On The Brink with Castle Island - Ray Youssef (Paxful) on building the world's largest Bitcoin p2p market (EP.109)

Episode Date: August 5, 2020

Ray Youssef, founder and CEO of Paxful, joins the show to talk his journey with Paxful and his mission to bring Bitcoin to Africa. Paxful is a wholly bootstrapped startup that has recently taken the crown as the largest Bitcoin p2p marketplace in the world with $2.1B in annualized volume. Ray is from Egypt and has always sought to bring Bitcoin to Africa. Today, Africa is the 2nd most active region by volume on the platform (behind North America). In this episode: Why Bitcoin p2p is so popular in Africa Why interstate settlements in Africa are so challenging today Ray's predictions about p2p volume versus centralized volume Why p2p exchange data is more reliable than centralized exchange volume How Ray went from being homeless to founding the largest p2p Bitcoin exchange Why KYC in emerging markets is so challenging How Ray went through 11 failed startups before starting Paxful The downside of taking venture financing and why Paxful is better off without it Why western startups fail when they try and get involved in African markets Why African users are under-served by KYC providers like Jumio or Onfido Why Paxful has KYC How the Paxful remittance flow works with gift cards Whether Paxful users are retail or wholesalers Why Nigeria, Kenya, South Africa, and Ghana are popular on Paxful Why Ray focused on Africa for Paxful How Ray found his way to New Orleans after Katrina The genesis of Ray's humanitarian project to build schools in Africa Paxful is hiring! 

Hello and welcome back to On the Brink with Castle Island. Today we have a pretty fascinating episode with Ray Yusuf, the co-founder and CEO of Paxville. Now, a lot of you will know Paxville. It's a peer-to-peer exchange, which means that trades do not appear in a single order book, but they're actually settled on a bilateral basis between individuals using a variety of payment methods. Peer to peer-to-peer exchanges are relevant in places that may not have good exchange infrastructure, maybe the government, takes a dim view of Bitcoin exchanges, effectively frontier markets. But these are obviously some of the most important markets for Bitcoin adoption. These tend to be some of the places with very high inflation and where remittance channels are very inefficient and expensive. So these period of big exchanges fill a pretty vital niche. Now, Ray has such a fascinating story. I wanted to get him on

the show to tell it. He had a string of 11 failed startups before he started Paxville. He was actually homeless at the time that he started it. And now it has surpassed local bitcoins in terms of volume and the number of trades to become the largest peer-to-peer Bitcoin exchange in the world. So it's really an amazing story. Ray is from Egypt. He's always had this desire to bring Bitcoin to Africa. And if you look at useful tulips.org, Africa is the second largest region on Paxville. So he's really succeeded in that respect. So I wanted to get him on the show to talk about what exactly folks in Ghana, Nigeria, and South Africa are using Bitcoin for? Who are these traders using Paxful? And what kind of trades are they making? Talk about Ray's philanthropy. And, of course, his battle

to build this exchange wholly bootstrapped with no venture financing. This is an absolutely fascinating episode. Ray is an amazing character. Let's dive right into it. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more to Britain's ailing economy

with a new round of quantitative easing. You print a couple trillion dollars, and all of a sudden, people start to worry. So out of this worry, we have something called a Bitcoin. Ray, welcome to the show. It's a pleasure to have you. Why don't you tell us a little bit about yourself and the history of Paxville? I'm Ray Youssef, CEO and co-founder of Paxville. Paxil started five years ago.

We just celebrated our fifth anniversary a few days ago, actually. Congratulations. Thank you. It's been quite a ride. People are finally starting to take notice of us now, mostly because we officially jumped ahead of local bitcoins in terms of volume. But the real story here started about two years ago when our number of transactions, we believe shot ahead of local Bitcoins and everyone else by orders of magnitude,

meaning that by sheer number of transactions, Paxville right now does more peer-to-peer trades and all other peer-to-peer service combined by multiples, including local bitcoins. That was the case with them even two years ago. And the reason is we focus on emerging markets. Our users don't have as much money, but they do a lot more business, right? And that, we believe, is the true metric for growth, especially in the emerging world. So there have been a lot of obstacles to this, but I'm going to give you guys all the insight and everything that I've learned from the front lines over these past five years. And the reason I'm going to do this is because I want everyone to jump in on this peer-to-peer thing.

I want us to stop being distracted by ICOs, IEOs, pump and dumps, you know, whatever else buzzwords come our way. This whole movement started as peer-to-pure electronic cash, and it will reach its pinnacle once it realizes that it is all pure-pure. to peer. What we are doing is we're building this people chain above the Bitcoin blockchain. And that is what is needed to bring this to the real world. Talking about the real world, everything that we have learned, we have learned from not our users, but our customers. Paxville is not an abstract thing. It's not a tool for robots. It's something that real humans use every single day, and particularly the peoples of Western Africa have taught us so much. They have taught us that what Bitcoin really is, its ultimate killer app, because this is a

universal translator and transporter of money. You don't have to use Bitcoin to buy coffee for it to be a success, but you can use Bitcoin or any cryptocurrency as a clearing layer to allow you to take a gift card and turn it into another gift card, another place in the world, or a PayPal deposit in the UK or an Alipay deposit in Shenzhen or cash in Cambodia or a bank transfer in the United States. Any one of our 355 payment methods can become any one of our other

