Crypto is used for payments in Georgia, not to get rich: Tbilisi Crypto City Guide
2024.09.12 12:06
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The city of Tbilisi in Georgia has lots of crypto startups and crypto ATMs, and it’s dotted with small-time “exchanges” that are essentially money changers with a Binance account. Visitors from nearby Russia often use crypto for payments here, as their bank cards don’t work outside Russia due to sanctions. The ease of electronic payments in the city poses competition for crypto, as does the government’s digital lari CBDC plan, but at least 200 businesses accept crypto at point of sale.
City: Tbilisi
Country: Georgia
Population: 1.2 million
Founded: 445
Most Common Languages: Georgian, English, Russian
Jump to: Crypto culture, Projects and Companies, Financial Infrastructure, Where Can I Spend Crypto
History
Legend says that Tbilisi was founded when the falcon of King Vakhtang I of Iberia fell from the sky and burned to death in a sulfurous hot spring during an unsuccessful hunt.
The hot springs and strategic location so impressed the king that he ordered the forest to be cleared and a great city founded on the site.
The Mtkvari River flows through Tbilisi’s old town.
Tbilisi and the country of Georgia have had a long, complicated history since. The city was an object of rivalry and occupation by the Romans, Seljuks, Persians, Muslim Arabs and Byzantine Empire.
It was only in the 12th century, some 600 years after the city’s founding, that it became the capital of a unified Georgian state under the direction of King David IV the Builder.
But Tbilisi has always been an international city. Situated along the historic Silk Road, it saw travelers and traders from Europe, Russia, Central Asia and further afield. At the beginning of the 19th century, Germans settled in what is now the Marjanishvili district of Tbilisi on the East bank of the Mtkvari River.
Today, the city is inhabited mainly by ethnic Georgians, with significant expat/immigrant communities from Russia, Azerbaijan, Armenia and Ukraine. Tbilisi is also home to a number of Ossetians, Assyrians, Abkhazians and Greeks.
There is a small but thriving community of digital nomads, attracted by the country’s easy visa regime, low tax rates, and relatively low cost of living.
Crypto culture
Payments are the name of the game in the Georgia cryptocurrency industry. The vast majority of crypto used in Georgia is not as an investment vehicle but for payments.
Remittances are an especially popular use case, with the most popular options being USDC and USDT, based on faster and cheaper blockchains like Tron and Solana.
Giorgi Tashurashvili, chief marketing officer and a partner at local cryptocurrency exchange Bitnet, tells Magazine:
“USDC is very popular for remittances or for payments, buying apartments, stuff like that, to get money in and outside of the country.”
Tbilisi also boasts a number of informal crypto meetups that take place at a variety of hostels, bars and cafes to discuss everything from business strategies to trading or just socializing.
There are also cryptocurrency conferences and hackathons with guests and keynote speakers from all over the world.
Marie Giorgobiani, CEO of Degamefi — a conference focusing on GameFi and decentralized gaming ecosystems — tells Magazine that some 50% of the conference speakers last year were from outside Georgia.
The Georgian government has taken some steps to support the cryptocurrency industry, from liaising with businesses when crafting laws around cryptocurrencies to dispersing grants to blockchain and crypto firms through the Georgian Innovation and Technology Agency, or GITA.
Operating under the purview of the Ministry of Finance, GITA provides grants to startups.
“Twice a year, they have this contest you apply for. It’s 150,000 lari, so it’s around $50,000 to $60,000 of equity-free money. It’s not bad,” Giorgibiani says.
But regulators aren’t 100% on board with crypto, yet. While there have been examples of the government working with the industry, a lack of understanding among officials still poses a roadblock.
Giorgobiani says that GITA supports the startup ecosystem and that another firm she co-founded, Arena Games, successfully applied for a grant after getting knocked back a couple of times.
“They don’t really understand blockchain. I’ve noticed that a lot of blockchain projects are applying. They’re not really getting these grants, but they are applying.”
The Georgian government has also adopted laws that are very similar to the European Union’s Markets in Crypto-Assets regulations, trying to balance supporting innovation and creating safeguards. Tashurashvili says they may have stuck too closely to MiCA.
Bitcoin accepted here (Aaron Wood)
“If we are able to somehow create an ecosystem that enables not only us but all other crypto companies to actually work from Georgia, we will have a very nice industry, and we will have the chance to become a crypto hub in the region, right? But if we play it too close to European standards, I think it will make it harder to have innovation here in Georgia.”
Projects and companies
A number of local cryptocurrency and blockchain projects, as well as international firms, have a presence in Tbilisi and Georgia more broadly.
Mining giant Bitfury (as well as a number of solo miners) has mining operations in Georgia. Cheap hydroelectric power provides a strong incentive for Bitcoin miners.
Ripple was selected as the official partner for the government’s central bank digital currency project, the digital lari, while Binance signed a memorandum of understanding with GITA last year to promote educational initiatives around blockchain and cryptocurrencies.
ZuVillage Georgia—a spinoff event inspired by the two-month Zuzalu event hosted by Ethereum co-founder Vitalik Buterin last year—wrapped up at the end of August. The event aimed to expand “individual cognitive sovereignty” and build “frontier tech guided by cypherpunk and d/acc philosophies.”
Local companies are numerous. In addition to Degamefi, Bitnet and Arena Games, there is crypto payments processor CityPay and crypto exchanges Cryptal, Bybit, Bitget and WhiteBIT.
