Peer-To-Peer Finance Provides Greatest Opportunity For Financial Inclusion

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As a global digital marketplace that connects buyers and sellers of bitcoin, Paxful has, in its relatively short period of existence, already carved for itself an enviable niche. Operating as a type of escrow service, they keep both parties safe and ensure the integrity of their transactions using blockchain technology. Founded in 2015, the company has offices in New York,  Estonia, Hong Kong, and the Philippines —staffed by more than 160 dedicated employees globally.
The story of Paxful’s rise to become a foremost digital wallet through which thousands of people around the world send, receive, and store bitcoin is in many ways the story of Ray Youssef, the co-founder and chief executive officer, himself. It may be hard for most people who have benefitted from the Paxful direct-trade platform to believe, but there was a time when Youssef was eating out of dumpsters and sleeping on park benches.  His life experience, which saw him go from victim to champion of cryptocurrency trading, embodies the resilient and optimistic character underlying a company that has become one of the world’s biggest peer-to-peer digital currency exchanges. From its early days as a payment provider for small businesses, street vendors, and independent artists, Paxful has had a record of surmounting numerous challenges—among them being the apathy and incomprehension of the general buying and selling public, even in its home country, the USA, along with maximizing opportunities whenever they presented themselves.  It is this same sense of what is possible, this tenacity and belief—especially when circumstances seem to be at their most daunting—that is driving Paxful’s foray into the African marketplace, a venture which, so far, is yielding dividends beyond the imagination of even the most optimistic of Paxful’s legions of exponents and clients.
In a recent conversation, Ray Youssef addressed these opportunities, emerging possibilities, and the capacity of cryptocurrency trading to radically transform African economies.  
One of the most positive features of Paxful’s operations in the African marketplace, he says,  is the ability of cryptocurrency to operate outside the existing structure of financial institutions—a situation which makes this medium extremely valuable to the unbanked, i.e. people who don’t have a bank account for depositing or sending money. Added to that is the fact that cryptocurrency is far less volatile compared to the fiat currency of some countries that experience high inflation on a periodic basis, driving market uncertainty, which is inimical to progress. This is an advantage that has become apparent to the company’s user base of over 2.5 million customers all over the world, who are able to trade thousands of bitcoin a month, which moves millions of dollars through the Paxful site on a regular basis.
Youssef believes that African markets, by their very nature, are in great need of the financial fluidity that cryptocurrencies have to offer. For example, the average African user of Paxful’s services (and especially ones that run small independent businesses) uses bitcoin as a means of payment. This is unlike their counterparts in the West, who see it purely as a store of value and a way of investing and growing their wealth. As has been the case with other disruptive financial technological innovations, Africa is currently leading the peer-to-peer financial revolution thanks to widespread enthusiasm, especially among the young and upwardly mobile who are tired of being frustrated by a system in which financial institutions are not easily accessible. The peer-to-peer finance system which Paxful embodies provides an opportunity for financial inclusion. Additionally, this system provides for a much lower barrier to entry into the bitcoin market—this is in contrast with traditional currency markets that involve various intermediaries, such as banks.
He goes on to say that nowhere else in the world has this trend gained greater momentum than in Nigeria, which has emerged as the biggest market of any country in terms of the number of Paxful users—a growth which mirrors a general trend across the continent. His organization, Youssef discloses, has learned much from Africa’s young consumers, who are on record as having the most connected 3G population on the planet. For now, Youssef admits, Paxful is playing catch-up trying to meet the growing demand by improving its own mobile capabilities to cater to the widespread use of smartphones throughout the continent.
“We are observing a new generation of young African graduates and professionals making use of peer-to-peer finance as a way to better engage the global financial system,”he says with satisfaction, adding that this phenomenal growth in recent years has largely been driven by users in the 18-30 age group. Paxful, he reiterated, is set to match their commitment to bettering lives and improving communities through education and providing access to global financial services. “We aim to empower the ‘little guys’ in any way our platform can provide,” he assures. He cites the Paxful Affiliate Program, a multi-tier program that gives Paxful affiliates 50% of the collected escrow fee for certain of their referred users’ trades on Paxful, as one of such empowerment methods designed to enable anyone, anywhere in the world, to build their own businesses.
The Paxful CEO is not unmindful of the suspicion and negative perceptions (and sometimes outright fear) that have surrounded the emergence of cryptocurrency as a viable alternative in some quarters, including in Nigeria. But it is a phenomenon that, he says, applies to all industries, especially emerging ones like cryptocurrency. While totally understandable (‘because there will always be people who will take advantage of you,’ he says), he advises cryptocurrency users to make sure that they do their research and all necessary due diligence first, in order to find out what exchange provides the services they need. “Avoid ‘too good to be true’ crypto investment opportunities,” he warns, adding that given the proliferation of scammers these days, you can only protect yourself when you are equipped with the knowledge needed to avoid them. Paxful encourages, and at certain trading levels, requires its users to submit to KYC (Know Your Customer) verification. KYC  is the process by which customers’ information is obtained to verify their true identities, ensure they are who they claim to be, and that they are legally allowed to conduct trades on the platform. Paxful also has a number of other functionalities implemented on the platform to keep users safe.
There is a type of escrow service that works by safely keeping your funds in a deposit account to protect both the buyer and the seller, locking the bitcoin until the payment has been successfully made by the buyer and received by the seller. This helps keep the transactions more secure by keeping the payment safe until all the terms have been met.

They have well-trained customer support available 24 hours a day, 7 days a week to help users. 

A dispute button helps users when they see or suspect that something is going wrong with their trades or when they do not go as planned—in which case a moderator intervenes to settle the trade.

‘Two-Factor Authentication’ (2FA) is also useful, Youssef says. With 2FA, users play a role in keeping their own accounts safe. Activating a 2FA on one’s account can be done through SMS text message or via Google Authenticator, which he recommends above other methods. 

Youssef has also decried the ‘uncertain legislation’ prevalent in many jurisdictions in Africa. “We still don’t know the government’s position on crypto assets—if they will be considered assets similar to fiat and will be allowed to be traded and mined freely, or if any ownership and transactions will be forbidden.” He would like to see smarter regulation that accommodates the need of young Africans for financial independence, which is manifested in the side hustles they are engaging in and the remittances they are making on a daily basis. “Africans are using cryptocurrency to satisfy both personal finance needs and entrepreneurial ventures,” he says, adding that there is an emerging generation of Africans buying crypto as investment vehicles into promising blockchain startups, with a relatively small number of them already trading digital currencies speculatively for profit.   

Beyond helping Africans make and trade money in a more seamless manner, as well as enabling them to engage more profitably with the global economy, Paxful and its founders have a passion for giving back to society in a way that empowers the vulnerable among us and makes a real difference in their lives. He is already spending a lot more of his time and resources working with charities. Youssef notes with satisfaction that many of these charities are accepting bitcoin donations, which enable them to gain easier access to money in local currencies through Paxful trading. 

It is an initiative called #BuiltWithBitcoin, which has facilitated the construction of educational institutions in many parts of the world, including Africa—with more planned for Nigeria very soon. #BuiltWithBitcoin, which was launched with a sizable donation by Paxful to a volunteer-driven charitable organization that builds wells and schools in a number of Middle-Eastern and African countries, is just one of the charities that Paxful and its founder have focused on. 

“I encourage people to get behind #BuiltWithBitcoin,” he says, adding that Paxful is looking forward to partnering with organizations that are willing to help broaden the#BuiltWithBitcoin initiative in Nigeria, as well as with potential Nigerian ambassadors of the brand, who would hold workshops and spread awareness of peer-to-peer finance among the populace.