Much of the wealth created by cryptocurrency has been siphoned off by established tech entrepreneurs. The Winklevoss twins and Chris Larsen’s of the world, who saw the upswing coming and had money to invest in it, have gained the most. Ray Youssef, the co-founder of Bitcoin direct-trade platform, Paxful, is a little different. While he still exudes the self-driven, cavalier attitude of many tech entrepreneurs, he sees himself as Robin Hood, not a slick Silicon Valley yuppie.

Maybe that’s because he has eaten out of dumpsters and slept on park benches. Before he founded one of the biggest cryptocurrency peer to peer exchanges in the world, Youssef was driven to homelessness by cryptocurrency.

Today, Youssef is a self-made Bitcoin success story. Yet he claims that Paxful was never about making money. To him, it’s all about helping the little guy and giving back from his success, specifically in the developing world. He’s a man who isn’t afraid to disregard the rules if he sees them as unjust. And his story is a microcosm of the broader conflict between success and responsibility that plagues Silicon Valley.

Beggared by Bitcoin

Born Ryam Azab Youssef, the eventual Paxful founder began launching startups and unconventional ventures in the early ’00s. He headed up a successful polyphonic ringtone business called MatrixM, then founded a less successful social network and dating platform called FunHi. He also joined a movement to bring back Victorian era technology inspired by Nikolai Tesla, had a stint as an actor, became an MMA fighter, and changed his name first to Ray Savant, then to Mohammed Youssef, along the way. He now goes by Ray Youssef.

“A lot of people may be ashamed of [being homeless] digging through trash, but I’m not.”

Clearly, Youssef’s not afraid to dive head first into new ideas and push them forward with his own brand of tenacity and personal belief. His attention turned towards cryptocurrency in 2012, when he posted his motorcycle for sale on an internet forum. One poster suggested he take payment in Bitcoin.

“I thought ‘Bitcoin […] that’s nerd money,” Youssef told Digital Trends with a chuckle. “But I kept looking into it over a few months, and I really started to fall in love with the whole thing. The technology was amazing, but it was the passion of the community that really caught my eye.”

That infatuation with the community’s drive is what lead Youssef to launch EasyBitz two years later with Artur Schaback, a friend he met at a Bitcoin conference. The two would later go on to found Paxful, but EasyBitz was their first joint project. It served as a payment provider for small businesses, street vendors, and independent artists, and was designed to make it easy for them to accept Bitcoin payments from customers. The company immediately ran into a small problem, however.

No one wanted to use it.

“At the time, nobody really had any Bitcoin [to spend],” he admitted. “As easy as we tried to make it, it was still too complex to use, and New York retailers were really not into that kind of thing.”

Not perturbed by these early difficulties, Youssef pushed forward even harder, using the aggressive strategy of giving Bitcoin away in pre-made wallets. Even that didn’t work.

“I remember being in Washington Square Park, going to the musicians there, saying “Hey, you should accept Bitcoin donations,” and I gave them this card with a barcode on it with instructions on how they could [accept it],” he said. “It even came with $100 worth of Bitcoin, which now would be worth about $5,000 or something like that. They refused it! No one would take it!”

Both Youssef and Schaback pushed EasyBitz for a full year, and soon found themselves up against a brick wall. Money became scarce. Eventually, the pair couldn’t make rent.

“There were days at a time where I just decided to ‘stay outside’ and would crash in the park.”

“Artur crashed with my best friend George, and then a month later I had to leave my place because my mother needed help, so I rented it out,” Youssef explained. “For three months I was homeless and going from crash pad to crash pad, usually with girls from my past, and couch surfing. There were days at a time where I just decided to ‘stay outside’ and would crash in the park.”

The resourcefulness that kept him moving from startup to startup kept him well fed during that time in his life, despite his poverty. “I quickly figured out that being homeless in NYC meant you didn’t ever have to go hungry at night,” he said. “I ate very well once I figured out where the best restaurants threw their trash. Huge chunks of sashimi could be found in Tribeca. In Sutton Place, I discovered a never-ending supply of pizza dough at the Domino’s Pizza, and two Greek places in Murray Hill became weekly favorites, with feta cheese salad and some amazing fish leftovers.”

Although at the lowest point in his life financially, Youssef says he turned down any financial donations while on the street. He had daytime work at cafes and continued to work on EasyBitz when possible. Then his business partner, Schabeck, ran into a friend with an idea that would quickly put him back on his feet.