355 payment methods anywhere in the world. This might seem like a cool invention, but it might not seem really useful to us in the West, but people in emerging markets, this is absolutely life-changing. And I can give you guys a lot of examples about that, each on specific use cases, and I think people will find it tremendously useful, and I also share all of our challenges, all the things getting in our way, guys, because what it's really going to take for that institutional money to come in and all the other things that we invest. Bitcoin had been salivating all the Bitcoin for this and that, it's going to take Bitcoin becoming

invisible. It's only with Bitcoin, you know, a complexity abstracted away from the mainstream user. Will the mainstream come in? And there'll be many of those people that go on to become advanced users, have their own non-custodial wallet, some might even run a full node, but we're not going to get to the top. We're not going to accomplish our mission by thinking that way from the beginning. We have to be thinking about Mama Bogga. That's a Kenyan term, mama out in the boonies, right? How do we get her in on this? What problems does she have with money? And to figure that out, we have to actually talk to people. One of Paxville's values is always be connected to the streets. And that is our guiding light. That's what's gotten us here.

We listen to our customers. We talk to them every day. I'm the CEO. I do customer support every single day on our website, on Telegram, on Twitter, everywhere. Why is I want to know how people see our product. I want to know what problems are having. I want to know what pushes someone to type Bitcoin into a browser for the first time and go on this rabbit hole right. Why? And you'd be surprised at why people do it. It's absolutely the emphasis on what we've been taught. There's a lot for us eggheads to learn here, but the great thing is once we do, really, sky's the limit guys. And all those things that we've been dreaming about are going to come. And once Bitcoin becomes used for real, real use cases by real people,

That's when all this institutional money is going to turn their heads. I'm like, wait a minute. This is technology that actually works. These guys are turning SMTP into hot mail. Let's get in on this right now. That's when it's going to happen. But it requires quite a bit of emotional maturity from the strongest amongst us. But the good news is not all of us have to jump into the right people.

And we can move mountains. And we already are. So, Ray, that's an amazing introduction, quite stirring. I recently called out Paxville as one of the most underrated companies in Bitcoin on Twitter because you guys are big and quite prevalent, especially in the developing world, but people in the West or in the U.S. at least aren't as familiar. They don't really pay attention to the P2P exchanges as much as they follow the centralized order book exchanges. It's interesting that you have to look outside of the U.S. to learn the real story of how individuals are you

using Bitcoin aside from just the various financial engineering and trading use cases. Absolutely. Yeah, I appreciate that. Thank you so much. It's absolutely true. We don't do a very good job of marketing. Some say we don't do hardly any marketing at all, because we spread mostly through word of mouth. People, especially in the emerging world, especially in Africa, they're looking for opportunity. That's the main thing they're looking for. Because people can't, I mean, if I could explain to you the toil, the daily life of someone in Nigeria, what they go through every single day, you'd understand why those people do what they do to survive, right?

We have, at the core of our mission, honestly, because we are going into broken places and broken civilizations and restoring the flow. We're allowing them to heal. We're allowing people to create and generate wealth from themselves with this magical internet money and this peer-to-peer network. It's like a walla 2.0. I don't like to use that term.

that term. It has bad connotations, but people in India and Africa really understand what that means. It's just people-powered money. That's all it is. So there's a lot of challenges, and we can go into those challenges later. We can go into examples right now. I want people to understand what's actually happening in peer-to-peer right now. This peer-to-peer is changing how the world works on a very fundamental level. And the question people ask me is, why is Africa taking off now, which I find very funny. It was four years ago, we went into Africa first. I made my co-founder.

We came back from that trip and we said, you know, Africa is going to lead peer-to-peer. It's going to lead all crypto adoption. And people laughed at us. They said, Africans aren't going to figure out Bitcoin's too complicated. Africans only make $2 a day. Why would they invest in Bitcoin? These are what people said.

And now the story is different, right? Everyone's rushing into Africa. They're leading Google searches. They're leading number of transactions. And soon they'll be leading volume as well. A lot is going to be happening there. And India is also one to look out for. India is a sleeping giant of crypto, Brazil as well.

We have people on the front lines and all these places, and we are gearing up to help all of them in a huge way. We're trying to scale holographically now. It's immensely difficult. Because what we're doing has never been done before. There's never been a magical translator of money built on top of a peer-to-peer marketplace. This has never been done in human history.

It's several orders of magnitude more complex than a PayPal, but we're doing it. So about Africa, two things. The problems that they have with money are immense. There are 2,000 payment networks in Africa. Only 3% of them actually talk to each other. And what you get is you get a situation where it is nearly impossible to send money from one African country to the country next door in any kind of, you know, just sane manner. Even corporations have a hard time doing it. It's immensely difficult.

What we do is we basically, through Bitcoin, we open up every walled garden in the world. And if we can actually enable seamless intercontinental settlements within, just within Africa, I know that in five years' time, Africa will be approaching superpower status. That's how fast an economy can grow once money is allowed to flow freely. And we saw that very clearly in the 13 colonies. And there have been other examples as well throughout history. And I know people again say, oh, no, Africa will know. I understand that.

People say that. But believe me, Africa is going to be the next America, particularly in Nigeria. You heard of your first. Whoever's going to call me crazy, please take a screenshot of their tweets. I'm going to save it, hang it up on my wall. So looking at the data, I don't know if you've ever seen this website, useful tulips, put together by Matt. Oh, yeah, Matt's. Matt's amazing.

