Bitcoin owes its success in Nigeria to the unstoppable youth, says Paxful CEO

by James · November 18, 2022

CryptoSlate caught up with Ray Youssef, co-founder and CEO of peer-to-peer trading platform Paxful, during Bitcoin Amsterdam.

He said the mental strength and hustle of Nigerians, coupled with the introduction of Bitcoin rails in the country, is making a real difference in breaking “economic apartheid”.

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The issue of corporate invoicing

On his background story, Youssef said he grew up as an Egyptian immigrant in crime-ridden New York in the 80s and 90s. His experiences at that time taught him street savvy and how to deal with people the right way.

At the age of 19, Youssef taught himself to code after getting his first computer. From there, he ventured into the business world and opened different startups, and despite the different challenges for each business, the constant throughout was the problem of invoicing, Youssef said.

His first business, an SMS Groupon clone, failed to take off, perhaps due to being ahead of its time, Youssef rued. But undeterred, he pivoted by changing tack to peer-to-peer ringtones, which, having captured the spirit of phone customization at the time, were highly successful.

“I just wanted to build cool stuff. Ultimately, I just wanted to get that Mission Impossible ringtone for myself. It was hell to get it, and once I realized that, I decided to make it easier for others. Then it became a multi-million dollar business in six months.”

Youseff said he primarily sold ringtones to teenagers, who are typically unbanked. To circumvent this, the teens often swiped their parents’ cards, leading to chargebacks after unfamiliar statements were asked.

Business after business, Youseff noted similar billing issues with each new venture. But then, out of nowhere, the serial entrepreneur came across Bitcoin.

The Bitcoin Rabbit Hole

Youssef’s initial reactions to Bitcoin, even though it was apparently a potential solution to his billing problems, was to dismiss it as “geek money.”

After a second look, he realized that despite his initial reservations, the protocol design was solid, and it was obvious that “serious work had gone into this thing.” Still, he remained wary, mainly because of doubts about its viability and whether it was really a bona fide instrument.

But after attending his first Bitcoin meetup, Youssef said he began to open up more to it. During the meeting, he came across “mission-driven people” who were intelligent, committed and idealistic towards the betterment of humanity. This gave Youseff positive vibes about the community.

Time passed, and after participating in the Egyptian revolution of 2011, where protesters overthrew Hosni Mubarak, and later the Occupy Wall Street Movement, Youssef’s experiences at these events led him to conclude that the world is ruined because of money.

Tapping into the unshakable sense that there is something wrong with the world, the Paxful CEO surmised that there must be more going on behind closed doors than what has been made public.

“Black is white, white is black, up is down, down is up, and everything is 180 from the natural order. How does this happen by accident? Greed and incompetence alone cannot substantiate it.”

Youssef recounted his personal experiences during Occupy Wall Street, a protest against economic inequality, and said he saw the movement being co-opted before his eyes.

Similarly, with the Egyptian revolution, he noted how the mainstream media’s narrative was the exact opposite of what was happening on the ground level. By pointing this out, he was mercilessly attacked by trolls.

“I began to realize that if they lie about it, what else is a lie? And I went down this rabbit hole, went to the political, health, I went through the science, everything… Suffice it to say, the natural order has been completely unturned and it certainly didn’t happen by accident, so I had a spiritual awakening. “

Although these experiences had not shaped his worldview, given his observations about business invoicing, Youssef confidently declared that he would still be “on the same path” to fix the broken monetary system.

“Every startup I’ve ever had, billing is always the problem. The whole system is completely broken, and once you understand, you’ll understand that something extreme needs to be done, and the people need to take back the power.”

Paxful addresses ‘economic apartheid’

Youssef met Paxful co-founder Artur Schaback during a Bitcoin meetup in New York City in 2014. A year later, the company was born with the goal of redistributing power back to the people.

But before Paxful, Youssef’s first Bitcoin business focused on BTC Point of Sale (PoS) solutions for merchants. In the course of running this business, he soon realized that operations were hampered by low BTC circulation at the time, especially in the places where people needed a fiat alternative the most.

To solve the problem, Youssef embarked on a trip to Africa, Nigeria, specifically because “it’s the place with the biggest hustlers.”

During the trip, in talking to local people, he discovered that Nigerians live under economic apartheid, which means that economic exclusion limits the degree to which a person can improve their life and circumstances. He added that the entire southern hemisphere also suffers from the same problem, which is the source of their inability to move forward, not laziness or corruption as is often discussed.

“They definitely aren’t [lazy]; they are the hardest working people around.”

Thinking about how he could hack the system and “make the ground fertile” for Nigerians to trade Bitcoin, he settled on the idea of building out a gift card trade route between America, Nigeria and China.

“I showed the Nigerians how to ask their relatives in America to buy gift cards from a pharmacy with cash and send them a copy of the back of the gift card. Then I connected them to Chinese players who were very happy to take that gift card code for a discount and give them Bitcoin, and it worked.”

Youssef said, once it was up and running, tens of millions of dollars a week started flowing through this corridor, resulting in the first Bitcoins entering Africa through Nigeria.

Nigeria now leads Bitcoin adoption

After witnessing the initial success of the gift card hack, Youssef vehemently declared that Nigeria would eventually lead Bitcoin adoption in Africa. At the time, critics expressed their skepticism, citing doubts about reasonableness and that locals could “figure it out.” But they were wrong, Youssef said.

A recent article from Business Insider Africa noted that Nigeria ranks the number one African country for Bitcoin adoption, despite the central bank banning on/off ramping through the retail banking network.

Returning to his earlier comments about economic apartheid, Youssef said Bitcoin took off in Nigeria because it enabled “exploitation, arbitrage, access to external liquidity,” previously reserved only for privileged and connected Nigerians.

But now, because of Bitcoin, the playing field has been leveled, allowing ordinary Nigerians to bypass the banking system and do what they do without financial oppression.

“The banks in Africa, especially Nigeria, they don’t allow people to send money in USD. They want to keep the hard currency for themselves. So what’s a small and humble entrepreneur to do?”

Nigerian youths are making things happen

Based on his experiences in El Salvador promoting Bitcoin at the educational level, Youssef noted a degree of resistance among Salvadorians. He said they didn’t understand it and generally felt it was imposed on them. Had the rollout been different, that might not have been the case.

However, the same could not be said for Nigerians, who expressed enthusiasm for Bitcoin from its inception, especially among the country’s youth.