A report published by Arcane Research found that almost half of Paxful’s revenue comes from trading between bitcoin (BTC) and gift cards.
The report states that “buying bitcoin with gift cards was the preferred solution for Paxful every month during the five-year period analyzed,” accounting for 48% of Paxful’s total sales in June.
Paxful processes around $ 40 million in trading weekly, which means that up to $ 20 million in BTC is redeemed for gift cards each week. The Arcane report pointed to the last week of June this year, when 16.2 million BTC gift cards were sold.
Arcane attributes much of Paxful’s size to the demand for remittances from underdeveloped financial services jurisdictions. More than half of Paxful’s trade in the United States is reportedly with migrant workers sending money to their families.
“The gift card payment solution is flexible. It allows customers to indirectly buy BTC in cash by buying popular gift cards at gas stations and then reselling the gift cards at Paxful for BTC.
Arcane notes that many of these offers have significant discounts on market value, indicating that some of these offers may involve illegal activities:
[Gift cards are often sold] for as much as 60 cents on the dollar. So a natural question arises: who wants 40% profit by buying bitcoin this way? ”
Paxful has become the best peer-to-peer (P2P) bitcoin market since Localbitcoins introduced KYC requirements a year ago for users with an annual turnover of over $ 1000.
While Western trade has shifted from P2P markets to centralized exchanges since 2016, Arkane notes that the size of new frontier economies has grown steadily in recent years.
Bitcoin P2P Volume Regional Dominance: Arcane Research
Western Europe’s share of global P2P volume fell from 20% on top of the bull in 2017 to 10% today, while trade in North America has fallen from 53% of global volume in 2016 to 35% today.
Since the beginning of 2016, P2P volume from sub-Saharan Africa and Latin America has grown from 4% and 1% to 19% and 13% respectively.