That guy, he's, yeah, he's not a different level. We had him on the show, actually. And, you know, basically I interrogated him about how P2P markets work. And, you know, the thing I understood through that was that Bitcoin, in many cases, is a bridge currency, bridging multiple fiat currencies with Bitcoin being the intermediate asset, which was more like nuance and complex than I had, you know, initially thought. But, you know, I think that that doesn't do Bitcoin a disservice. That just shows that it can service these kind of multiple different use cases. So I'm looking at useful tulips. I'm looking at the website and it aggregates obviously on a geographical basis.

So your number one market by volume is still North America. But number two is sub-Saharan Africa. And there's been a really sharp increase from about March of this year to today with African volumes basically doubling in that period. Is there anything special about the last kind of four months that you would have an explanation? for why volumes had this really sharp uptick? No, I don't have any magical thing that has happened. COVID, you could say COVID, you know, help move volumes up a little bit.

But the honest truth and what I feel in my gut is that all the work that we've been doing, all the community building, the campus tour we did last year in Kenya and South Africa, all of this outreach, all of this building, all this grassroots work, all this evangelizing and educating for the past two years, finally paying off. We're just starting to creep up on the hockey stick right now in the emerging

world, just starting. And this is what's going to take us into the golden age of cryptocurrency. Again, some people will say, I'm crazy, but I'm going to make another prediction here, and it's not about the Bitcoin price. I really don't care. The Bitcoin price doesn't matter to peer-to-peer. In fact, when the price goes down, peer-to-peer volume usually goes up. So it's a, it's like bizarro world for, you know, where the average crypto-Western crypto user is. But within two years, I predict that peer-to-peer volume will outpace by a significant margin centralized exchange volume. I know that sounds crazy, but it's going to happen. We'll be launching an index that will show centralized volume versus peer-to-peer volume,

and we'll be creating a peer-to-peer alliance to bring in all of this OTC traffic from us, LBC, BISC, whatever other OTC providers' service tests are available. even wallets, they're peer-to-peer as well. So I'm calling this out. Anyone that wants to join the peer-to-peer Alliance, come to us. We are going to all working together, take peer-to-peer ahead of this clown show we have going in this centralized space right now and truly take this, take us into the golden age of crypto. You know, the thing I love about looking at your data and local bitcoins is that, you know, in my mind, a peer-to-peer transaction is, and I don't know if this is a bug or a future,

it's kind of more consequential. It's, you know, it requires more work to arrange. Again, you know, presumably, you know, you don't want that to be the case, but it's easier to fabricate or forge volume on these centralized exchanges, whereas I have a very high degree of confidence that the volume coming off of these peer-to-peer marketplaces is genuine, which is why I consider it kind of a true barometer of crypto exchange volume. Absolutely. Absolutely. Absolutely. Absolutely. Absolutely. right. In fact, you know, the bitwise report 95% of centralized exchange volume is fake. So, and peer-to-peer volume, absolutely. It's very, very hard to fake. There's really no reason for people to fake it. So it absolutely is the barometer of choice. And it's not even the volume. It's really the number of

transactions. These people don't have as much money, but they soon will. So we're going to show the number of transactions. We're going to show the volume and all of that is real people using Bitcoin to solve a real problem in their world right now. And that is what our world should be about in its entirety. Just that. We focus on that with all the geniuses in this space, even if you had just 1% of the Vitalics out there helping us with this, we can literally move out. We will single-handedly, by single-handle, I mean us crypto-nerds and the peoples of Africa, working together as a continuum, create a real golden age in the emerging world. It's absolutely possible. I'm one of those crazy people that believes that humans are born into a natural life of abundance, or we should.

That is a natural state of human beings. I want everyone to be rich, and I know it can happen. And I know people think that's impossible. We live in a zero-sum game, but no, I know in my heart 100% and in my mind that we can have a world where everyone is rich. So, Ray, I wanted to zoom out and go back to the genesis of Paxville, which, you know, when you founded Paxville, about five. years ago. Happy birthday on that. Local Bitcoin's that already existed for, I think, about two or three

years. Three or four, yeah. Yeah, three or four. So what was the, what did you look at and, you know, what made you realize, hey, there's actually still an opportunity here. You know, I can do it better. It happened very naturally. So my co-founder and I, our first crypto startup didn't work. And we ended up homeless in the streets of New York, surfing couches for about two and a half months. Me and our tour. This is a very hard time for us. And one of our friends looked at a, he looked at me and he said, hey, Ray, you're looking kind of haggard there. Maybe you need some extra money. I was like, yeah, what do you got? And he told me, hey, you know, you can sell Bitcoin. And, and, to make about 100% profit, meaning you can sell $250 of Bitcoin and get a $500 gift card, which you can spend. And I was like, nah, that sounds like a scam. But I tried it, and it worked. And I couldn't believe it.

And me and Artur said, hey, wait a minute. We can really like take this and focus it on this specific use case. You know, like this is a way to onboard unbanked peoples with gift cards since they're everywhere. This is a way to get gamers involved, which is. tremendously useful we need to make the whole process a lot easier but at its base we needed a listing service an escrow service and a wallet which is essentially the same components of local bitcoins but they didn't think quite like we

did so first we built the system for ourselves we're doing these trades on the coin talk on LBC and various other places telegram WhatsApp and they say let's make a centralized place where we can do this that's optimized for the user journey and that's what we did and the market's been teaching us and you know ever since and we've been iterating constantly with user feedback. One of the things about LBC is like they literally do not differentiate between a new user and like a pro vendor who's made them millions and is feeding the entire market. They don't give those people any support.