Bitcoin at a premium

2015 was still two years before Bitcoin reached its financial peak, but interest was growing. Many people were willing to pay a premium to own Bitcoin.

“A friend of ours, Max, came to us and said ‘hey, you guys can actually sell $250 worth of Bitcoin and get a $500 Paypal MyCash gift card in exchange and just spend the profit with your Paypal Visa card,’” Youssef said. “We looked at him and thought, why would anyone do that?”

You would be forgiven for assuming that anyone willing to pay twice something’s value using a digital service could be leveraging a stolen credit card or hacked account to do so, but Youssef insists that was not the case.

There was risk involved, he explains. People were willing to effectively pay double the going rate for a Bitcoin purchase through Paypal because using a payment processor was notoriously dangerous for cryptocurrency sellers. Paypal’s chargeback system allowed Bitcoin buyers to effectively scam the seller by sending a payment, receiving the Bitcoin they bought, and then claiming they were scammed, prompting Paypal to return the funds used to purchase it. Due to Bitcoins’ decentralized nature, there’s no remediation process, leaving sellers out of pocket.

Youssef quickly began to turn a healthy profit by selling Bitcoin to Paypal purchasers, and soon he and Schabeck had turned their fortunes around. They even roped their friends in to effectively set up a business facilitating Paypal purchases of the cryptocurrency.

There were limits to what the business could accomplish at that scale, however. Selling Bitcoin through BitcoinTalk and LocalBitcoins gave them a good start, but the sites weren’t designed for volume trades, which made the process of buying and selling complicated. Youssef saw the potential to launch his own cryptocurrency trading platform. That became Paxful.

Helping the “unbanked”

Paxful differed from its competitors by focusing on gift cards. They had been Youssef’s salvation, and much like cryptocurrencies themselves, they can operate outside the existing structure of financial institutions. This makes them extremely valuable to people who don’t have a bank account for depositing or sending money – the “unbanked,” as finance wonks call them.

Three months into Paxful’s operation, he received a call from someone in dire straits. “Artur and I were working in Soho, 2 a.m. or so, it was really late,” Youssef said. “We had put our number on the website and no one ever called. But all of a sudden, I got a call and it was this woman. She said ‘I need some Bitcoin. I need it, I’m down to my last $13.’ She was frantic, telling me how her kids were going to be homeless the next day if she doesn’t get this Bitcoin.”

This might seem like hyperbole – indeed, the fanaticism over people’s desire to buy Bitcoin at its 2017 peak was certainly overblown – but it turned out that the woman had a very real reason, a real need, to buy some Bitcoin.

“She was frantic, telling me how her kids were going to be homeless the next day if she doesn’t get this Bitcoin.”

“She needed it to post an advert on Backpage,” Youssef explained — a site notorious for facilitating prostitution. The classified site’s shady reputation caused Mastercard and Visa to pull out of processing transactions for it, but the site still accepted Bitcoin. The problem, however, was that getting hold of Bitcoin wasn’t easy, particularly if you didn’t have a bank account.

“I had to walk her through it. She was so angry, she’d spent eight hours going around the internet every Bitcoin site trying to get one and she couldn’t do it because all of the Bitcoin sites you had to have a bank account,” Youssef told Digital Trends. “This was a completely unbanked person in the United States. So, I asked her, how were you buying these ads before? She said she bought gift cards in the drug store.”

“For the next three months, every single day we would get [calls], mostly women, who were looking for [Bitcoin],” Youssef said. “They were all in a desperate situation, but the beauty of that entire episode is that it helped us get our product market fit. If someone has a bank account they can easily use Coinbase, but if you don’t have a bank account or are underbanked, Paxful is the place you go to.”

Youssef remains unapologetically proud of Paxful’s start, despite the hot water Backpage eventually ended up in. Backpage came under fire in 2017 for its anything-goes attitude, and the posting of classified adverts for sex work ultimately resulted in the site’s seizure by multiple U.S. federal agencies. Seven people associated with Backpage, including its founders, have been indicted on charges that include money laundering and facilitating prostitution.

“…the free market will win in the end, and we do believe there are many lawmakers looking for a better way.”

