Nigeria: Youssef - CBN's Concerns About Cryptocurrency Legitimate

30 April 2021

The Chief Executive Officer of Paxful, Mr. Ray Youssef, who was in Lagos recently to dialogue with government officials, in this interview advises on the way forward for cryptocurrency business in the country. Excerpts:

What is Paxful all about and its vision?

It is all about helping people by impacting their lives and making them wealthy, but not through speculation, but by allowing them to build businesses. It is also about allowing people to use their money in a way everyone will have the right to use money. That is human rights. The fact that people have to live in this world and do not have equal access to money is really a crime. Financial access should be a fundamental human rights. My vision for the world is a place where the hardest working people should be the ones on top. That is essentially my vision for the world though it may not be the commonest thing to say, but I actually believe it because people in Africa have shown that it is possible, especially the youth in Nigeria with what they have done in the past five years by leading in cryptocurrency globally without help from anybody. Then you can imagine what can happen in the next five years. That is why Paxful is bringing not just Bitcoin, but is also coming to educate the people and show them something legitimate that can help them in their everyday lives.

Few months ago, the Central Bank of Nigeria restricted financial institutions from processing any transaction on cryptocurrencies. How do you intend to play around this?

At Paxful, we do not want to get around anything. You want to engage everyone including the regulators and speak with them and show them what this is all about. I understand the central bank put the ban because they saw things moving fast because Nigerians can move things pretty fast when they are motivated. So, the Central Bank of Nigeria (CBN) is concerned about safety with regard to money laundering and financing terrorism. These are pretty valid questions regulators all over the world, including the United States of America, are asking. So, there is no need to move around anything because we can engage them and we have been engaging them and we want to continue to engage them to show them that this is safe and can create wealth for everyone. This is a pure marketplace. We just connect people together. We want to engage the regulators, meet with them and give them the clarity that people involved in the trading are not criminals but normal businesspeople that want to deal and transact with everybody, including the government. This is why we are communicating and listening to the regulators to understand and respect all their concerns.

What are the products traded on your platforms and their uses and benefits?

The product that is primarily trading on our platform is money in every single form it can pass to those that need it whether as a gift card, cash in a bank account and on wallet like VISA or MTN mobile money, credit and debit card and every form of value container that can be traded with password. We use Bitcoin as the clearing, which is almost a universal translator and transporter of money. For example, someone here in Nigeria may want a relative in California to send money back home to him in Nigeria. Usually, he will use the Western Union that can charge between 20 and 40 per cent and can take one or two days. But with Paxful, he will just go and buy a gift card in a local shop in Los Angeles and give me the code and upload the picture of the card to me. Then the guy takes the code and finds someone in China or Indonesia and says "do you want my gift card and I can give it to you at 10 or 20 per cent discount with a Bitcoin in exchange? The question is what he will do with the Bitcoin? He can turn around and sell it to another Nigerian on Paxful and say I will give you this Bitcoin but I will want you to send money from your own Nigerian account to mine. And because Bitcoin is in more demand here he can make a profit out of it. So, instead of paying 40 per cent, he can accept 15 per cent and that happens within a minute or less. Crypto-currency in this case is not a means of investment or speculation but just a vehicle of exchange.

Is it a payment instrument or means of payment?

It is like the kind of liquid clearing layer that allows anyone to access any means of payment in the world.

A recent report showed that Nigeria is the global market leader in the use of cryptocurrency. What is the current situation now?

Nigeria is still leading and the lead is even growing. Nigeria is further ahead since the CBN's ban and our value has grown by 15 to 20 per cent. And it is going to continue to grow. We have 1.5 million users here in Nigeria that has moved over $1.5 billion worth of value.

Why are you in Nigeria?

I came to Nigeria because Nigeria is the hustling capital of the world. The Nigerian people have a special gift and by my own opinion the best businesspeople in the world. They have the passion on how to make things move faster. And that is why Nigeria is the leading global cryptocurrency users. We want to help their acceleration. The beautiful thing about Nigeria is that it is not a rock that is just sitting and waiting for you to push it. Nigeria is a moving train that is moving so fast. Now we want to add more fuel into that train so that it goes even faster, picks up more passengers and takes all of Africa and the entire world with it. So, how do we do that? Education! This is important.