Artur and I, we realize that we're in the financial services business, financial services, and it's all about the service and respect that you give people. They're not users, their customers. It might seem like a trivial difference, but in business, it makes all the difference. Right. One thing I found interesting when I was researching for this was I looked at your LinkedIn and it says you were involved in 11 failed startups.

Was that as an employer as a founder or kind of a mixture? All is a founder, man. I'm very stubborn. I'm basically unhirable. It just, you know, honestly, I describe serial entrepreneurialism once it goes to that level is almost like a mental illness. Like you literally can't stop yourself. And I have particular issues.

Some of those 11 failures I had, they were doing all right. They were making money. But I realized I wouldn't change the world with any of this stuff. They would never go to a level that would satisfy me and my appetite for real change and innovation. So I said, forget it. I'm going to put all my love into the next thing. Maybe this will be the one. But the amazing thing is that looking back every single one of those startups,

the lessons that I learned from each one of them, I absolutely need it to be the CEO of Paxville because the challenges here are on every level imaginable. Imagine PayPal, but two levels of complexity, two orders of exponential complexity greater. Because we have two peers on each side of every transaction. We have to deal with immense fraud across 350 payment methods, each with their own issues and idiosyncrasies.

We have to deal with KYC in the emerging world, which literally does not exist. massive undertaking in and within itself. Every single one of those startups I ever had, and any entrepreneur will tell you this, no matter how well you build the product, you always hit the wall, okay, how am I going to get people to give me money?

Like, how am I going to collect their money? How am I going to do payments with this? And that was something that, you know, is always going to be a problem. So we've set to fix that. So that's basically my journey there, Nick. But I'm really thankful for, the journey because I had to, I'm one of those stubborn guys that kind of had to be broken to dust

before I could ask the big man upstairs for help. And I did. And I surely got it. Wow. That's, I don't know if I've ever met anyone on their 12th startup where it was such a spectacular success after 11. Well, it's actually my 14th. 14. And my first, my first two were very successful. And I thought I had the mightest touch. I was really arrogant as a young man. And, you know, God set me straight. You had to break me in half, and he did. And I needed it. So this is like, Paxwell's the 14th startup of mine.

That's amazing. So you never took venture funding, which is another pretty cool thing. So Paxville is totally bootstrapped, right? Absolutely, absolutely. In fact, I've never taken venture funding from any VCs. I never really trusted them. I had some really bad experiences with them. But I'm glad we didn't because there's no way we'd be building 100 schools in Africa

and building wells and doing all this other radical stuff that we want to do if we had VCs sitting on our board. They'd be like, what? You want to do what with company money? Yeah. Yeah, I mean, you know, obviously, as a VC myself, I hear these stories from startups about how they are so happy to be bootstrapped. And I think it makes sense. I mean, there's only a certain narrow breed of startups that really should be taking venture financing. and a whole host of entrepreneurs that do much better without it.

I think so. And I am beginning to see that Paxville is going to have to take venture funding because we have hugely aggressive plans. I mean, by aggressive, I mean, we want to go and give like a phone to everyone in Africa with data, with an ID. This is what we want to do. We want to do the work that the United Nations failed to do. We want to build communities.

A lot of these startups, the reason to go into Africa and they failed was they have this mind of this rapist mentality. You want to go in, dominate, penetrate. No, we're not about that. We're about building real communities. And built with Bitcoin is a huge part of that. That's why people trust us because we actually want to help them. We actually want to build. And in the money business, trust is the number one asset by far.

So you talked about KYC a little bit. So obviously everyone knows how it works in the U.S. and there's a zillion vendors that will help you do your KYC. Everybody has documents, you know, they've got their driver's license or their passport or whatever. But as you say, it's much trickier in Africa. So tell me about the difficulties there and whether KYC is even kind of an appropriate way to think about financial services in Africa. Yeah, this is actually a great way to highlight the, just how disjointed the situation is. So first of all, let me say that almost all of our African-Rexamination.

users have bank accounts. They really do. They have, some of them have many African bank accounts. The problem is, is that those African bank accounts only work within that country in Africa. You can't use them to send money outside, even to the country next door. So they may be banked officially, where they are domestically, but in terms of the global scene, they are unbanked or underbanked. And it's the same thing with K-YC. All of our users in Nigeria, they all have ID. All of our users in Nigeria, they all have ID. All of our users in Nigeria, they, in Nigeria, you have to KYC with a biometric fingerprint scan just to get a SIM card. Just to get a SIM card.

So they, Africans want a KYC. They're like, yeah, please, if I can get a global financial passport that will let me interact as like a visible human with the rest of the world. Hallelujah. Take everything. But the problem is, is that, for example, Nigeria has five different types of national ID. And Jumeo-on-Fito can barely handle any of them. We've had to sit down there and feed them all these IDs. and feed them all this information, like, hey, this ID doesn't have an expiration date.

Can't check for that. We have to factor in all of this localized info into our KYC system, which is actually turning into a KYC switchboard that could very well be a white label of a product that we could sell, but we just need it for ourselves. This doesn't exist. So KYC is a massive challenge to us. You know, we're estimated we're from 30 to 50% of the users that come to us. We have to reject because they can't KYC properly into our system.

