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Exclusive: Arbitrage – the Key Business Opportunity Brought by Blockchain

Following the latest update of Paxful, Ray took a step back and shared to us his inspiration to set up Paxful and what he learnt from 11 failed startups! He then identified arbitrage as the key business opportunities by blockchain and instead of decentralization, peer to peer should be the core value preposition of Bitcoin!

We noticed that prior to the establishment of Paxful, you have set up 11 startups and failed. Can you share with us the lessons learned and how do these failures inspire you to set up Paxful?

My first startup was successful and after that, I had 11 failures in a row, but every single one of them taught me something. Now We’re trying to build a peer to peer Bitcoin marketplace and there are tremendous challenges in doing that. When I look at PayPal, PayPal is literally three times more complex to build nowadays. Western Union has cash as the only payment method and it took 30 years to become successful.

We’re trying to provide over 400 different payment methods around the world to facilitate peer to peer transactions in every payment method. It is immensely difficult and mentally challenging. When I look back on my startups, they all have their unique challenges.

Billing was always a challenge for my previous 11 startups. Payment giants like Visa and MasterCard may not want to work with you if your products are targeting young teenagers or the unbanked. For example, I sold ringtones in my first startup. I was selling credits and users can buy ringtones with credits. You’d never heard of that 15 years ago and the payment giants want to work with me. To sum up, it was very difficult to launch a billing system from my previous experience of 11 startups.

How I tapped into the blockchain world?

When I first heard about Bitcoin, I read the whitepaper but I can’t figure that out initially. Then I started meeting people in the Bitcoin community, they won me over and that’s how I tapped into the Bitcoin space. It got me into libertarianism and the most important thing I got in Bitcoin by far was it taught me what money actually was and where it came from.

What are the key business opportunities brought by blockchain?

The key business opportunities are always arbitrage! There are 400 different major payment methods representing different networks. With Paxful, you can have full access to them and the markets around them. This is an amazing opportunity and humanity never has this before.

Imagine we have some magical friends in every single country that they have every financial account like banks, Paypal and Alipay. Whenever we need payment, he’ll make the payment for us. We have to pay transaction fees in return but the fact that you can now access every single financial network in the world which powers up peer to peer finance.

Do you think in the future, Bitcoin will remain the poster Coin for cryptocurrencies? Or other altcoins will overtake Bitcoin?

I can’t predict the future and I don’t think any other coins are doing better than Bitcoin. All the issues like transactions per second (TPS), privacy is trivial in comparison to the main use case of blockchain: payment network. Bitcoin is a very good payment network and that’s what the world needs! Bitcoin doesn’t need an immense throughput of billions of TPS and other altcoins can do that.

I don’t think another cryptocurrency will pop up that will replace Bitcoin unless something catastrophic happens to Bitcoin. I don’t see Libra as a huge threat as well, I think the reason people are freaking out over Libra is that we’re fighting with each other and coming out with our own coins, going to war with each other and it is just disgraceful. At the end of the day, Libra is just another satellite revolving around. Bitcoin is currently the clearing layer of all currencies worldwide and I hope it stays that way.

Do you think the lack of scalability for Bitcoin will hinder the mass adoption in the payment network? People view Bitcoin as more like a digital gold as a storage of value. What is the core value of Bitcoin?

I think it’s either of those things, like the people of Blockstream want you to think of Bitcoin is just gold and not scalable so we need to build a lightning network on top of it.

Then there’s people like Roger Ver creating Bitcoin cash and say Bitcoin cash should replace Bitcoin in the future. Then there is a guy like me, who is right in the middle and say “There is an entire world of money trapped in retail economies like Amazon, Apple, bank accounts in cash and all kinds of online wallets. There needs to be something that can circulate that money value around. Gold can’t do that because it’s not something that can move around like Bitcoin. Bitcoin is really the clearing and that’s what peer to peer finance is.”

When people talk about Bitcoin, they always say decentralization is the holy grail.

However, decentralization is just the technical feature but the most important point is two humans are exchanging value.

The core value proposition is we are connecting two humans together and how they actually interact with each other. We missed this fact which is honestly the biggest thing holding us back.

Do you think the emergence of Central bank digital currencies (CBDC) and Facebook Libra Coin will facilitate a world of decentralized finance and why?

Libra is not decentralized. Those validator nodes are controlled by a certain party of people. Central bankers are not going to lose control of this. They’re going to keep fighting and gain back the control eventually.

