Ray Youssef, founder/Chief Executive Officer of Paxful, a global peer-to-peer finance platform, who visited Nigeria recently to discuss opportunities in cryptocurrency, advised government on measures to stabilise the naira. GLORIA NWAFOR had this interview with him.
What do you think can be done to address the depreciation of the naira and what opportunity do you see for cryptocurrency in the Nigerian market?
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. Cryptocurrency 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. There is a huge opportunity and if the Nigerian government makes the right move, they can actually stabilise the naira using cryptocurrency and Bitcoin. How would these work? It is simple.
The government can decide to take Bitcoins from all those transacting in online services and give them naira in exchange. The government can then have all the Bitcoins or cryptocurrencies 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. 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 is your take on the eNaira that was introduced about a year ago by the Federal Government?
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, blockchain 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 can you say is Paxful’s contributions to the Nigerian economy and your expectations from government?
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, cryptocurrencies 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 elections 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 best interest of this country.
It is only the small group at the top that is thinking short-term and sees efforts by youths as competition. We all agree that stabilising the naira is the best thing for this country, but some people don’t and I 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 over 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 cryptocurrencies 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.
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 also 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 what would the digital currencies be? Would it still be a form of fiat money? The answer is 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 forms 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 at 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 continues 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.
In your overall market share, what percentage does Nigeria hold, 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 cryptocurrencies 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 do you think about the level of financial inclusion in Nigeria and what innovation should your customers expect in the next medium to long term?
Nigeria has an amazing financial inclusion system but the connection is not happening. When we talk of financial inclusion, it has to be on a global perspective. Locally, Nigeria is doing a good job but globally it is not, however, it is not her fault. Our plan is to improve on our culture of trading. We want to bring the locals into the most important parts of the business. If one is giving out financial services, we want to make sure that they understand what you are selling.
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 cryptocurrencies 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 got 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 and they are trading a lot. Most people have voter cards 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? There is a huge divide there.
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