And they have IDs. So we have a lot of work to do here as a scene. Yeah, it's not localized at all. So we're building a switchboard right now to bring in all of the localized players as truth oracles into this system because we need that to grow in this space. There is no way around that. It is absolutely heartbreaking when someone is sitting there to get their ID verified for a few days and they're hitting me up on Twitter and I'm going in there and asking for their

ID and trying to match it up with anyway, it's a huge. challenge Nick. I cannot overstate how massive and how important this KYC challenges to us. And that's why again I'll put this out there. Paxville is always hiring awesome product people. If you want to be a product owner for a startup within a startup, a startup within a scale up, come to Paxville. You have absolute freedom to build as you see fit. We will connect you to the people and you will change lives on a day-to-day basis, promise you. All right. Well, you heard it here. Paxville is hiring. Oh yeah.

So on that topic, I mean, what is it that is compelling you to KYCL your users? I mean, you operate kind of globally. Is that something that every regulator is asking for? Or is it just you're doing it out of prudence? Well, there are, okay. So besides, let's forget about the regulators for a moment, completely. But just say we don't exist. By saying that Paxhuls, federally licensed in the United States,

we are the leaders in compliance, it's peer-to-peer. for all of our state licenses. We've worked with states that have never heard from anyone before. So we're leading the way there. And we're doing that because you have to be good with Uncle Sam if we're going to connect the global north to the global south. That's just the reality of the scene that we're in the stage that we are in here. Anyone that's still talking about this anarchist stuff. Okay, you can do whatever you want, but that's not what Faxville's for. Faxville is not here to help those that are visible, become invisible, like Mr. Jameson, Luke. You know, God bless him, but he's not our client. We're trying to help

the people that are invisible to become visible. And so we have to walk a very fine line between regulators in the West, because we're an American company, and people in the global South that need our help. So besides the regulators, let's say they don't exist for a moment. There's a challenge that's even bigger than AML or compliance or any of that, and that is fraud. Fraud is a huge problem, peer-to-peer.

As you think about what we've done, we've given everyone in the world, no matter where they are, or how much money they make, we're giving them access to basically every financial network on the planet. Fraud exists in all matters of money, but in peer-to-peer on the internet, that's when you have all, you know, of the players coming out, whether they're good or bad. So this is an immense challenge just for us to solve the problem of fraud. I'm very, very proud to say that 99.5% of all Paxville transactions happen safely with absolutely no issues whatsoever. And that is an immensely hard number to get to, brother. I cannot overstate. We have

We have half the company's support and fraud, and we call it CCX, community and customer experience, half the company. Our support team is not just a bunch of dudes in the Philippines or India that we forget about and throw a bone once in. No, they're the very heart of the company, and I am personally on that team myself. So this is a huge challenge to us,

the challenge of controlling fraud and making a safe marketplace for everyone. It's an immense challenge. We need the help of everyone to be able to do this. And once we've gotten that half a percent down to nothing, well, we started worrying about other things. But KYC is a big part of helping fraud. You know, this identity is the foundation of banking for a good reason. If people know who you are, you're a lot less, more likely to be a lot more honest, right?

Yeah. Yeah, that makes sense. On the topic of, I don't know if you've paid much attention to this, but the FATIF, you know, keeps making noises about crypto. and there's all this chatter about potentially imposing the travel rule, whereby exchanges have to share data on their users with each other alongside transactions. Is that something that you have to reckon with or build tools to comply with in some capacity? Well, we're peer to peer, so we don't handle any form of fiat ourselves. But at the end of the day, we're getting all these licenses.

I mean, some of the states have said, hey, you guys don't even need a license. based on your model. But we're still applying for these licenses anyway. And it's not really to protect us so much it is to protect our users. Like you've heard of these local Bitcoin traders being arrested by the FBI in the United States. It's never happened to any of our users because we're taking every measure to protect them. That's the main thing. The state-by-state licensing regime, you know, you're going through it. But, you know, tons of crypto startups go through it. It's kind of this ordeal. All the states are different. They all have different standards and expectations. Some of them don't need you to do anything, strictly speaking,

and then some of them are super onerous like New York. Do you wish that there was kind of a unified federal standard, or is this patchwork method kind of you're just going to have to deal with it? I mean, we're working every day to build that unified standard everywhere we go. All we want and all our users want is just some clarity, you know, people like our ventures. in the United States and in Azerbaijan, in Nigeria, in Ghana, and India, all they want some clarity. They want to know, okay, is what I'm doing legal? I hope it is. How many taxes? How much taxes do I have to pay this much? Okay, great. They'd be happy if we could automate all of that. We're very willing to talk to regulators just to bring clarity to the scene.

So our market makers, our vendors can continue helping people. These are good law-abiding citizens, running their own business. All they want is some clarity. And whenever we talk to regulators, especially in the emerging world and the United States, a lot of them are still just playing catch-up. You know, they're human beings just like us. They're not evil people. They're just trying to figure all this out. And I will say in their defense, I mean, not many people have spoken to Africans, but we did

an African campus to her last year. And it's amazing how when you say Bitcoin in Africa, everyone thinks scam, scam, scam, scam, scam, scam, scam, scam, scam, scam. Because the African people are not scammers. Like, yeah, they've been scam. Africans are always being preyed upon by scam. Always, like, you look at my Twitter timeline. There's people on there.

A lot of them are, almost all of them are Africans. And they're coming out here and calling me personally a scammer. And Paxville's scam. Look at my Twitter timeline. And I will say this, Nick, if you're not getting that kind of feedback from your African users and you're not doing shit in Africa, you're fucking wasting everyone's time, you're a clown.

