The State of Bitcoin in MENA, 2015 (part 2)

by David El Achkar | May 13, 2015 | 0 comments

[This is the second post in a two-part series on the state of Bitcoin in the Middle East and North Africa. Read Part 1]

State of Bitcoin in MENA

There’s no other way to put it than Bitcoin usage is still quite low today, but things are moving fast and we’re seeing very promising activities. Let us break it down.

Last year (2013) there were 0 Bitcoin conferences, 0 Bitcoin meetups, 0 Bitcoin companies, and even 0 companies accepting Bitcoin. Really, numbers couldn’t be any worse. Now let’s flip to this year. I’ll outline what we’ve seen to date, but keep in mind this is in no way exhaustive, the space being so fragmented, it is difficult to get definite numbers. This should nonetheless give you a good sense of the progress.In 2014, there were 3

In 2014, there were 3 conferences covering Bitcoin exclusively (Cointalks, “Bitcoin in Lebanon” Symposium, and Dubai Bitcoin Conference), and several more traditional payment or tech conferences featuring Bitcoin segments (ArabNet, DGTL#U, Webit, GITEX, Cards and payment, etc.)

So far, we (the Bitcoin community) have launched 3 meetup groups (in Amman Jordan, Dubai UAE, and Beirut Lebanon) with 400+ members and 20+ meetups organized to date. There are now countless Bitcoin social media communities on Facebook, Twitter, and even Whatsapp (Bitcoin Arabia, Bitcoin MENA, BTCLB, BTCJO, Bitcoin Egypt, etc.).

What’s most exciting in my opinion is the launch of several homegrown Bitcoin companies:

  • BitOasis, a multi-sig Dubai-based wallet and buying service
  • Umbrellab, a multi-service Bitcoin company, behind the infamous albeit short-lived Bitcoin ATM, and the popular Piiko mobile top-up service
  • BitFils, a way to buy bitcoins with debit cards in Kuwait
  • Nouqood another Bitcoin buying service with cash in Tunisia, and online payments in other countries
  • And, none other than Yellow, a Bitcoin payments company for the Middle East
  • And there are several more in “stealth mode” that we will hear about soon.

As for merchant adoption, we’re still at the very beginning, and that’s what we, at Yellow, are working on and hoping to change fast. Of course, there is ThePizzaGuys famously first to accept Bitcoin, but now we have several more such as an electronics shop and eCommerce platform (ShopBuilder) in Lebanon, a crowd-lending platform (Liwwa) and coffee shop in Jordan, and Anghami the Arab music service, and many more coming out soon.

As for investments, it’s still early to say. We know that regional startups are getting funding with announcements to come soon. And having spoken to many of the major regional VCs, we believe there is a strong interest in Bitcoin; they are starting to follow the space closely.

The media coverage to date has been extensive and across all media outlets, and it seems to be growing steadily. Bitcoin in the Middle East has been covered on TV, radio, Tech outlets, print, and online, and internationally as well.

Unsurprisingly, there hasn’t been much progress on the regulatory front. Only two central banks in MENA have released (standard) notices (Lebanon, Jordan). These highlight that Bitcoin is still a new and poorly understood technology, and warns consumers against using it. Financial institutions, on other hand, are prohibited from dealing with it (but not prohibited from dealing with Bitcoin businesses). We are also seeing other governments starting to pay attention to Bitcoin, e.g., the Kuwait central bank has inquired about Bitcoin activities occurring within the country, and certain Dubai free zones have shown regulatory support for Bitcoin companies.

To recap, we went from almost 0 activity in 2013, to something that looks not unlike the US in 2011: the first batch of dedicated startups (like BitPay, and Blockchain.info in 2011), several well-attended conferences (the first global bitcoin conference being in 2011), and a rapidly growing interest from both the mainstream media and regulators.

What’s next?

For things to really take off we need to address 3 tightly linked pillars: Awareness, Merchant/Business adoption, and Customer tools. With a high phone penetration, a fast growing eCommerce market, a poor financial and payment infrastructure, and a young population, there’s a lot of opportunity for bitcoin but a lot still needs to be done.

Merchant Adoption is likely to be the first step, and can be a catalyst for Bitcoin adoption, because today they have the most to gain even in the absence of a strong network effect. Cash-on-delivery is a painful option, and adding Bitcoin is simple and free. Without exaggeration, almost every merchant we have talked to has passionately complained about the poor payment options, and is actively looking for alternatives. Bitcoin may be coming at the right time. For example, it’s not uncommon that for a small business to get online payment capabilities they need to place a deposit in their bank, pay a setup fee, and then pay monthly flat fees.

Increased merchant adoption leads to greater consumer awareness. But, as a community, there is more effort we should be doing, especially in terms of content creation and distribution. Arabic is the unifying language of the region, but Bitcoin resources in arabic are still scarce. A group of us are already working on this, having released ShuBitcoin.com, the first Bitcoin educational resource in the 3 languages of the region (Arabic, French, English). And Bitcoin News Arabia is another promising news resource (bitcoinnewsarabia.com/). But there is still more work to be done if we want Bitcoin to reach the average arab.

And finally to satisfy a greater consumer awareness, we will need to turn interested individuals into users by providing easier and more accessible ways to use and get bitcoins. Today there’s only one exchange in MENA (Igot in Dubai) and a few alternative ways of buying bitcoins (BitFils in Kuwait, Nouqood in Tunisia). Buying Bitcoins anywhere else still requires p2p transactions, or opening accounts at international exchanges. Keeping in mind that this region is highly cash dependant and has a high phone penetration, we are most excited about cash-based Bitcoin solutions (like vouchers) and sms-based Bitcoin wallets.