Bitcoin and Entrepreneurial Philanthropy: A Q&A With Paxful CEO Ray Youssef

Over the last five years, through the peaks and throes of bitcoin’s price volatility, Paxful has grown steadily. 

The global peer-to-peer bitcoin marketplace’s main success has been in fueling a million dollar remittance and payment market for under and unbanked Africans in countries like Nigeria and Kenya. Added to that mission is Paxful’s philanthropic initiative, #BuiltWithBitcoin, which has redefined the scope of a successful Bitcoin company by building not only financially-empowering products but also previously unattainable educational opportunities by building schools in Rwanda and Kenya. By the end of the year, Paxful plans on building six schools total in Africa and other developing places in the world. 

We sat down with Paxful’s CEO Ray Youssef to understand how the company uses bitcoin in its philanthropic mission and why it has taken such an active role in these humanitarian projects.

Building #BuiltWithBitcoin

Paxful’s business is based on using bitcoin to grant financial access to underserved communities in developing countries. You also do a lot of philanthropy such as the #BuiltWithBitcoin initiative. Can you tell us about it?

#BuiltWithBitcoin is an idea I had about three years ago. It goes back to Hurricane Katrina, when I was living in New York and wanted to do something to help New Orleans. I chose to go there myself, without joining the Salvation Army or Red Cross or anything. I just caught a plane to Mobile, Alabama, then drove straight to New Orleans. When I first arrived, the city was under martial law. People were not allowed back into the city. Long story short, I managed to help build one of the first schools to reopen in the city, New Orleans Cathedral Academy. 

Why didn’t you work with a relief organization?

Most of everyone in that area — the army, police and fire department and even these charity organizations — didn’t know what was going on. I met these five Dominican nuns and helped them rebuild their school. Because of that, the police and fire department had a place to put their kids and started coming back into the city. And then the city started coming back online, I saw firsthand how powerful education alone can be. It’s more than just, you know, educating people. It’s actually the basis of civilization, people are not going to come back to a place unless they know they can educate their children there. 

Since then, I’ve had a dream of building more schools. I’d love to build 100 schools, especially in places that need it most, like Africa. Some years later, we worked really hard on Paxful, watched every penny, and finally one day, I turned to my co-founder, Artur Schaback, and I said, “What are we gonna do with it?” We weren’t going to buy Lambos. So I said, “Hey, let’s build 100 schools in Africa.”

The reason we could do this is that we didn’t have any venture capital. Paxful is completely bootstrapped, so no one was watching over our backs. There’s no way a VC would let us do that, but it was just something I wanted to do. I didn’t know how it would help us financially speaking, but I just started building. I funded the first two schools in Rwanda myself. It educates about 400 students right now. It’s more than just a school, they have full water wells, water treatment, water filtration, storage, a water distribution point and more. We bought everything from uniforms [and] desks, educated the educators and also built a clinic. So now people are beginning healthcare. 

So those first two schools in Rwanda have been a huge success, and now we’re building our third school in Machakos County in Kenya. It’s a place that hasn’t had a drop of water for the past three and a half years. So there’s tremendous need there. And our plan this year is to build a total of six schools: four in Africa and two in another place which I will announce soon. 

I don’t know why I believe in this so much, but I feel very strongly about this despite what my accountants and lawyers are telling me. I don’t believe that social good should just be something that for-profit companies outsource to not-for-profit companies. I believe that it should be a central mission of every for-profit company … and it should also be something that is enclosed within the for-profit structure.

As an entrepreneur, I know the entrepreneurial drive is the strongest, most powerful tool we have. It can literally change the world. Look what it’s done for the past 20 years. To take that, and say, “Okay, no, this nonprofit stuff, this philanthropy stuff — this outsourcing stuff to people who really don’t care too much?” No, making a better world has to be driven by the entrepreneurial spirit. That is how we’re going to change the world.

Bitcoin as a Philanthropic Tool

Apart from the fact that Paxful is a Bitcoin company, is there anything unique to using bitcoin or a Bitcoin address to raise funds for #BuiltWithBitcoin? 

Well, I’ll give you an example.The first two schools in Rwanda took a quarter-million bucks to build. We could have just wired the money from our bank account in the United States to Rwanda and let them all figure it out. Instead, we used the opportunity to get bitcoin into Rwanda because there’s a huge premium for bitcoin in Rwanda — up to 20 percent — there is not enough bitcoin in the country. 

Once we got the bitcoin into Rwanda, we realized the builders don’t want bitcoin. This is a sobering point that people need to understand. There are a lot of crypto charities that are in love with the idea of proving the transparency of the blockchain. No. No one gives a f— at all.

Many of these people don’t even have a smartphone. So we went to Rwanda with about $220,000 in bitcoin. We sold it to Paxful vendors for a little over market value, which was a good deal for them. They gave us local money, then our people on the ground gave the local money to the builders and managed the operation. The big bonus is that we brought a big infusion of bitcoin into the Rwandan economy.

In this continued work, do you find using bitcoin enables better donor transparency?