This is the only way. We're getting this feedback wide because, for example, We used BitGo. They failed to broadcast one of our transactions out. Someone thought we were scamming them. When Cloud Fair went down, there was another issue. People automatically, Africans assumed they're being scammed at the drop of a hat. Why have been scammed to hell, man, one coin, all these MLM scams, all these crypto mining scams. When I went to Africa to speak, I would ask everyone, raise your hands if you know someone

that has been scammed or you have been scammed in an MLM scam. LM scam. Half the room would raise your hands. Raise your hands of crypto money. Half the room. You're like, I raise your hands if you lost money, day trading on something. Half. Everyone in Africa has been scammed in one way or another and has involved Bitcoin. Yet despite that, they are still willing to listen.

If there is a path, if there is a path to opportunity and there is. And that is our guts end. Wow. So one thing I noticed looking at the site is, you know, you have this. definite focus on Africa. And I think that's awesome because obviously Africa is so underserved financially and it's just not as integrated into financial markets. But then in terms of your largest user base by volume, North America is number one, which is kind of interested in me because, you know, North America has such abundant access to crypto exchanges of all stripes.

You know, probably the best access of any country in the world. you have half a dozen choices for credible exchanges. So why is it that your American users customers use Paxford? Do you kind of have an idea of what they're using it for? Yeah, absolutely. And this is going to be kind of a bit of candy to us OGs here. But a lot of our American users are these OG vendors that we started out with in the very beginning when me and our tour were homeless I'm pulling these guys off WhatsApp

Bitcoin talk and LBC they're still with us this day and they've grown with us they grew with us through this whole you know BP thing they grew with us the African thing when the Nigerians started coming in God bless our our Paxful users our American Pax for users all these other guys in LBC they didn't want to deal with Africans or Nigerians at all they just they didn't want to deal with them but our people worked with them they worked with them they worked with the Africans, they worked with the Indians, they went through it all, and they found amazing trading partners. So hats off to our American vendors and impactful users. You guys are our customers,

rather, you guys are awesome. You helped build this company. You did build this company. You stayed with us throughout every step of the journey, and you really did help the African people. So many of our American vendors have done so much to bring liquidity to Africa and India. It's inspiring. So one thing that Nate Alborg pointed out is that, you know, oftentimes the volume, there's a volume impact on both legs of the trade when peer-to-peer exchange is being used for remittances. So you might have that trade being expressed as volume in the U.S. And maybe those funds are being sent to Nigeria. And so then you also have a trade on the other end as they trade out of Bitcoin into the Naira. Exactly.

Exactly. Yeah, that's another great point. Matt sniff that out. Absolutely. I'll give you as an example. A fellow in Nigeria might say, hey, to his brother in California. I need you to send me money. But sending with Western Union, like, it's a huge pain in the ass.

They take it away up to 15 to 20 percent. Plus, it's slow. It'll take one day to get there, then, you know, his mother, or he'll have to wait in line for six hours over there. Or you can just ask his relative to go to the drugstore or buy a $1,000 Amazon gift card and just send him a picture of the back of the card, then he will take that code,

sell it to a fellow in China, get Bitcoin, and then take the Bitcoin and sell it to a fellow in Nigeria, and he'll send money straight to his bank account. So that guy will do two peer-to-peer trades himself using a USD-denominated gift card sent by a friend in America. And boom, he's just sent money to himself instantly. And sometimes via the arbitrage,

The price might even be better. It depends. From Berlin to Kenya or from anywhere in Europe to Kenya, you'll actually make plus 4% sending money on Paxville as M-Pesa. Because there's a premium. You won't pay a fee. You'll make 4%. Exactly.

Exactly. So how about that? How about no free remittance? You'll actually make a profit. Some of our users have actually turned that into a trade route. These guys in Bangladesh just built their own little version of Western Union. Union on top of Axel. A guy in South Africa did the same thing.

He found these Nigerian migrant workers in South Africa that didn't have bank accounts, want to send money back home to Mama and Lagos. It's like, no problem. Just put the cash in my South African bank county takes it by the coin. The Bitcoin to a Nigerian, he sends money to the parents. So that's something I notice as well. As I talk to more of these traders that use these systems is it's not necessarily retail volume. sometimes you have wholesalers effectively batching trades and using the platform because it's fundamentally,

you know, it's fairly complex for your average person. And so you actually have people like effectively wholesalers building businesses on top of these peer-to-peer platforms. Absolutely. You can build any kind of business. There's a girl in Kenya. She's building her own version of PayPal on top of Paxville, focusing on payments from Kenya to Malawi. I mean, the amount of corridors, real use cases, and payment methods, it's endless combinations of trade routes that someone can build. And the beautiful thing is, it's all public.

In Africa, the most popular locations in order by volume are Nigeria, Kenya, South Africa, and Ghana. What are the features of these countries that make them the most popular locations? Or is it just that's where Bitcoin has the most penetration and awareness? It's all about the problems that people have with money. Look at Nigeria, for example. In Nigeria, if you have a bank account, many Nigerians do, and you get a Visa and MasterCard bank card from your bank,

great. Unfortunately, you can only spend $100 online a month with that credit card, that debit card. You can't even buy an Xbox, man. Imagine every piece of plastic in your wallet being useless like that. Yeah. There's more problems. Imagine Nigerian guy, merchant,

wants to buy some video games from Shenzhen and China to sell. Africa doesn't produce much stuff yet. So that's great, but how does he pay for it? How does he pay the guy in Shenzhen? His bank, the Nigerian Central Bank, won't let people send money out for the country. They make it hell for them. So what this guy will have to do is they have to take his Naria,

withdraw it from the bank, get U.S.D on the black market at exceptionally high rate, find out way to get that U.S.D to Hong Kong, either through the United States or Europe or through one of his own personal friends. And then from there, make the payment to China. Or you could get on Paxful, sell some Bitcoin to some guy in China and say, hey, just pay this alley bill for me with your Alley Pay account. Boom.