The only thing that can stop them is educating people. For example, number one: what money actually is and where it comes from. This is the key. Before Bitcoin, I had no idea about these concepts. Once I figured it out that money is not necessarily gold, silver, and fancy paper that central banks are giving us, money is a representation of our work that freed up my mind. All we need is a medium of exchange and that’s what cryptocurrency is. When we focus on that peer to peer aspect instead of decentralization, that’s when we can start to understand what we’re working with here and we can build real applications that will stay ahead of the central bankers.

Is Bitcoin in India about to Boom? Paxful Survey Projection

Paxful, the peer-to-peer Bitcoin marketplace, has released a survey that indicates India’s enthusiasm for Bitcoin has been reignited following the landmark decision to lift the ban on crypto trading.

Paxful, conducted a survey around the future potential of cryptocurrency in India. The survey finding have highlighted which industries are most primed for adoption, as well as uncovered the feelings of Indian citizens,aged 18 – 55, towards crypto and bitcoin.

Prior to the Indian Supreme Court’s reversal of the ban on digital assets, Paxful data showed Indian sentiment around digital currencies did not reflected the concerns of their government.

In January, Paxful has recorded over $3 million in trade volume in India.

According to the March survey, 93.8% of respondents invested in crypto prior to lifting the ban in 2020, with 90% holding Bitcoin and 44% holding Ether.

The Survey found that prior to the ban lift, almost 94% of the respondents had already invested in crypto with the majority holding BTC and about half holding Ether. An interesting finding was that of the 75% of respondents that claim to rely on crypto for money remittance cited the need to bypass a corrupt banking system.

Per the report, “The future of cryptocurrency in India looks bright, and the survey respondents agree with 43.40% stating that they look forward to an increase in jobs and the ability to take on entrepreneurial endeavors. It is expected that cryptocurrency usage will continue to flourish, a conclusion that can be based on the statistic that 40.40% of respondents would invest in digital currency over any other investment option with stocks and bonds to follow (30.00%) and real estate and gold coming in at 14%.”

R3’s Marco Polo Network Sees India As Key Area for Growth

As reported by Blockchain.News on March 27, The Marco Polo Network announced on Thursday that India’s leading provider of digital transformation, Tech Mahindra became the first corporate in India to join the R3’s open-source blockchain-based Marco Polo Network for facilitating cross-border transactions.

With this new partnership, Tech Mahindra carried out several digitized trade finance transactions, facilitated by its partnering bank DBS Bank, utilizing Marco Polo’s Receivables Discounting tool. This tool is a solution that enables effective management of working capital, enhances liquidity and reduces any risks associated with credit.

Rob Barnes, CEO of the Marco Polo Network and TradeIX, the company behind the Marco Polo Network highlighted that the decision behind bringing an Indian company onboard was due to the fact that “Asia serves as a key area of growth for the Marco Polo Network.”

“We are in extremely difficult and challenging times now, with facilitating trade and minimizing supply chain disruptions becoming even more important now than ever,” stated Barnes. “This is a great achievement with two leading institutions with more collaborations planned in the near future.”

Image via Shutterstock

BitMEX Invests in South Africa’s Largest Bitcoin Exchange

In a bold financial move, the parent company of cryptocurrency exchange BitMEX has decided to invest in South Africa’s biggest Bitcoin exchange, VALR.

Bitcoin Crypto Exchange, VALR

The newly founded Bitcoin exchange offers safe digital trading for anyone and popular cryptocurrencies supported by their exchange include but are not reserved to Bitcoin (BTC), Ether (ETH), Ripple (XRP), and Cardano. Although it was only launched in 2019, it has now grown to be a popular international exchange.

100x Ventures Dreams of Going Global

Parent company of BitMEX, 100x Ventures, was hypothesized to have invested in VALR for three key reasons.

The first reason that came into consideration was that it enabled the investment arm to expand its fintech horizons and it allowed the company to grow in overseas markets. Furthermore, 100x Ventures was able to meet the demands of regional exchanges as well as trading services with the new alliance formed with VALR.

Lastly, the investment might have executed by 100 Ventures because of the ever-growing and trending regional Peer-to-Peer (P2P) Bitcoin market. Outside of dominant countries hosting major cryptocurrency markets, Bitcoin exchanges are known to be less well-regulated or not as transparent in their crypto transactions. Consequently, this led to a surge of Peer-to-Peer crypto exchanges, which allowed investors to trade directly with each other.

