Nigeria Is The Hottest Crypto Market In Africa, But It Still Does Not Have A Bitcoin ATM

In 2014, Canada received the world’s first Bitcoin ATM. The following year, the United States’ first installation took place at a cigar bar in New Mexico. Today, there are more than 4,000 Bitcoin ATMs across the globe. 

71.9 percent of such ATMs are located in North America, while Europe lays possession to 23 percent. While Asia has 2.3 percent, Australia and Africa collect 1.3 and 0.1 percent respectively.

South Africa, Kenya, Uganda and even Djbouti all have a Bitcoin ATM. But Nigeria, the largest market for crypto in Africa, is left behind. This is also despite the fact that continent’s first stablecoin project is backed by the Naira,

First Off

There are swaths of Bitcoin exchanges in Africa’s largest economy. A crop of blockchain and crypto-based startups like WiCrypt and Bitkoin Africa are also looking to harvest the digital market’s financial potential. Yet, the country lacks what will make Bitcoin and other crypto-assets’ transactions potentially easier. 

Seemingly paying deaf ears to the invest-at-your-own-risk warning by financial authorities, Bitcoin use in Nigeria has continued to soar.

A WeeTracker report from last September carried the Nigerian Securities and Exchange Commission’s (SEC) plans to create the framework for blockchain and virtual financial assets for the country’s capital market. 

Actually Nigeria, Ghana and South Africa are the top three markets for crypto in Africa. South Africa – the continent’s most developed economy – is home to five Bitcoin ATMs. Ghana, on the other hand, has two, according to Coin ATM Radar. 

While Kenya received its only installation so far last year, it appears Nigeria is not hitting the ground running. However, here lies an unverified report of the country getting its first issue.

The report said Azeez Makinde, the CEO of Naijaloaded – a music and entertainment site – had purchased one in December 2019. But as far as official records go, there is not functional Bitcoin ATM is Nigeria yet. 

Why?

Artur Schaback, COO and co-founder of Paxful – a peer-to-peer Bitcoin marketplace headquartered in New York – spoke to WeeTracker on the topic. Confessing that Nigeria is one of the company’s leading markets for crypto, he said it remains a surprise that the country does not have a Bitcoin ATM. 

“I think it boils down to three factors: investment, maintenance, and security. A good Bitcoin ATM machine requires upfront investment and additional shipping cost and customs charges.

Top that with maintenance fees for putting cash, maintaining secure servers and evading petty robbery attempts, establishing a bitcoin ATM is not easy anywhere in the world, even in Nigeria”. 

The case Artur puts forth is accurate, especially when you look at it from a sole proprietorship point of view. That point is, with the willingness to invest and having gotten necessary approval, anyone can purchase and install a Bitcoin ATM anywhere. However, some of these ATMs are run and maintained by societies and companies, hardly governments. 

For instance, Kenya’s first issue is operated by the BitClub Network – a pool people with interest in cryptocurrency investments. Uganda’s machine, which is hosted by the Kampala Post Office, is run by KIPYA Bit2Big – a local blockchain company. It is similar to how Google provide free WiFi access to Nigerians in Lagos and Abuja without involving the government. 

Upfront For A Bitcoin ATM

Depending on the model, the cost of a Bitcoin ATM ranges from USD 755 to USD 4,500. However, the estimated cost for the machine’s hardware, taxes, delivery and installation can be anywhere from USD 10 K to USD 15 K.

For Nigerian pockets, that ranges between USD 3.6 Mn to USD 5.5 Mn. Businessman or not, that’s some investment one would want to give many thoughts. 

By 2023, the global ATM market is expected to reach USD 145 Mn. Even though crypto assets form a substantial part of Nigeria’s economy, it is not yet its favorite child.

As such, banks in the West African countries have not put yet quite put their hands in the Bitcoin pie. All transactions are left for crypto exchange platforms, a huge bulk of which are on social media. 

The banks represent the traditional sector of any country’s financial industry, so one would need one of them to run a Bitcoin ATM. However, not many – or any – of these institutions are happy to deal with crypto-oriented businesses, especially as the apex bank CBN has not given the go-ahead. 

On the flipside, dealing with cryptocurrency ATM operators is risky. For one, it is a challenge to confirm the identities of people who buy Bitcoin with cash – no wonder why Bitcoin teller machines have some shady reputation.

Considering a country like Nigeria where internet fraud is a household name, it seems to be too much stress to go through. Logically, one would have to obtain series of approvals, one of which should come from the CBN. 

If Only

According to Shaback, Bitcoin ATMs can make it easy for anyone to buy and sell their BTC and be a way to inject more liquidity into the bitcoin ecosystem in Nigeria.

“Bitcoin eliminates many hurdles that Africans may face with traditional banking. Though it symbolizes adoption, the lack of it does not mean otherwise,” he added. 

But he says the country may not necessarily need one. “Nigeria, one of Paxful’s leading markets and peer-to-peer finance, works in such a way that people don’t even need to find these machines. People can buy and sell their Bitcoin easily with their online wallets”. 

Truly, the country’s cryptosphere has gotten used to buying and selling their digital coins via exchanges using their online wallets. It is not just about installing a Bitcoin ATM, but also making sure it is safe and set in the right environment. Also, people will take some time getting used to them as opposed to the conventional teller machines used in the fiat space. 

Featured Image: Bitcoinafrica.io