13 seconds later, it's done. So wherever there's capital controls or encumbrances, that's where Bitcoin thrives. That and there's one other missing components. And that is drive, that is hustle. was peer-to-peer and Bitcoin is tough for the average person. It takes a lot of work to figure it out. We're always putting our workshops and educating people. But I have to say, when I was beginning this journey in Africa four years ago,

I talked to Africans from every country, every stripe of life. And out of all the brilliant people, super well-educated, but the Nigerians have the hustle, man. Western Africans have immense strive and hustle to figure things out. That's because life is so hard there. So there's some brilliant young entrepreneurs. There's an army, millions of, maybe hundreds of millions, hundreds of millions of young,

brilliant entrepreneurs in Africa. Let's just say there's 100 million, brilliant, well-educated, ambitious young entrepreneurs in Africa that are just looking for a path. That is the magical ingredients, sir. The natural resources of Africa are immense, and it's not in the ground. It's in the heads and the drive of their young people.

Quote me on that. When you started Paxil, did you have this deliberate orientation towards Africa, or was that something that just emerged when you noticed where your users were coming from? Well, I'm African myself. I was born in Egypt, two Egyptian parents. I've always had a love of Africa. And I always knew they had problems. Like, for example, Egypt is a prison for people and for money, too. You can't get your money out at all. So I knew about the problems in Africa from the start, but only when I went there and I saw, wait a minute, the problems are even worse than I thought. people are ready to go. They are ready to smash. It was so beautiful. I was inspired. I said, this is where we have to, I'm going to die on this hill. I'm on our tour of my co-founder who's

with me 100%. And we said, let's do it. Let's just focus on this. And we did that. And it was beautiful. Everyone thought that Paxville was going to go out of business when the whole B-B thing went out. But no, we took Bitcoin to where it was needed most because we were not afraid to do the work that no one else wanted to do. We just just talk to people to engage with them. You know, Nigerians are not all scammers. They're very honest people. They're just being prayed upon. I can send you just tweets of people calling me a, calling me a Nigerian scammer, making fun of everything that we were doing. But, you know, that's all just background noise. It was an Arabic saying, dogs keep barking and the convoy keeps moving and Africa is moving forward. And we're

with them, 100%. So on a, on a slightly different topic, So you mentioned earlier, you have this project built with Bitcoin where you actually build schools. What's the objective? How did that get started? All right. Well, I kind of have to fast forward. Rewind, rather. Remember Hurricane Katrina?

Of course. Yeah, so I saw that and I had a real moment and I wanted to help. So I went back to, I got into New Orleans the first day. It was open. And there was no one there except the Army, FEMA, Salvation Army, Red Cross. And none of them knew what they were doing. I had quite the adventure. I got arrested by the DA.

They thought it was a looter. But I found these five Dominican nuns, and they knew exactly what was going on. And there was their mission to help rebuild the first school to open up in the city. And that was in New Orleans Cathedral Academy. Fast forward three weeks later, and some hell of amazing adventures, I should really write a book about this one. We opened the first school in New Orleans and because of that the police and fire department could finally come back into the city and the city could finally get moving again. It was absolutely, it showed me the power of one school to change the situation dramatically. And after that, I swore to myself that I would find some way to do this again.

And I just had this crazy idea, hey, let's build schools in Africa. Like, what's cooler than that? You know, it's hell of a lot of buying a Lambo. I'll tell you guys out there, you're just thinking about ladies, that don't impress ladies a lot more than a Lamborghini, seriously. Right. So I decided, hey, let's build schools in Africa.

Everyone thought I was crazy, but our tour was with me, my co-founders, we just did it. And our third school is now being completed in Kenya. We want to build 100 schools throughout Africa in the emerging world. And that's why we want to get the entire industry behind us, peer-to-peer. We can build 100 schools in the next five years. If it's not just us,

if it's all of us working together. We've already built a sustainable well in Rwanda, which is providing clean, fresh drinking water to 450,000 people, probably even more. We want to expand those wells out to every district in Africa. They're sustainable. These wells pay for themselves. So it's amazing what we can actually do here, what's possible. And because we have a sustainable business,

we can continue to actually build on what I call the seventh true use case of Bitcoin in cryptocurrency, which is social good. It's payments, remittance, wealth preservation, e-commerce, and social good. And we're not going to ignore that last one. Me and my co-founder, we took an oath when we were, you know, really down on our luck in the worst way. We said, hey, we're not going to wait until we make it and become billionaires to start giving back.

We're going to make it a part of our mission from day one. And that's what we've been doing. How does it work when you decide to build a school in a specific region? I mean, are you in touch with the like the like kind of local authorities? Like what's the process like of getting started? The first step in this process is get a local partner. The first step is to get a local partner that you can trust. And I was blessed to meet this angel named Yusuf Nasari of Zam Zamwater, a non-for-profit.

