Youssef: eNaira is a Great Innovation

Paxful is a global peer-to-peer finance platform for people to make payments, transactions and send money by buying and selling Bitcoin as a means of exchange. The company’s mission is to advance a truly global economy by building a financial system that serves the 100 per cent. In this interview, the founder/CEO, Paxful, Ray Youssef, speaks about the future of money, Nigeria’s eNaira, among other issues. Obinna Chima brings the excerpts:

What do you think is the future of money?

Central Bank Digital Currencies (CBDCs) are the future and it has an increasing presence in China which already has its CBDC in wide circulation and you can see the trend increasing. We already have a world where cash is being phased out, especially in places like Sweden where over 90 per cent of the transactions are cashless. But the issue remains that in the global setting, cash will remain king, not just in Nigeria or Africa, but go to Latin America and others. So, it is going to take a very long time to phase out cash. What we are seeing are innovations such as the eNaira. I do applaud the Nigerian government for introducing a digital currency like the eNaira and technologically it is great. The only problem it has is that it is still naira and as you can see, presently the naira is under attack. That is why you see in Nigeria, a lot of people are turning to Bitcoin because it allows them to access things that give them stronger values. Look at the entire global currencies, all of them are under attack. It is not just the Venezuelan or Zimbabwe currency that is under attack, but all the currencies. So, there is a shift to Bitcoin and other digital currencies. The answer to the question is yes, digital currencies are definitely going to replace fiat money, but the what would the digital currencies be? Would it still be a form of fiat money? The answer yes.

Just because you are digitalising money doesn’t meant it is not fiat. Most of the fiat money in the world today are digital now. So, fiat is going to be around for a long time. In fact, there is the argument that CBDCs are also fiat as well. So, there is a war between the fiat money in every form it takes and honest money. And what is the only honest money that we have? It is Bitcoin. Bitcoin is only digital, you can’t get physical Bitcoin, but it is not fiat and Bitcoin is the only form of money that is not fiat and that is the only real debate – Honest money versus money that is not, no matter what form it is in.

That is the war. With Bitcoin, you have an army of believers, maybe 10 million believers around the world getting richer and on the other side, you have the whole world with fiat money controlled by governments and central banks of the world. So, who is going to win this fight? This fight started 2,000 years ago when Jesus walked into the temple and was angry with what they were doing inside. He knew it was going to lead to a world where money was going to be used to control the world, which is where we are right now. That is why more than 80 per cent of the world is poor right now and a certain group of people continue to make money from nothing. They can just type some numbers into computer, print money and spend it as they want. That is super power. If one group has the power and the other doesn’t, that makes us slaves. What makes Bitcoin honest money is proof of work. To make Bitcoin, you need electricity, you need computing power and work has to be put in to create it. There is a real human work behind it.

What is your take on the eNaira which was introduced about a year ago?

I think it is a great piece of technology. For the banking system, it is good and it is a good idea for the Nigerian government to digitalise its currency so as to get along with the flow. The only problem is that it is still the naira. What is the official rate of the naira? About N450 to a dollar and what is the black market rate? It is over N800 to a dollar. So, that is the problem. But who is to be blamed for that? The Nigerian people are not to be blamed. Something is definitely wrong somewhere. It is not as if people are doing less work, Nigerians even work harder than Americans, so why is the value of the naira going down? Definitely, something dishonest, something manipulative is happening to the naira and what it comes down to is that the naira is under attack. It doesn’t matter whether it is digital, block chain or fiat, the naira is just under attack. So, the only problem with the eNaira is that it is still naira and I don’t blame the Nigerian government for that because it is something outside their control.

What do you think can be done to address the perennial depreciation of the naira on the parallel market and what opportunity do you see for Bitcoin holders under such situation?