Places in the world that record huge P2P crypto trading volumes include India, Mexico, and the Philippines, where a proper exchange infrastructure is often lacking. Since there is an increase in demand for regional exchanges around the world, 100x Venture thinks that its investment could be a bridge that joins predominant crypto markets with smaller ones. CEO and co-founder of BitMEX Arthur Hayes commented regarding the alliance with VALR Bitcoin exchange:

“South Africa has an incredibly exciting and fast-growing cryptocurrency ecosystem, and we believe VALR is well-placed to capitalize on future growth of bitcoin trading. In VALR we’re backing not only a successful early-stage business, but a management team with the ability to scale operations significantly.”

BTC Future Continues to Shine for BitMEX

Because of their investment, 100x Venture is now able to gain exposure in a developing crypto market as promising as South Africa. For several years on end, its finance affiliate BitMEX has also remained on top of their game. However, with the newly formed crypto alliance, both the P2P crypto trading platform and its parent company are now able to diversify their business even more, due to regional investments.

BitMEX remains a competitive player in the crypto field. In fact, the cryptocurrency exchange possesses an open interest of $1.02 billion dollars, which consists of double the amount of its competitors, such as Binance and Bybit.

Paxful Crypto Peer-to-Peer Marketplace Expands Beyond Bitcoin with Tether USDT Stablecoin

Paxful, the leading peer-to-peer Bitcoin trading platform, announced that it will be adding stablecoin Tether to its crypto payment options.

By adding Tether (USDT) to its crypto marketplace, Paxful is hoping that investors could be better protected against the volatility of the crypto market and that it could be an improvement to their assets portfolio. With Bitcoin and Tether, Paxful users could pay for goods and services online with cryptocurrency, as well as buy and trade digital assets among themselves with ease.

Paxful enlists Tether

Paxful already offers more than 300 payment options as of now. With the addition of Tether, the global peer-to-peer Bitcoin marketplace hopes to enable users to “be more in control of their finances.” The company also asserts that Tether can be leveraged for digital asset protection against inflation, and a hedge option, when needed. During Bitcoin (BTC) price fluctuations, Paxful users could convert BTC to USDT, and vice versa, to protect their crypto assets. Co-founder of Paxful, Ray Youssef, said:

“We consider this a big step for us since this is the first cryptocurrency other than bitcoin we have on the platform. We always listen to our users. We understand that they go to Paxful for wealth generation and turn to crypto for stability when their national currency is affected by inflation.”

Fighting inflation with USDT stablecoin

Tether’s addition to Paxful is big news for investors, as USDT is the largest stablecoin. Trailing behind Bitcoin and Ethereum, Tether is the third-largest cryptocurrency by market capitalization, with a value of $14 billion. The stablecoin’s value mirrors that of the US dollar and is often leveraged as an option by first-time crypto investors who are looking to venture into digital currency investments.

Due to the high cost and transaction fees of converting crypto to fiat and vice versa, Tether is seen as an interesting alternative by many, as it is cost-friendly and economical. After converting fiat to Tether on the trading platform, the digital currency could be traded for more volatile crypto, such as Bitcoin.

At the time of writing, Bitcoin trading platform Paxful has listed 4.5 million registered wallets and is reported to have reached 4.6 billion USD in trading volume. The peer-to-peer (P2P) marketplace is anticipating a bigger influx of new traders for the months to come.

Bitcoin for wealth

In an exclusive interview with Blockchain.news earlier this year, Youssef discussed how this was the perfect time to capitalize on Bitcoin investments, saying that peer-to-peer trading is an emerging investment tool that will benefit many investors, as COVID-19 has severely dented major economies worldwide. With countries desperate to recover, “radical economic measures” have put in place to reduce the impact. However, the measures have not always proven to be beneficial. CEO of Paxful Youssef said:

“These measures have the potential to hurt the economy in the longer run. In this case, Bitcoin can serve as a better store of value for wealth. This means an even more robust ecosystem of P2P trading with newer participants and a greater reach.”

Paxful Exits Venezuela’s P2P Crypto Bitcoin Market Following US Sanctions

Paxful, the leading Bitcoin peer-to-peer marketplace, has officially withdrawn its crypto trading services from Venezuela after the Office of Foreign Assets Control (OFAC) of the US Department of Treasury classified the country as high-risk.