I haven’t seen a place where it can be practically used. If you’re going to actually do something on the ground in these places, forget about the blockchain. People are not thinking about it. If you actually want to do something there, we learned you have to work with the instruments that people have there. If a blockchain can be used as a clearing layer to enable greater liquidity and a whole new generation of peer-to-peer money changes, then yes, absolutely. That’s how it makes sense. Trying to get every single transaction on the blockchain will happen one day, but that’s absolutely the wrong place to focus attention right now. Not everyone is going to like me saying this, but from my perspective on the ground it’s absolutely the truth.

Giving Back With Bitcoin

How can people donate Bitcoin to the #BuiltWithBitcoin initiative?

They can go to builtwithbitcoin.org, where there’s a QR code Bitcoin address. Don’t worry, it isn’t my Bitcoin address! It belongs to the charity, ZamZam Water. 

They have built all of our schools. They have an actual Paxful wallet. When they get the cryptocurrency, they sell it for local cash then make things happen. The beautiful thing about ZamZam Water, and any of the charities we work with, is that 100 percent of donations go to helping the people. If you want to contribute to their administrative costs, you have to explicitly call them up and strike an arrangement. I want to stress this point because all of the people we’ve worked with on this are absolutely the best human beings I have met in my life. 

Do you work with larger charity organizations?

I’m not a big fan of charity organizations. I have never believed in charities, especially after building that first school in New Orleans. When I went there, I saw that the Salvation Army and Red Cross were not doing a damned thing. They didn’t know what was going on. My experience with the nuns was so different because they made things happen on the street. I’ve come to believe charity depends on finding those people who can truly execute on the ground, those real-life angels. Bitcoin is one of the best things for these people because they can work with it. They are completely transparent, they don’t have to go through any of the financial hoops. Most of all, they can convert it to anything, anywhere. It’s beautiful.

A longer version of this conversation will be published on the Bitcoin Magazine podcast.

Trading Platform Paxful Completes Construction for Second School in Rwanda

Children in the Rwandan village of Kasebigege are being given a greater chance to pursue a sound education as construction on a new school, developed by bitcoin marketplace Paxful, has been completed.

Located in the Bugesera District, the school is a primary institution designed for children between the ages of 6 and 15. It’s Paxful’s second Philanthropic endeavor in the village, and construction was finished roughly one year after the company built a nursery education center in December 2017.

In an interview with Bitcoin Magazine, Ray Youssef — CEO and co-founder of Paxful — says it has always been one of his dreams to build schools for underprivileged children.

“You will see more of this, especially schools where they’re most needed like in Africa and in rural villages where people don’t have access to education or clean water,” he explains. “We want to build 100 schools in Africa fully funded by cryptocurrency. This is just the beginning and we’ve only built two out of the 100.”

The school is in the heart of the village where Rwanda’s infamous genocide began roughly 20 years ago. Youssef says that the area glows with an aura of healing and forgiveness and thus seemed like the natural place to begin rebuilding the country.

“We believe that education is key to sustaining a community, but that’s not the way you start,” he comments. “When you go to a place with absolutely no infrastructure, you must start with the very basics. There should be clean and potable drinking water. In both schools, we have installed water filters, so there’s clean water plus a nursery school plus a primary school. We’ve even installed solar panels. It’s everything you need to build up a community. #BuiltWithBitcoin is our way of giving back to the communities that we serve in a way that is sustainable and brings a huge smile to our faces.”

Youssef says that it took about three to four months to build the school and get it up and running.

“The president and founder of Zam Zam Water, Yusuf Nessary, presented a plan for this second school, and it made sense,” he states. “Building a primary school next to our nursery gives the children access to continuous education.”

Construction on the establishment originally began in July of 2018. The goal was to raise approximately $100,000 worth of crypto funds with Paxful matching every donation made.

“Last summer, when I came to Rwanda for a visit, the construction was almost complete,” Youssef says. “Now, it’s really done. It’s twice the size of the first school — six classrooms, a cafeteria, bathroom stalls, solar panels on the roof and a 35,000L water well system.”

Youssef further explains that the new school boasts upgraded furniture and “proper salaries” for its teaching staff. He also says it was easier to build than the first school since he and the rest of the Paxful crew have built greater trust with the people of the village.

“We appreciate the trust given by the people to us and Zam Zam Water,” he asserts. “The lands where the second school stands were given to us by the officials in the area. We’re grateful that we found Yusuf and his team.”

This is not Paxful’s only activity on the Africa continent. The company, which runs a marketplace that allows users to cash in their unused gift cards for bitcoin (among other payment methods), has also established a blockchain incubation hub in Lagos, Nigeria.

Paxful CEO Ray Youssef Shows How Bitcoin Can Be Used for Social Good

Can bitcoin be used for social good? If anyone thinks so, it’s Ray Youssef, the CEO of peer-to-peer bitcoin platform Paxful.

A successful entrepreneur in the crypto and blockchain space, Youssef comes from humble beginnings and understands the importance of maintaining control over one’s finances. Marred by memories of homelessness and extreme monetary strain, Youssef’s journey to build Paxful was an arduous one.