What is happening is that as the naira is rapidly depreciating, people want something else. They want to hold their value in something else and that is why they are doing everything possible to access dollars. Bitcoin has amazing opportunities and that is why a lot of youths are finding ways to turn their time and energy into foreign monies, whether it is Bitcoin or dollars so as to maximise the opportunities. The more of these hard currencies that come into the country with Nigerian youths exporting their services outside their country while still in the country, that brings in more dollars and hard currencies into this country. There is a huge opportunity and the opportunity is that if the Nigerian government makes the right move, they can actually stabilise the naira using crypto-currency and Bitcoin. How would these work? It is simple. All our brothers and sisters that are selling their services, doing virtually assisted work and developing software, the government can decide to take their Bitcoins from them and give them naira in exchange. The government can then have all the Bitcoins or crypto-currencies and decide to turn them into dollar or any currency they want to. What that does is to bring more hard currencies into the country and that helps in stabilising the naira. That would be the biggest power play in the world. So, the question is why are they not doing that right now? It seems to me that some people don’t want that to happen and they want the naira to keep falling. Those who have arbitrage opportunity want the spread between the official market and black market rates to continue to expand.

What can you say are Paxful’s contributions to the Nigerian economy?

Paxful is a global services and market place company, the Nigerian youth found about it and they showed us what it is really good for. If for anything, I think the Nigerian youths have contributed a lot to us; they taught us what our platform is good for and they are helping to stabilise Nigeria’s currency. They have brought so much honest monies like Bitcoin, crypto-currencies into Nigeria, which is great. Paxful played a role in that, but the work was done by the youths in Nigeria. What are my expectations from the government? My hope is that there would be a change in leadership hopefully in the next election in Nigeria and the new leadership would recognise with the youths of this country and they would have a long-term perspective and work in the interest of this country. It is only the small group at the top that is thinking short-term and sees the youths as competition. We all agree that stabilising the naira is the best thing for this country, but some people don’t and hope the government recognises this as early as possible. We need policies that would be innovation-friendly and we need to focus more on the long-term; we need to give the youths a sit on the table. Nigeria ought to be the richest country in the world with 200 million people. So, it is amazing that most of its youths are unemployed and you can imagine what would happen if we create jobs for 10 per cent of those youths that are unemployed. What Nigerian youths have done with Bitcoin and crypto-currencies in the past seven years is absolutely amazing and they have done that with obstacles on their path. All I want from the government is just to remove those obstacles; they don’t even need to help the youths. That is all I hope for and if that happens, I think the future would be very bright. Today all the youths in Nigeria want to ‘Japa’ and I understand their plight. It happened in Egypt as well. My family left Egypt 45 years ago and went to America because there were limited opportunities in Egypt.

How big is the size of your market in Nigeria?  

Nigeria is our biggest market in the whole world and by far it is bigger than the United States America and India. Ghana is number four on the list. And Nigeria is number one for all Bitcoins and crypto-currencies and it is not going to slow down. When I first came here eight years ago, I saw the level of entrepreneurship and the opportunities, but others were seeing the challenges. People have said for Nigeria to be number one, it means 30 per cent of the population holds Bitcoins, but that is not it, it is less than one per cent of Nigeria’s population that have Bitcoins, but what we are looking at is the quality. The quality of Bitcoins that a Nigerian is holding is equal to that of 100 persons elsewhere.  

What are some of the challenges Paxful has been facing in the country?

The first thing is education. People need to be educated about why Bitcoin or crypto-currencies are superior forms of money. When I first came to Africa to talk about crypto-currencies, everybody was looking at me like I was a scammer. So, the biggest challenge is education because Africans are mostly the prey and not the predators of scammers, especially Nigerians. Nigerians are the most honest people in the world. A lot of the time we have to protect Nigerians from a lot of scammers that want to defraud them. So, the good news is that the Nigerians that have gotten the message are teaching everyone else and are changing the narratives. We tell them to use two-factor authentication to secure their accounts so as not to get hacked. The second biggest thing is Know-Your-Customer (KYC). As an American company, we operate under very strict compliance guidelines. The truth is that a lot of Nigerians don’t have. Most people have voter’s card and some don’t even have that. A lot of the youths on the streets campaigning ahead of the elections on Twitter don’t even have that and they are trading a lot. So, how do we KYC them?