Bitcoin Exchange Paxful Reveals Plan to Reach Venezuela's Unbanked

Peer-to-peer bitcoin exchange Paxful is doubling down on developing markets.

According to Paxful co-founder Ray Youssef, the reason for both moves is that exchange use is surging in developing nations, where mobile phones are abundant and cheap but access to crypto remains scarce.

"Underbanked, unbanked or people in a desperate situation, such as with market inflation. Those are the markets where Paxful can add the most value and where bitcoin actually adds the most value for people."

According to Paxful's internal data, June saw 772,000 bitcoin trades averaging $64 each in Nigeria and 50,000 bitcoin trades in Ghana averaging $56 each.

Aside from Paxful and the similar P2P exchange LocalBitcoins, Binance, KuCoin and Luno are among the few exchanges serving users in cash-strapped economies like Nigeria and Ghana, where U.S. dollars and South African rand are harder to find, said South African entrepreneur Thabang Mashiloane.

Still, the demand for Paxful's services in these areas highlights the complexities of bitcoin usage in the developing world.

Paxful itself hasn't been completely immune to these issues - starting in September, it will require IDs from buyers of bitcoin, a change Youssef said was necessary to fight fraud.

Up to now, Paxful required only the sellers of bitcoin to upload their IDs, because it didn't want to exclude potential buyers who were attracted to cryptocurrency for the same reasons they lacked access to banking.

"For a long time most Paxful users were actually female," Youssef said, speaking to the segment of the developing world's population who, according to World Bank statistics, are most likely to lack IDs and bank accounts.

Most Paxful users swap bitcoin for fiat wire transfers or online gift cards.