Crypto’s Promised Land? Paxful CEO on the ‘Unbanked’ in Africa
Ray Youssef speaks on Paxful’s strategy for growth in Africa and the platform’s partnership with Binance.
Crypto is not a zero-sum game. At least, it’s not yet. While some companies may be trying to compete in established markets, others recognize the potential to reach new corners of the world and create new markets.
One of them is Paxful, a peer-to-peer cryptocurrency exchange based in the USA. The African continent has been a major contributor to the growth of Paxful’s peer-to-peer crypto exchange. Paxful’s user base nearly tripled in Ghana in 2018, with 41,243 accounts. also more than doubled in Nigeria, where it now has 321,476 accounts.
The platform has grown since then. In October 2019, Paxful reported a 64% increase of African trades, including a 2800% rise in South African trades. Paxful currently processes more than 50,000 trades per day worldwide and has over 3 million wallets.
Paxful’s rapid growth has been noted. Binance revealed in December that Paxful’s web-based Virtual Bitcoin Kiosk would be integrated into the Binance platform and available for existing and new users.
Recently, Finance Magates sat down with Ray Youssef to discuss the strategy of Paxful for growth in Africa and the ethics of engaging unbanked people.
Skepticism and Potential
Based on Paxful’s numbers, it seems as though the potential for cryptocurrency-related growth in Africa is vast-but Ray has encountered quite a bit of skepticism. “As an American, I found it funny when I started talking about Bitcoin Africa. Everyone said that Africans didn’t have any money. How are they going to use Bitcoin when they only make $1 a month?
He said, “I can’t fault them for saying that”-as ignorant and stupid as it is-because I once believed the same thing.” “When it comes to Africa in America, we are only shown poverty, disease, and corruption. These are the only things that we hear.”
Youssef, originally from Egypt, stated that the truth of the situation is very different to the media narrative. “When you actually go there you see…these folks have money. They don’t have the money they have.
Why? Ray explained that the banking system in the country is not connected to the rest of the globe. It’s almost impossible to send money from western Africa if you are in Africa. It’s not possible to send money to more than three, four, or five hops. You need to use your family and friends networks.
Paxful identified this opportunity to use the Bitcoin network as a utility.
Recently, Finance Magates sat down with Ray Youssef to discuss the strategy of Paxful for growth in Africa and the ethics of engaging unbanked people.
Direct contact with the “unbanked”
Ray stated that people are prone to a negative perception of Bitcoin in Africa, as well as in other parts of the globe. They associate it with frauds. People need to be educated on the practical use of Bitcoin.
People need to be aware that there is another way to use it. You can move, transfer, and convert your money and then move it around the world to solve real problems.
Ray explained that Paxful’s engagement in African markets and growth was largely due to this type of educational outreach. “We went to Africa and engaged with the people. We listened. We listened to their problems, learned about the dominant payment networks they used, and what people did with the money they had.
We had this information and were able to identify the major players. Then we got everyone together and said, “hey, let’s solve these problems. Here’s how we can get it done…Bitcoin is only one of the building blocks.” you guys are another big building block.
This type of engagement seems to be rare in the financial and cryptocurrency industries. Dovey Wan is a founder partner of Primitive Crypto, and a well-known Crypto Twitter commentator. He stated in November last year that many of the people who build platforms for “unbanked”, don’t have direct contact with or knowledge of their daily lives.
Building on existing Social Financial Structures
Ray stated that Paxful has been able to create systems that enhance existing financial structures in African societies by having direct contact with people and communities. The Journal of the International African Institute defines as one of many “indigenous” credit institutions in “underdeveloped” societies around the world.
Ray stated, “Every society has them.” These clubs are money rotation. Three mothers from one village will come together and pool all the money they have accumulated in a month. They’ll then give the money to one of their daughters.
Ray explained that the money would allow her to buy a sewing machine for her business. Then she will be able “to, say, start a new business.”
These systems are often not known outside the countries they are found. “But if you travel to Africa and talk to people, you will find that they have developed financial social structures over thousands of years…we are able to work with these structures and make incredible things happen.”
Ray believes that this will be the key to sustainable and healthy business growth. “Too many businesses chase Africa with the mindset a serial rapist…how can you go there and actually understand the people and work with them? Trust is the key to money, and Africa is about relationships just as the rest of the globe.