ccording to the Bitcoin Foundation, there are 370 Bitcoin ATMs in circulation (August 2015). If we agree on the definition of a Bitcoin ATM as a machine that exchanges Bitcoins and cash without the need for a human to facilitate the transaction, we can add 1.500 additional Bitcoin ATMs that are currently deployed in Georgia, a country with a population of 4,5 million. In other words, there is one Bitcoin ATM per 3.000 people. This should be the highest density of Bitcoin ATMs worldwide.
The terminals are operated by JSC Nova Technology which, according to their website, serves more than 70,000 customers daily. They are popular to top-up mobile phones, pay household bills, gambling and other types of payments.
Buying Bitcoin with cash in Georgia
Fortunately you can change the language of the terminal to English so that you can easily find the option to buy Bitcoin. The terminal quotes the exchange rate between the local currency Georgian Lari (GEL) and Bitcoin (BTC). The markup seems to be around 8,5%, which is allot more than online exchanges charge but not unusual for Bitcoin ATMs. The terminal prompts you to enter your Georgian phone number (luckily I have one) and then asks you to insert the money. The smallest denomination is 1 GEL (about 0,40 EUR). The machine accepts bills and coins. I chose to insert 5 GEL (about 2 EUR). I was hoping that I could instantly receive the Bitcoins but the process was not that easy.
Not without AML/KYC
After the transaction I received an SMS that explained I need an account at emoney.ge to claim my Bitcoins. After creating an account, I still could not receive my Bitcoins until I have verified my account by showing my ID at a branch of the Liberty Bank. I found that process to be quite complicated for a small purchase and also not easy to explain to my wife that I need to go to the bank for one hour to receive less than 2 EUR worth of BTC. But I was committed to my mission to buy Bitcoin with cash in Gerogia. I suspect that process is complicated because of local KYL/AML requirements. After my trip to the bank I could finally withdraw my Bitcoins for additional 1% fee. As complicated as it seems, we have to keep in mind that this is a one time requirement and for many Georgians, who already have a verified account, not even an issue.
Potential for remittances
According to the World Bank, 12% of Georgia’s economy relies on remittances. This amounts to almost 2 billion USD per year. The 8,5% fee for Bitcoin transactions is not a competitive rate for remittances, even when transferring money to Georgians without a checking account. But if Bitcoin becomes more popular, competition should lower that fee and if adoption increases further there is no need to convert Bitcoin back to GEL anymore because people could just pay their bills in BTC. In that case the transaction fee for remittances would just be the miners fee which is typically 0.0001 BTC (0,03 USD). That would be a disruptive rate