And this guy really is an angel. 100% of everything this guy got went to actually helping people. And I was so inspired by that. So I can really trust this guy. I'll tell you the truth. I was never the philanthropist type. I always made fun of these people giving away money to this and that. I'm like, how much of how much of this money is actually going to get to these people, not just fancy dinners for some socialites, right? But I found a guy that I could trust, and it's him. It's him and his team that built those first two schools for 400 children in Rwanda, built that well, or building this school in Kenya. So it's all about the people you can find on the ground, good, trusted people to help you.

We chose Rwanda as our first location because there's hardly any corruption there. It's clean. It's safe. They have a great leader. They gave us the land for free. So basically Yusuf goes out there and he finds the land. He works with the local authorities. They're very happy to work with us.

And he makes it happen. And there's no replacement for that. You know, people are talking about blockchain, blockchain, blockchain to keep, you know, charity, transparent. But the truth is that's bullshit. That really is. I hate to say it, pop some people's bubbles, but it is bullshit, man,

because you're not going to talk blockchain to some guys like digging a well or putting up bricks there. Ultimately comes down to human relationships. There's nothing that can get around that. No matter how fancy your blockchain is and won't get around that. There's no replacing it.

We're in the people business. We have to remember that. So when you build a school, is it just basically infrastructure? How does it work in terms of ensuring that there's teachers, and so on, you know, because I guess part of the cost is obviously, like, getting the educators in the door.

Absolutely, absolutely. So the first two schools are a great model. We paid for everything. We educated the educators. We paid for the uniforms, the books, all the materials. We're constantly, you know, paying for the maintenance of the school. We're constantly adding and upgrading. We just added a clinic and the sports field.

The first campus in Rwanda, there's a kitchen there as well. there's solar panels. Soon we'll put in tablets. We're, oh, this is not just, hey, build it, put our press lease and forget about it. We're constantly upgrading the structures. To me, it's like SimCity. It really is.

The end of the day, I see us as creating wealth and building civilization. And the people will take it from there. We even pay for their health insurance. They have health insurance, yes. It's super cheap, man. I'm telling you, for the price of, like, a night out in the town,

you can, like, pay for the health insurance of, like, 100 children for an entire year. seriously. This is the power that we have to affect change in places like this. And all these kids growing up there, you're going to see what these kids are going to turn into. It's going to be something amazing. So I guess it's kind of all integrated as, you know, it's, you know, allowing this underserved population to get access to financial markets so they can become entrepreneurs, but then at the same time educating them so that they can actually reach their potential. Absolutely. The trifect of civilization is water, education, and financial services. You give a people that and the result is going to be runaway abundance and prosperity. And I know that in my heart history has taught us that over and over again. If people have an honest money system, there will be peace. Pax will just means peaceful. That's our belief with an honest money system, with a road to opportunity, with a true liquid free money market of the world, there will be peace. As bankers

just aren't going to be able to create wars rather the drop of their hat, right? Peace is beautiful. Peace equals wealth. Ray, this has been awesome, man. I know you're at a wedding, so I'll let you get back to the reception. How would you recommend that people best follow you? What's the best way to follow your work? You can follow me on Twitter, Ray Paxville on Twitter. I'm Ray Paxville on Telegram, Instagram. You can follow Paxville. We're doing a lot with social media right now. You can go to Paxville.com, post-slash careers. And please, man, you can apply to work with us. We need talent for this.

I am shooting up the flare with all my might. My last gasping breath, help us. We need help right now. We are so needful of talent right now. Because this mission is way beyond any one of us. We need the absolute best in the world to help us with this. But this is the biggest mission anyone in business has ever tried to undertake. No one wants to step up to this fight, but we're here and we're leaving the charge.

Not because we step forward, but most of us everyone, I'll step back, but we're stepping forward as well. And if you want to step forward with us and make real change in the world with every single line of code that you write, every single person that you help in Paxville is a place for you. It's a young company. It's a bright, energetic company. We make a lot of mistakes as we try a lot of new things, but I promise you, you'll

never find people with their hearts in the right or place than us. Well, Ray, I would be surprised if some of our listeners didn't listen to this and then applied to work for you because, I mean, I, yeah, I think the vision is great. I mean, that's why I wanted to talk to you today. I think P2P markets are the most important infrastructure in Bitcoin behind Bitcoin itself. They are the backbone of Bitcoin. That's how we distribute it to the world. And centralized marketplaces can just be cut off so easily. If there's capital controls and if the government turns sour on Bitcoin, they can shut the whole thing down. But P2P marketplace places can't be turned off.

Exactly. Exactly. Once people know that there's a path, they will find a way. If they shut down Bitcoin or anything, people will find a way once they know this is possible. You can't stop them. It's so easy to cut the head off any movement, especially in Africa where African leaders just disappear. But you can't stop an army of mosquitoes.

And that is our strength. For the first time in human history, we have a real shot to take back that financial. Financial pillar of power that the bad guys, quote unquote, the bad guys took first. We're going to take that. And we're not trying to get rid of the banks. This is an antagonistic relationship. The banks will always exist. We're building an umbrella around them.

And they are free to partake in the system as well and make even more money. We're just here to create wealth for everyone. We're not against anything. We are just pro-human and we believe everyone can be rich. That's it. It's crazy as we are. That's all we really believe. Well, Ray, this has been awesome. Thanks so much for making the time and coming on the show.

Thank you for having me, Nick. I've really been looking forward to this. You're one of the people I really respect in the marketplace. You have this baby face, but you've got the mind of a real freaking sage in there, brother. Keep going, man. Do not apologize. Just keep slamming it out, bro. They're going to have to listen eventually. From your lips to God's ears, man. Thank you, brother.