Nigerians pioneered Bitcoin as alternative financial system – Youssef, Paxful CEO
Paxful, a Peer-to-Peer (P2P) crypto marketplace in Africa with presence across Nigeria, Kenya, and South African markets, recently opened PaxNaija, a tech educational Centre in Abuja, to train Nigerian entrepreneurs to leverage blockchain technology and digital currencies in developing goods and services. RAY YOUSSEF, CEO / Co-Founder, Paxful in this interview with HOPE MOSES-ASHIKE, discusses the company’s operation in the country. Excerpts:
Paxful celebrated its 6th year anniversary recently; tell us about this feat and how the brand has been sustaining growth?
Paxful is our baby. My co-founder, Artur Schaback and I started Paxful about six years ago. Since then, we have been learning about what Bitcoin is actually good for. There are three narratives about Bitcoin. There is the old world narrative about Bitcoin that comes from central bankers and old established investors and they think it is a scam.
The second narrative would be people in Bitcoin who primarily see it as an investment or something to double, triple their money. Then there is a third narrative. Nigerians, particularly the youth have shown us what that narrative is and how it should actually be the winning narrative. And that is, Bitcoin, not as an asset class or speculation, but as a means of exchange that real people can use every single day along real use cases like remittance payments, wealth preservation, and commerce. We have been learning from the youth of Nigeria. We built our whole product around what they have shown us, and we are trying to bring light to this third narrative that will empower the entire global South.
Six years ago, we were saying to everyone that Africa is going to lead in Bitcoin adoption and no one took us seriously at all. Now, Africa is leading Bitcoin adoption, particularly, Nigeria is number one. So, I think it is a landmark event. Nigerians actually pioneered Bitcoin as a means of exchange and building an alternative financial system around it such that the government has to take action. This is impressive. Nowhere else in human history has that happened, that the youth of a nation built their own banking system.
Paxful recently announced that Nigeria is its biggest market globally, how is this so?
There are two things that made Nigeria the biggest Bitcoin market. The first one is the challenges Nigerians face with money. If you look around you talk to people here in Nigeria and ask them about their day-to-day life, the Nigerian financial system works very well inside the country. Nigeria has a very technologically advanced banking system, Nigeria Inter-Bank Settlement System Plc (NIBSS), which is instant. But, the moment you need to send money to even the country next door, it becomes extremely difficult, and if you want to send money outside of the country to China, the US, Europe, it becomes a nightmare. And that pretty much cut off Nigeria from the rest of the world, especially the small entrepreneurs. So, they had to rise up and figure out a way around that.
Then came Bitcoin, and peer to peer services like Paxful and they gave them a way to actually do that. They went with it beautifully. You can see that remittances are now transferred over to crypto to Bitcoin as Nigerians figured it out. And once one Nigerian figures that out, they all figure it out. So, that’s the first thing and it is the problems, and the problems necessitate a solution and Nigerians always find solutions.
The second thing is that, there is something exceptional about Nigerians themselves, you know, to call them over-achievers is an understatement. There’s something about the people here that just drives them to excellence. Nigerian youth are ready to move forward, they see that their leaders are just not moving fast enough. They’re not sure why but they don’t care, they’re moving forward themselves. So, there’s something about their DNA here.
Can you tell us what drives your investing in Nigeria?
Nigeria is a place I have been telling everyone that if you want to change the world, have a massive impact on the world and become a billionaire, just look at Africa, particularly in Nigeria. The energy here is on a level that few people can even begin to comprehend. And we are willing to put our money where our mouth is. We are investing here in Nigeria. We have an amazing team on the ground. We have opened an office in Abuja for education and incubation. We will open up one here in Lagos soon, God willing, and I am thinking about staying at least six months in Africa and Nigeria at least three months out of the six months in a year.
How many schools have been built in line with the Built with Bitcoin Foundation 100 school initiative?
Four years ago, Paxful started investing back into the community. And by doing so, it shows that we believe in Nigeria, we are not just talking about it, but actually doing it. We have built six schools on the continent so far in the past four years. Our mission is to build 100 schools and communities around the world, utilizing Bitcoin, specifically here in Nigeria. In Kaduna state, we built a nursery and a primary school; almost 400 Children go to school every single day with the power of Bitcoin.
Not only do they get quality education, they get access to clean fresh water, have access to electricity through solar, and also sustainable vegetation, through our farming system. We provide uniforms, books, pencils, stationeries, health insurance for the students, and creating actual communities on the ground in the rural communities are very important to us. If we want to ever attain universal Bitcoin adoption, it is going to start in those areas.
Do you have plans to partner with banks in delivering your products and services?
We had very fruitful and promising meetings with several banks here, and they are all very interested in what we are doing. However, currently, they can’t work with us in a direct capacity because of the CBN ban, but we’re all looking towards a future where the ban is lifted, and an innovation friendly regulation is passed. So, to that effect we are speaking with them, we are discussing various ways we can work together, So that, when the ban is lifted, we can all move out quickly, and we welcome all banks that approach us because we want to work with them.
Banks know the world is changing. Literally, the ground is shifting under their feet and it’s not just cryptocurrency that they’re concerned with. Even the government structures are changing such that they don’t have the same exact position that they had before. So, they are beginning to innovate and they see the importance of building and making the right partnerships.
Any data to show the level of acceptance of your business in Nigeria?
Nigeria is our largest market, with 1.5 million users and over $1.5 billion volume to date (since 2015). Compared to last year – we are on pace to have 23 percent more bank transfer trades in Nigeria on the platform than last year. Also, we are on pace to have 36 percent more bank transfer volume in Nigeria on the platform than last year. Looking at year-on-year data from the end of June 2020/2021 we see an increase in Bitcoin trading volumes of 57 percent in Nigeria, likewise we see increase in user numbers of 83 percent.
From February 2021 to March 2021, trade volume increased over 23 percent in Nigeria while as of April 2021, Bitcoin P2P trading has surged by 27 percent, since restrictions were introduced by CBN.
How is the ban on cryptocurrency in Nigeria affecting your business?
We would like to work with the government directly on issuing some regulation that brings clarity to our users. We are here talking to our users and they are telling us some horror stories that should not have to happen. These are honest business people trying to help other business people use their money and they just want to be in the clear. Even if it is to pay a small tax on transactions, they are fine with that too.
They just don’t want to be in breach of the law. So, we are very open to dialogue with the Government, we’re here not just to help ourselves but for our users. Even with the ban in place, we are here on behalf of our users in the country to keep them safe to make sure that their bank accounts continue to operate, to make sure that they’re in the clear, and that’s why we’re going for licensing and regulation, all over the world. That’s why we brought our Chief Compliance Officer. He’s right here with us. So, we’re hoping this will be the start of something very good and fruitful. We remain optimistic of getting licensed.
What other challenges are you confronted within the course of your business in Nigeria?
The number one challenge for any company that is entering Africa is to take the market seriously, take the people seriously. That means, come over here and feel the energy here, especially in Lagos. It’s going to take you to a whole different level.
Another challenge is that it is not easy transforming from a small startup to a larger startup and also still trying to stay connected to the streets but we are trying our best because of our users.
QUOTE: We are very open to dialogue with the Government, we are here not just to help ourselves but for our users.