People need to understand what they are getting into. Cryptocurrency is just connecting things together. We have set up office in Abuja that will be the centre of education, centre of incubation where anyone can go and learn this thing and see that it is good and meet good people that want to help to see them succeed and that is so very important. The other thing that I will love to do is to have a campus here. We have a campus in South Africa and Kenya in 2019 and after that values in Kenya and South Africa skyrocketed. If we do that here in Nigeria I think that it will be hundred times better. If you give a Nigerian a dollar he is going to turn it into $10,000. I am super excited to see what the Nigerian youths can do with just a little bit of love. We have just built a school in Kaduna State, which is one of my best investments in the world. And you can imagine building up these central hubs of innovation that will be incubators for your young unemployed geniuses in this country to use to build something amazing and have success. It is the greatest hope for an entrepreneur.

What do you mean with the 'Built on Bitcoin Foundation?'

It is officially a not-for-profit foundation. We have built four schools in the past three years. The question is why? My first experience was in New Orleans, during the hurricane Catherina disaster. I was looking for a way to help people any way that I could. I was nearly shot by the police that thought I was a looter. But I was lucky to meet five Dominican nuns led by Sister Mary Rose. We worked together to rebuilt a whole school. This showed me the power of giving back in the right way. And I thought what better place to be doing this than in Africa. Our mission is to build a hundred schools in the next five years.

What is Paxful putting in place to address the skepticism that crypto-currency is an investment?

First, their skepticism is healthy because no people have been scammed more than the African people throughout history. And cryptocurrency is prone to being scammed and a lot of people have lost their money. So, skepticism is good. You should be skeptical when someone comes to you and said hey this coin is blowing up, put on your life savings. You need to be skeptical enough to run away. When we come to people we do not say this is an investment. Rather we say that Bitcoin is just a tool for making all-round instant payment easier. It is a technology that is powered by people. And by using this system you can access money anywhere in the world much easier and faster. But you are not going to get rich quick here because it is like building a business. If you work hard at it and put your mind into it, take your time and be patient to learn about the risks you can do very well. There are tremendous profit margins to be made that can be up to 30 per cent. But where ever there are high profits there are high risks.

The risk of fraud is very big. In China, India and Nigeria and the entire world I am very proud to say that over 99.9 per cent of all Paxful trades have not had any issues at all. And we really worked very hard to get that number. There is still a whole lot of work to be done. The number one thing I have to say to people is that they have got to educate themselves their money is not in a brick building with some security guards but on the computers and the phones and the only thing saving your money from hackers is your password. There are some hackers somewhere in Europe or Russia or America that has your email and your password. So, use two factors authentication, meaning that you have to get a message on your phone as well. That is the basics and if you will not do that you shouldn't be in the game. The responsibility is on you to protect your own money and understand the game.

Can Bitcoin be used as a vehicle for creating jobs for the youths?

Absolutely! People can build their own financial services business on Bitcoin. And as they are growing and breaking into new markets jobs are created. My advice to the youths is to learn about everything else and also learn about crypto-currency. They do not need much money to start. They can start with just few amounts, play around it, send them to their friends and see how it works. Then it becomes an entrepreneurial journey of solving problems. First, do you have problems sending and receiving money on daily basis? Solve that problem for yourself with every tool that you have including the crypto-currency if it makes sense. And once you have solved that problem for yourself then you can turn it into business by solving problems for others. If that works and people want to pay for it because it adds value to their lives then you can scale it and that is what technology is good for. Once you scale it up with the public you keep fine tuning it with real feedback from your customers. What happens over the years is that you are wealthy because you have built something useful for others.

What role do you envisage for the crypto-currencies in the implementation of the emerging African Continental Free Trade Agreement?

I hope that this initiative by the leaders of the continent works. And I am really praying that it works. There is a crypto-currency in every single African economy. So, while the leaders of Africa is working on the system and playing all the political games they have to with Europe and France hoping to make it work, the youths of Africa have already gotten a system for playing the game and it is going to spread to the entire continent of Africa. They (African leaders) are trying their best but let us keep building what we are building because this is the real game that when it starts no one person can control it. There is no way to stop Bitcoin.

How prepared is Paxful to work with the government of Nigeria in regulating the crypto transactions?

We are ready right now brother and I will love to meet them and engage with them. We cannot do this with hate and animosity. We are all together in this: the youths, the rich, the poor, everyone is a member. We have to respect each other and work together with each other bringing the regulators and the government on the table.

What are your expectations?

I am very optimistic. There is amazing opportunities in this continent, especially in Nigeria. I will like to meet with the government to share my vision and listen to understand what their concerns are. We will give them the data and the information, show them what is happening and we can come together and make an agreement and put a regulation that is innovation friendly that will help the youths to make money. Nigeria can do better, much better.

How is Paxful positioning itself for growth and expansion?

Number one: create a safe marketplace that gives people universal access to money. This is the ultimate challenge. Next is responsive instant support to customers 24/7 that listens and understands the people to build trust. Third, is building things that make using money easier.

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