H.R. 1865, better known as the “Allow States and Victims to Fight Online Sex Trafficking Act,” allows authorities to hold sites liable for misuse of their classifieds, and forced Craigslist to shutter its personals when it passed Congress earlier this year. Youssef said he supports the new law’s ideas, but worried it could do more damage than good. “Sex trafficking is indeed a problem that should be handled with all the resources of the state,” he stated, “yet the ramifications of this bill have clearly thrown an entire community into disarray, putting single mothers in serious jeopardy […]”

As Youssef sees it, the best thing anyone can do, whether business owner, government or individual, is to try and improve the day to day lives of everyday people. He remains adamant that Paxful has accomplished that, and seems confident that, even after the passage of H.R. 1865, lawmakers will ultimately reconsider. “This isn’t the kind of day-to-day difference we wanted to see,” Youssef told Digital Trends, “but the free market will win in the end, and we do believe there are many lawmakers looking for a better way.”

Bitcoin beyond borders

Today, Paxful is a direct trade platform with a claimed user base of 1.5 million customers. It trades thousands of Bitcoin a month, moving millions of dollars through the site on a regular basis. Many of those users do so from all over the world, and it’s those international markets that have Youssef so excited. He sees those markets as in even greater need of the financial fluidity that cryptocurrencies offer. Often, transactions still rely on the gift cards that kickstarted this whole venture.

“iTunes is a very special case,” Youssef said. “It’s how most of Nigeria and Africa get their Bitcoins. Right now on Paxful, $11 million of iTunes gift cards go from Nigeria to China every week.” While this remains a convoluted way to exchange cash, Youssef thinks it’s a better solution than financial institutions for those in vulnerable situations.

“In Nigeria, for example […] these folks prefer to keep their money in crypto,” Youssef explained. “So even in the fall of cryptocurrencies [in December 2017] some of them who bought it at the beginning of the year are still up [several hundred percent]. In Nigeria, […] their local currency has fallen by 90 percent in the past two years [so] their neighbours would be down 40 percent for the year.”

Youssef explained that where Western markets often see Bitcoin as purely a store of value, as a way of investing and growing wealth, elsewhere in the world it’s more commonly used as a means of payment. Independent businesses in Africa are some of its biggest proponents, leveraging Paxful and Bitcoin to improve their fortunes, much as Youssef himself had.

“[When] I went to Nigeria I met this very charming, beautiful woman, who was making amazing women’s clothing and she had an Instagram site,” he said. “She didn’t have a shopping cart. [Customers] sent the money to her friend in America who also has a Nigerian bank account and he transferred the money to her.”

“Right now on Paxful, $11 million of iTunes gift cards go from Nigeria to China every week.”

Youssef ultimately set her up on Paxful, so she could accept Bitcoin for clothes and then sell the Bitcoin herself. “We made that whole process peer to peer, so that anyone could help her do this without needing trust because of escrow,” he said.

Youssef’s also hopes to focus his company on philanthropic endeavours. Although he’s excited about the potential for Paxful to accept more cryptocurrencies in the future, he spends a lot of time working with charities. He wants to help them accept Bitcoin donations to give easier access to the money in a local currency through Paxful trading.

“We’re calling the initiative #BuiltWithBitcoin,” he said. “We’ve built one school so far, with three more planned in Africa. We’re just getting plans for one in Venezuela, one in Nigeria that is planned too.”

The scheme was launched with a $50,000 donation by Paxful to Zam Zam Water, a volunteer-driven charitable organization that builds wells and schools in middle-Eastern and African countries like Afghanistan and Rwanda. It’s one of the charities that Youssef has focused on. It takes Bitcoin and Ethereum donations already, and Youssef wants more charities to get on board with the idea.

“I encourage people to get behind #BuiltWithBitcoin,” he said. “Because once you educate these charities about Bitcoin they are in awe, because they can get the funds immediately, cash out to their bank account anywhere in the world, immediately, using a service like Paxful. It’s never been so easy to give back.”

A mirror

Bitcoin dragged Youssef to his lowest financial depths, and boosted him back to financial freedom, giving him a first-hand taste of its capacity for good and evil. He doesn’t shy away from that moral ambiguity in his business, which can be used to stabilize the life savings for farmers in Rwanda or simply used to buy hacked Paypal accounts.

Despite the extremes, Youssef is guided by an underlying optimism about humanity. He doesn’t ask how his business might be used for ill, but instead tries to use it for good. Some might call it honorable. Others might call it naïve. But like Bitcoin itself, Paxful seems destined to become whatever society makes of it.

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