Parties first negotiate terms, including if the gold transfer will happen in person and where. The bitcoin (BTC) holder then sends the agreed-upon funds into a Paxful escrow, where it sits until the gold holder confirms bullion transfer and the counterparty confirms receipt. At that point Paxful releases the bitcoin. All this must happen within 21 days of payment initiation or the parties enter dispute arbitration.
Paxful, a peer-to-peer bitcoin exchange, now allows users to transact in gold.
CEO Ray Youssef said the new service comes in direct response to user requests, offering a swap option and a transfer procedure.
Gold trades must submit to Paxful’s know-your-customer protocols for transfers valued over $50, with “enhanced due diligence” possible for prospective gold sellers, according to a press release. Paxful recently onboarded Chainalysis’ intelligence tools for crypto.
Youssef said the procedure formalizes a process some Paxful users were discreetly executing by listing one payment method, like bank transfers, and then negotiating gold or silver payments outside of the platform.
“Our users were already starting to do this on quite a large scale. We weren’t aware of it because it was difficult to track. We actually had to go in and talk to people,” Youssef, who said he still logs hours working Paxful’s support lines, told CoinDesk.
“I’m always interacting with the customers because I want my ears glued to the street,” he said. These customers told him – repeatedly – they wanted to trade gold.
The feature, unique among formally organized exchanges, continues Paxful’s strategic positioning as a go-to resource for people and places that other crypto firms often ignore. That means Nigeria, Malaysia, Ghana and Venezuela, for example. Youssef said these are the kinds of countries many companies neglect in their focus on Europe and the U.S.
“The west is not the entirety of the world,” Youssef said. “The vast majority of humans are outside of the west in emerging markets and they are hungry, they’re not going to let anything stop them – COVID-19, Ebola, they don’t give a damn, they’re going to continue to do business.”
He predicted any pandemic-triggered hesitance to trade goods person to person will be irrelevant in the long term, especially in Africa.
In the meantime, though, the global shutdown might actually be bolstering Paxful growth: Youssef said new user registration jumped 27 percent in March.