OFAC classifies Venezuela as a “high-risk country”

The news was announced by the Paxful team situated in Latin America. The Bitcoin marketplace team disclosed in a video released on their social media platform that cryptocurrency and financial regulations were becoming too strict for them to conduct business as usual in Venezuela. They added that it was with deep regret that they were exiting Venezuela’s crypto market.

Furthermore, with the OFAC classifying Venezuela under the high-risk category, Paxful needed to comply with the US financial regulatory sanctions. Being listed under the “OFAC sanctioned/high-risk countries” category entailed that traders in Venezuela were obligated to verify their identity before they sold or sent Bitcoin (BTC).

Bitcoin marketplace leaves Venezuela

Paxful pulling its crypto trading services from Venezuela is huge news, as the peer-to-peer (P2P) Bitcoin exchange was the second-largest P2P outlet in the country. Venezuelan crypto traders seemed to prefer decentralized exchanges like Paxful to government-regulated alternatives.

Paxful’s Latin American branch sent out an email on Monday to its Venezuelan crypto traders to announce the crypto service shutdown. In addition, the Bitcoin marketplace team tweeted:

“To our Paxful family in Venezuela,
Today we are saddened to announce that Paxful will cease operations in Venezuela. We hope that there will be another opportunity to enter the region again in the near future. This is not the end. Thank you always. – The Paxful Latin America (LATAM) team”

The withdrawal from the Venezuelan crypto scene is regarded as a deep loss for Paxful. The Bitcoin marketplace had courted the Latin American country for years, in hopes of delivering an interesting financial solution to the unbanked. The economic demographic of Venezuela and the high use of mobile phones in the region largely appealed to CEO and co-founder of Paxful, Ray Youssef. On his Bitcoin company’s official Twitter, the CEO had previously said:

“There is a massive opportunity that awaits in Venezuela to be the first closed loop crypto-economy.”

How Paxful can deliver financial relief during COVID-19

The peer-to-peer crypto marketplace has done a lot of good, despite coronavirus hitting global economies full force. With certain countries’ economies flushing faster than others, Paxful had conducted research in certain regions to propose better financial solutions. For example, Paxful research revealed strategies that were employed in Nigeria by Bitcoin traders to fight the devaluation of the country’s native currency, Naira.

In addition, earlier in May, CEO of Paxful Youssef had discussed with Blockchain.news about how “Bitcoin could serve as a better store of value for wealth” in times like the ongoing coronavirus pandemic. Others in the crypto industry have echoed that sentiment, as Bitcoin has increasingly been viewed as a safe-haven asset.

Deliberations about whether the cryptocurrency asset will potentially replace gold as the traditional safe-haven have risen, with more and more Bitcoin whales turning towards BTC as a hedge.

Africa Records the Largest Bitcoin P2P Volume Growth

Africa continues to stamp its authority in the crypto space based on the significant adoption rates witnessed in the continent, as acknowledged by Documenting Bitcoin.

The crypto data provider explained:

“Africa has the largest Bitcoin peer-to-peer (P2P) volume growth—proving nothing can stop the innovative and driven youth from securing a better future for themselves and their families.”

Therefore, African youths are taking up the mantle of bettering their lives and their families through Bitcoin.

In July last year, BTC being traded weekly exceeded $1 million on African soil, and some of the nations leading the pack included Nigeria, Kenya, South Africa, and Ghana.

Documenting Bitcoin added:

“Nigeria’s peer-to-peer Bitcoin volume is going vertical—proving nothing can stop the innovative and driven youth from building a better future for themselves and their nation.”

Bitcoin supply shock gets more aggressive

Bitcoin gained considerable momentum after a short-squeeze setup was created after the leading cryptocurrency made a $3K intraday move despite the futures markets remaining short. At that time, BTC surged from lows of $29K to hit $32K.

The top currency has surged by 23.92% in the last seven days to once hit $40,011, according to CoinMarketCap.

On-chain analyst Will Clemente acknowledged:

“This current wave of BTC supply shock has a lot of momentum. Think of this as a visual for the underlying wave of supply shock (or lack thereof) in the market. The last time we went from full reset to buy signal was September, although this current move is much more aggressive.

The analyst had previously noted that the Bitcoin supply squeeze was just getting started, given that the illiquid supply RSI indicator had flashed the first buy signal since November last year. As Bitcoin continues testing the $40K waters, whether it will surge past this psychological level remains to be seen.