“When my mother got divorced and lost her home that she had put so much into, I went into higher gear,” he explained in an interview with Bitcoin Magazine. “My first two startups were successful, but then I had 11 failed projects in a row. I took risks and kept taking them until my savings were gone, and I was so busy working on Paxful, trying to get it to work, that when I lost my apartment I went for walks at night and slept in a new place when my friends couldn’t bunk me.”

Youssef says things took a positive turn when he and his business partner chose to get serious about entering the crypto scene. “A fellow bitcoin enthusiast told us about how you could sell bitcoins and make a profit,” he says. That encounter made him look more closely at the world of peer-to-peer bitcoin trading.

“We didn’t know its potential back then — we just saw that it worked for us and we wanted to make it even easier for other people to do the same, whether to start a business online or just get extra rent money.”

Today, Paxful is a peer-to-peer online bitcoin platform that connects BTC purchasers with sellers. Currently, the site offers over 300 ways to purchase bitcoin including credit and debit cards, PayPal, Western Union transfers and even Amazon gift cards.

Buyers start out by finding an offer they like. They then work one-on-one with an experienced seller who guides them through the purchase process via online chat. Once everything is set, they pay the seller directly from a selected account to receive their coins.Every seller is verified to offer customers the highest level of safety, and Paxful will soon implement KYC in an effort to further protect buyers.

Once his marketplace was ready, Youssef convinced his closest friends to give it try. Things began to grow from there, but his big break came from a phone call he would receive one fortuitous morning:

“I left my personal mobile number on the website to help people directly, but no one ever called until one lady desperately in need of bitcoins called me at 4 a.m. yelling at me in pain and claiming that she was down to her last $13. I believed her, and the crying baby in the background was the icing on the cake. We had to help her. The problem was she had no bank account, and sites like Coinbase and other bitcoin brokerages had no solution for the unbanked. She had gotten the run around for two days and needed just $5 in BTC.”

Youssef was able to provide the woman with the finances she needed, and the rest is history. He says that the company truly began the day she called.

“She led us to realize that gift cards were the perfect way to onboard the unbanked to crypto,” he says. “She and all the others that followed taught us that bitcoin is the universal currency the world needs, especially the unbanked. They were the people that bitcoin was supposed to help, but no one was helping them or even trying. My co-founder and I did not sleep for a week, and we redid the entire system to make it usable for the non-techy, unbanked user.

“Now, instead of me having to be on the phone with people for an hour to walk them through buying their first bitcoin and sending it to pay for something, people are able to figure it out themselves through Paxful’s tailor-made system. No one in crypto ever took the time to build a simple onboarding market and wallet for ‘normal people,’ let alone the unbanked. We did.”

Paxful has been operating in full-form ever since, and Youssef has never looked back. As the platform onboarded more customers, Paxful has given Youssef and his team the opportunity to extend their bitcoin services to much larger causes.

Among the company’s latest projects is its building a blockchain technology hub in Lagos, Nigeria. Youssef says that bitcoin has become extremely popular in several regions of Africa and has empowered young entrepreneurs to build wealth in ways nobody could have foreseen.

Furthermore, Youssef began #BuiltwithBitcoin in late 2017, an initiative designed to boost the cryptocurrency community’s involvement in humanitarian projects. The project got its start with Youssef donating roughly $50,000 of his own money toward the construction of a new school in Rwanda. This has led to plans for a second institution. Other projects include a scholarship initiative for Afghan refugees, a Rwandan water tank project and food drives in Venezuela, which Youssef confidently states could become the first official “bitcoin nation” in the future.

Youssef describes bitcoin as a “universal currency” whose potential has barely scratched the surface. He says there are “currency wars” brewing in countries like Venezuela and Turkey, and bitcoin is the strongest weapon.

“Wealth preservation is the first use case for bitcoin,” he explains. “People in currency wars can buy bitcoin to store their value and even use it to pay bills in other countries by ‘borrowing a bank account.’ This just means they sell it to a peer on Paxful and they use their bank account to pay a bill for them to another local bank.”

He also lists commerce as one of bitcoin’s biggest factors. People can sell their goods to anywhere they can ship them. They are then paid in bitcoin, which can be converted to fiat currency. There’s also a strong case for bitcoin’s use for remittance, in which someone can send money to family members abroad without processing times and banking fees.

“The best thing about bitcoin is that it’s the core part of the #p2pfinancial revolution, and this means wealth and opportunity for entrepreneurs all over the world that didn’t even think being an entrepreneur was possible,” Youssef comments.

“They can become vendors on #p2pfinance platforms and help onboard their communities to bitcoin while earning profit at the same time. This is how you really make a day-to-day difference in people’s lives. You show the ones most ready to act a better way, and their communities grow around them. There are single mothers who first came to bitcoin in fear and desperation, and now make five figures a month selling bitcoin. This is just the start.”

Overall, Youssef is grateful for his past hardships as they taught him lessons about survival, humility and what was “vital” in life. He says it was these past experiences that showed him how to make Paxful a success and understand where his customers would be coming from, mentally and emotionally.