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Bitcoin Nordic Brings Bitcoins to Middle East and North Africa

Op-ed - Bitcoin Nordic Brings Bitcoins to Middle East and North Africa

The Middle East and North Africa remain one of the more difficult parts of the world in which to acquire bitcoins. Although largely justified by the region’s low GDP, the concentration of Bitcoin clients in the region is low, and options for exchanging the local forms of digital money for bitcoins were hard to find – until now. Bitcoin Nordic recently introduced CashU as a payment option. Bitcoin Nordic is a Bitcoin exchange based in Denmark launched on April 2 with its main feature being instant delivery of bitcoins for payments by credit card. This activity was soon suspended by Visa and MasterCard, but the company remained, and continues to offer bitcoins for bank transfers (and vice versa) and anonymous cash in the mail, expanding their range of payment offers with this new addition.

CashU is a popular online and mobile payment method in North Africa and the Middle East, as the region’s large and young population currently has very limited access to credit cards. It works as a prepaid system, allowing users to top up their CashU accounts through CashU prepaid cards sold in the Middle East and Africa, Ukash vouchers which can be found around the world including the UK, mainland Europe, South Africa, South America, Canada and Australia, and a number of other methods. Users can then spend their CashU account balance at a number of online sites. Bitcoin Nordic claims that by introducing CashU as a payment option, they will have made Bitcoin accessible to over 300 million people who did not have a convenient way to buy it previously.

Bitcoin Nordic’s prices are steep; they charge a 15% commission on top of the 24-hour average MtGox price, higher than the 10% that they charge for cash and check payments, and much higher than the 0-7% fees typical for cash deposits and wire transfers in the United States. However, relative to other fees in the CashU market, Bitcoin Nordic’s rates are hardly exceptional. Although credit card payments and some other methods like Fawry and BEE are processed with a fee of 5-7%, UKash vouchers take 9% plus foreign exchange rates. Comparing these rates to Google’s baseline rates, we see that this constitutes an additional commission of roughly 5% – in total a 14% fee, almost exactly as much as what Bitcoin Nordic charges for converting CashU to Bitcoin.

Nevertheless, even with net fees of 20-30%, Bitcoin Nordic has potential to carve out a viable niche for itself for one simple reason: it has no competition. Although CashU is the established payment method of the region and is already used by much of the population, the range of sites that accepts it is fairly small. Though many major products like World of Warcraft and iTunes gift cards can be bought with CashU, the majority of the products and services that we are used to in Europe and North America do not support it. Bitcoin, on the other hand, does – both by itself and as a gateway to other stores through services like SpendBitcoins, which offers gift codes for stores like Amazon, the Apple store and Thinkgeek for bitcoins and even features a Buy Anything service that allows you to use Bitcoin as a proxy for any purchase online.

In the past few months, Bitcoin has seen a massive increase in its reach all across the world. Chinese adoption spiked rapidly in May, BitInstant added 700,000 locations to buy bitcoins in the USA, Russia and Brazil, and, although with no evidence of success so far, efforts to bring Bitcoin into Africa are underway as well. With this move by Bitcoin Nordic, the Middle East and North Africa will now be able to participate in Bitcoin’s worldwide growth in adoption, and millions of people will gain access to products and services that they had no way of getting to before, both inside the Bitcoin community and outside of it.