcoins have built-in escrow systems that are designed to protect both buyers and sellers from scammers. There’s not much of a difference between the escrow systems of each platform, but the important thing is that you always trade using these escrow systems to avoid getting ripped off.
Additionally, LocalBitcoins and Paxful both have structures to their seller and buyer profiles that make it easier for you to find and vet potential trading partners.
On LocalBitcoins and Paxful, seller and buyer profiles include metrics such as:
- Total trading volume
- Total number of confirmed trades
- Account creation date
- Account verification status
- Average escrow release times
- Feedback scores
- Number of trusted and blocked accounts
Ultimately, there’s not much of a practical difference between Paxful and LocalBitcoins as far as platform security goes.
Each company gives you plenty of information to help you vet potential trading partners and they have good escrow systems. But the responsibility of finding quality people to do business with is fully on you when you use a P2P trading platform.
Winner: Tie
The Bottom Line
Paxful and LocalBitcoins are very similar P2P crypto trading platforms. Both companies offer similar features, though each is best for a different kind of crypto trader.
Consider using LocalBitcoins if you want:
- Access to one of the best-known P2P crypto trading platforms.
- More competitive exchange rates on Bitcoin (BTC).
- Free BTC trades when you respond to an offer and a flat 1% fee when you create buy or sell listings.
Alternatively, use Paxful if you want:
- To trade more than just Bitcoin (BTC).
- The ability to buy and sell crypto using cash and 350+ other payment methods.
- A transparent platform that compares the real crypto exchange rate with the asking price on all buy and sell offers.
You can learn more about each platform in my dedicated reviews: