{"id":6152,"date":"2020-08-20T09:57:39","date_gmt":"2020-08-20T13:57:39","guid":{"rendered":"https:\/\/cointelegraph.com\/magazine\/?p=6152"},"modified":"2020-08-20T09:57:39","modified_gmt":"2020-08-20T13:57:39","slug":"journeys-in-blockchain-ray-youssef-paxful","status":"publish","type":"post","link":"https:\/\/cointelegraph.com\/magazine\/2020\/08\/20\/journeys-in-blockchain-ray-youssef-paxful","title":{"rendered":"Journeys in Blockchain: Ray Youssef of Paxful"},"content":{"rendered":"

\u201cI\u2019m coining this term right here, right now,\u201d Ray Youssef declares. \u201cFinancial Apartheid.\u201d<\/strong><\/p>\n

The CEO and co-founder of Paxful is on a mission. \u201cIt\u2019s what has held Africa back more than anything else.\u201d<\/span><\/p>\n

\u201cHow advanced would the United States be if you couldn\u2019t send money from New York to Florida? From New York to California? From Oregon to Washington? It wouldn\u2019t be the United States! It would be a mess of all these squabbling little city-states that can barely get it together.\u201d<\/span><\/p>\n

Youssef is passionate about transforming the world by enabling the free flow of money everywhere. This can only be accomplished, he says, with a people-powered marketplace.<\/span><\/p>\n

\u201cCryptocurrency is just a piece. We use that as a technology, but it\u2019s the people that make it work. It\u2019s peer-to-peer just like Napster, Uber, Airbnb, Craigslist, all of it. This is the last piece needed so that technology can truly disrupt finance.\u201d<\/span><\/p>\n

Bitcoin by itself, Youssef says, is not enough.<\/span><\/p>\n

Paxful values learned at the newsstand<\/span><\/h4>\n

Youssef reflects on his first job in Hell\u2019s Kitchen in the 80\u2019s, when New York was \u201ca rough place.\u201d He hauled huge stacks of hundreds of newspapers, delivering to hotels around Central Park. \u201cI was like eight or nine years old, but I was a monster.\u201d Lugging a hand truck of papers around the neighborhood, he would collect up to a thousand dollars in cash by the end of a night\u2019s run. \u201cThat\u2019s a lot of money for an eight year old boy to be carrying around!\u201d<\/span><\/p>\n

His parents worked non-stop. Immigrating from Egypt, his father started out as a lowly dishwasher before saving up enough money for the family to join him in America. Eventually, the parents started a modest newsstand business with a little help from some friends, where Youssef worked as a teller. \u201cThat\u2019s where I learned how to handle money and handle people.\u201d<\/span><\/p>\n

Youssef learned to connect with people on the street. Staying connected to everyday people is a key value that Paxful espouses, he says.<\/span><\/p>\n

This value continues to ring true for Youssef now, as his company strives to build for the needs of its users. The tendency in the tech industry, he says, is to avoid connecting with people on the street. But a successful company is open to learning about the problems users are experiencing and where they need help.<\/span><\/p>\n

One particular event from his childhood informs his current role. Walking with his parents in a crowded New York street, he remembers seeing a man drop a wallet, stuffed with about a thousand dollars in cash. \u201cA thousand bucks would have been a huge boon to us at the time. But what did my father do? He picked up that wallet, and he ran after the guy that dropped it\u2026\u201d The man simply thanked his father and walked away, but the moment left a lasting impression on Youssef.\u00a0<\/span><\/p>\n

\u201cHonesty is number one. We\u2019re in the money business. You have to have people you can trust. My co-founder, Artur [Schaback], I trust him. He is my brother. More than my brother. I never had a real brother but Artur is my brother. We both love and respect each other and trust each other completely. You need that in this business.\u201d<\/span><\/p>\n

Building for the future<\/span><\/h4>\n

He wonders what the current bullish sentiment might do to new naive investors who are testing the waters of crypto markets for the first time. \u201cWhat\u2019s gonna happen after [the bull run] is the question. Are all the retail investors gonna get burned again?\u201d<\/span><\/p>\n

\u201cOr are we actually going to build real structure around this thing we love called cryptocurrency, called Bitcoin? To enable real use-cases to happen?\u201d Institutional money will fully enter the scene, Youssef suggests, when use-cases are genuine and cryptocurrency is not just a speculative asset class.<\/span><\/p>\n

Making that happen requires some serious hustle, he believes. Pointing again to the legacy of his parents, he learned what it meant to work hard. \u201cMy mother and father worked so damn hard. Eighteen hours a day would be an easy day.\u201d As a youth, Youssef watched immigrants from Greece, Colombia, and from all over Africa working non-stop to find success in America. It was this aggressive hustle, a \u201cmaniacal drive,\u201d Youssef says, that instilled the spirit of entrepreneurship in him.\u00a0\u00a0<\/span><\/p>\n

This same fanatical passion has carried over to Paxful, Youssef says, with the goal of building the best product team in the world, focused on customer service. Seeing how good his parents were with people, Youssef is striving to follow in their footsteps. \u201cThey can do that in a newsstand, we can do that in financial services.\u201d\u00a0<\/span><\/p>\n

The banks, he says, have forgotten this. They simply don\u2019t care. \u201cSo here we are to care. People really appreciate that, especially when it comes to money.\u201d<\/span><\/p>\n

Pondering his family\u2019s legacy caused Youssef to pause in a moment of gratitude. \u201cI can give thanks now for those things.\u201d\u00a0<\/span><\/p>\n

Failure to launch<\/span><\/h4>\n

Youssef experienced his fair share of failures before finding success with Paxful. Starting with computers relatively late at the age of 19, he learned to code in a number of languages. He soon developed proficiencies around architecting systems, building structures and integrating with products. With his newfound skills, he began looking for problems to solve.<\/span><\/p>\n

His first solution to garner attention centered on ringtones with a startup called MatrixM, \u201cthe Napster of ringtones.\u201d Youssef single-handedly built a peer-to-peer service where users could upload ringtones and send them to other users via SMS.\u00a0<\/span><\/p>\n

\u201cIt blew up overnight,\u201d Youssef explains. The service generated a million dollars in revenues after a mere six months of existence.<\/span><\/p>\n

\u201cIt was a huge success and I was the only guy in the company! I built the whole thing myself. All the code.\u201d Youssef shared the success with his mother, buying her a home in New York with the money he made. But a lingering problem remained. Music publishers were not too keen to see outside parties getting a piece of the lucrative action. Even with what seemed to Youssef like a very generous offer, publishers refused to cooperate, insisting on being paid every single time the ringtone would go off on a user\u2019s device.<\/span><\/p>\n

\u201cThat\u2019s what I went up against in my youth. It was a rough lesson.\u201d\u00a0<\/span><\/p>\n

Along with a number of other startups that fizzled out, this disappointing failure turned Youssef off technology for a while, during which he says he \u201cwent insane,\u201d running away from his troubles and turning to a nomadic lifestyle, boxing and engaging in MMA as well as traveling throughout Asia visiting and praying at every temple he could find along the way.<\/span><\/p>\n

\u201cMy one big mistake was that I did not ask for help. I was a one-man army and I was so proud of that, and so proud of how smart I was. I was arrogant. I couldn\u2019t ask for help and properly scale.\u201d<\/span><\/p>\n

Since then, Youssef says, he has learned to be more humble and to accept help. \u201cGod has broken me,\u201d he says. He admits he is very stubborn, so the change to a more humble outlook took some convincing.<\/span><\/p>\n

\u201cPharoah is a great example [of stubbornness]. How long did he defy the God of Moses and Abraham before he finally got the message? Only when he was drowning. But God was more gentle on me. I came to a point where I had to ask God for help and I got it.\u201d<\/span><\/p>\n

Just six years ago, Youssef and Paxful co-founder Schaback were homeless for a period of about two months, bouncing from couch to couch and living on the streets. Sometimes, Youssef confesses, he would spend nights wandering aimlessly around town. After so many startup failures, he had burned through all of his life savings and \u201cfelt like a loser.\u201d<\/span><\/p>\n

Still, he was motivated to press on by the desire to provide for his mother, he says, returning to the game in order to get his mother another house after a divorce. Youssef returned to building startups, focusing on file-sharing technology while also writing blogs on health and natural philosophers. The missing link in every single previous startup, he explains, was always the problem of payments. Payments, Youssef says, is the last major barrier, but it can be overcome with cryptocurrency technology.<\/span><\/p>\n

In 2013, Youssef started hearing more about Bitcoin and was attracted to its potential for helping people. He particularly saw the potential for cryptocurrency as a tool to help people in Africa. Bonding with Schaback at a Bitcoin meeting in Manhattan, the pair soon started working together, creating a point of sale Bitcoin merchant tool called EasyBitz. Despite Youssef\u2019s newfound enthusiasm, it didn\u2019t get a whole lot of traction, at first. It wasn’t solving a problem anyone had at the time.\u00a0<\/span><\/p>\n

Building Paxful<\/span><\/h4>\n

Youssef and Schaback eventually created Paxful, pivoting with EasyBitz toward providing a peer-to-peer financing platform for trading Bitcoin. The goal was to make exchanging value easier and more accessible for everybody, from businesses to individuals.\u00a0<\/span><\/p>\n

He is grateful for the life lessons that have brought him here. \u201cI needed all of that. I really did. Every single one of those taught me something. Some of them taught me about marketing. Some taught me about positioning. Some taught me about technical challenges, architecting, sharing with people, but almost all of them were peer-to-peer in some way, very much oriented around people.\u201d<\/span><\/p>\n

Now, Youssef explains, Paxful can do something real because \u201cWe can touch money. That\u2019s what blockchain has given us.\u201d\u00a0<\/span><\/p>\n

Blockchain frees the financial system from what Youssef sees as an oppressive and unjust regime. \u201cThis is like the last boss. Central banks, the financial system: it\u2019s warped, broken, closed off, compartmentalized, segregated. Basically, it\u2019s under a regime of financial apartheid.\u201d<\/span><\/p>\n

Pax Africana<\/span><\/h4>\n

In Africa, Youssef explains, sending money from one country to a neighboring country is a nightmare, as Steve Msoh <\/span>demonstrated earlier this year<\/span><\/a> in a feature for Cointelegraph Magazine.<\/span><\/p>\n

It\u2019s easier, in fact, to transport yourself, he says. This legacy of Imperialism can be traced back to the 1400\u2019s, with currency that remains under the control of colonial powers like France. Countries throughout Africa to this day do not have a sovereign money system (as <\/span>Akon noted<\/span><\/a>, in his own Journey in Blockchain), forcing unjust limitations on people throughout the continent.\u00a0<\/span><\/p>\n

African money, Youssef says, is not treated like money from other parts of the world. It\u2019s heavily scrutinized and much more vulnerable to destabilization. \u201cThey\u2019re used to it but when I hear about it, it\u2019s like, this is diabolical stuff. It really is.\u201d<\/span><\/p>\n

\u201cThis is what we\u2019re doing. It\u2019s a crusade against financial apartheid.\u201d<\/span><\/p>\n

 <\/p>\n