Paxful Gets Desperate, Priced Out Of Bitcoin

Paxful, a website that claims to do "peer to peer" matching of Bitcoin buyers and sellers, issued a desperate plea on their blog (archived) threatening to move to an altcoin as they get priced out of Bitcoin. Because Paxful specializes in facilitating very small trades any pricing of transaction fees in an actual market obliterates their market niche, and Bitcoin is definitely moving towards a healthy market for block inclusion fees. Paxful claims to:

do over 5% of the total blockchain volume by number of transactions

They further explain that many of these transactions are users transacting a dollar's equivalent at a time in order to buy single ads. Advertising purchasers appear to dominate Paxful's customer base after they heavily courted users when all backpage's methods for receiving fiat money were suspended.

Paxful is suffering from their strategic blunder to build a business on serving the poor while incorporating the medium least amenable to interactions with the poor. Because of this blunder they now demand a bailout. Not a bailout to save Bitcoin, but to make their chosen business model possible. A lack of planning and understanding on the part of Paxful's creators has lead to an impedance mismatch between conditions necessary for Paxful's survival and what Bitcoin is. Bitcoin can thrive without Paxful, but Paxful can't survive a thriving Bitcoin.

For Paxful to survive on its dollar equivalent transactions, it would need more than just one blocksize bailout at the expense of node operators and miners. Paxful would require these bailouts continually. Expect Paxful try reinventing itself by using a semi-centralized blockchain like DASH1 for small value transactions or close its doors.

  1. formerly Darkcoin  

2 thoughts on “Paxful Gets Desperate, Priced Out Of Bitcoin

  1. What? This makes no sense. did you even read their blog?
    They are saying merchants are pondering other coins. Which I know for a fact as I'm hearing the same thing.
    Paxful wants to stick to bitcoins. Any alt coin switch would just delay the inevitable as the same thing would happen to the alt coin. actually READ what they wrote.

    • Not every coffee purchase needs committed to the blockchain forever, and purchases with still less value than coffee definitely don't belong. Bitcoin is worth more than this. If Paxful leaves it is no loss for Bitcoin.

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