There are also lobbying and media organizations like the Georgian National Blockchain Agency, whose mission is to “help the implementation and adoption of blockchain in Georgia.”
Crypto Bazari is a media firm that has its own show on the television channel Girchi TV and provides advertising, legal, research and educational services to the blockchain industry in Georgia.
Despite the activity, Tashurashvili admits that Georgia has yet to have its “Skype moment,” like Estonia.
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Giorgobiani says, “It is quite difficult to source startups from Georgia. A good quality [startup], with a good product-market fit, is quite difficult to find.” Many startups concentrate on solving local issues, which means, while good, “they are not really into scaling afterwards.”
But Tashurashvili believes that will change.“I think there might be that moment when people realize that new startups can come out of Georgia.”
Financial infrastructure
Georgia’s commercial banking sector is dominated by two large commercial banks, TBC Bank and Bank of Georgia.
Both have user-friendly payment apps that support quick transfers to other customers and are integrated with local utility providers, technology companies and administrative services.
It is difficult to find a business in Tbilisi, even a small fruit and vegetable shop or corner store, that doesn’t accept cards. Tashurashvili said:
“Georgia is quite developed in the online banking sector. […] I don’t carry any cash with me. Sure, I have like 20 lari in my pocket. That’s it. Just in case. Just because somebody else gave it to me.”
This ease of use and convenience of existing payment technologies provide a high bar for crypto to clear.
A crypto vending machine (Aaron Wood)
It also makes the motives for the government’s digital lari initiative — the design of which the government is currently researching — a bit unclear, says Tashurashvili.
“So, the idea of having this ‘crypto lari’ — I don’t completely understand why we have the necessity. What is going to improve? I don’t understand what’s going to improve,” he said.
In regard to crypto, in addition to strictly online licensed exchanges like Bitnet or Cryptal, the city is dotted with crypto “exchanges” (essentially a money changer with a Binance account) where people can buy crypto or cash out in dollars or lari.
These impromptu crypto/money changers were largely unregulated until last year when they had to begin proper Know Your Customer procedures and comply with new regulations set by the National Bank of Georgia.
For many of the city’s residents from Russia and Ukraine, these small “exchanges” have allowed them to expatriate their savings from their home countries, where sanctions and strong currency controls have been enacted since the start of the war in 2022.
Cryptocurrency ATMs are also rather common in Tbilisi, at least in the city center. The ATMs do not allow users to cash out their crypto for lari or dollars, but they generally support purchases of major cryptocurrencies like Bitcoin, Ether and Litecoin, as well as some stablecoins.
Where can I spend crypto?
Cryptocurrency payments in Tbilisi are becoming more widespread thanks to the proliferation of cryptocurrency payment systems that integrate with point-of-sale terminals or can be made through simple QR code scans.
Payment services like Binance Pay and CityPay allow a number of businesses to accept crypto.
Tashurashvili says, “I think they have over 200 companies or something [accepting crypto]. So, that they have their POS. You can directly transfer. It’s super easy. Works super fast. If you go to the Radisson, for instance, you could pay for your hotel or lunch with crypto.”
Many of the enterprises that accept crypto are small businesses: cafes, bookshops, bars and the occasional restaurant.
Krab Coffee and Bar in Tbilsi’s bohemian Vera district recently began accepting crypto payments.
The owners, Kristina and Barbie (KRistina And Barbie = Krab), told Magazine over a cup of coffee that the decision to accept cryptocurrency payments was practical.
Krab Bar is Tbilisi (Aaron Wood)
For one, paying in crypto can be cheaper for customers, since they’re not hit with conversion charges and travel fees. Barbie says, “It’s cheaper for you to pay here with crypto because you’re maybe from Europe, Asia and so on. You’re not from Georgia, and your card charges a high percentage.”
It also makes payments easier for Russian tourists, who make up a large slice of Georgia’s tourism-oriented economy. Since the beginning of the war with Ukraine, sanctions have prevented Russian cards from working outside the country’s borders, meaning Russian tourists have to either bring large amounts of cash or use crypto.
Kristina says that crypto payments can smooth out this awkward situation. Tourists traveling with crypto will still “have to change USDT to Georgian money. Your first time in Georgia, you don’t know where to exchange it.“
But with a crypto payments option, “you scan [the QR code], that’s it.”
Krab Coffee and Bar doesn’t hold crypto — the payment solution converts it to lari immediately. “It’s just more comfortable for people,” the owners say.
Novelty crypto establishments have also appeared in the city.
In the Marjanishvili district, opposite a large hostel/bar/restaurant complex called Frabrika (the building used to be a textile factory), a local entrepreneur opened Crypto Bar. Its unique advertising point was that you could pay for your beer with crypto.
Using crypto to pay for a drink the first two or three times can be interesting, but after that, you are ultimately just in a dive bar with overpriced Czech lager that caters to crypto-carrying guests of the nearby hostel.
Crypto Bar shut down only a few months after it opened.
Another crypto-centric venue was Crypto Cafe Georgia, a cafe in the Saburtalo district that featured crypto symbols like the Bitcoin “B” and the Ethereum diamond on the walls. It has also closed.
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Aaron Wood
Aaron Wood is an editor at Cointelegraph with a background in energy and economics. He keeps an eye on blockchain’s applications in building smarter, more equitable energy access globally.
