Coinazer launched towards the end of 2022, when the crypto market was decimated by the FTX crash and the fall of TerraLuna. During this period, few people were interested in cryptocurrency.
Despite the bad timing, the company has been able to achieve some growth, a feat the Co-founder and CEO, Johnpaul Achigonye says is a testament to how much value the startup offers.
Achigonye founded Coinazer alongside Egbuonu Ikenna, Malachi Chidera and Nnaji Joshua. Previously a researcher at global blockchain company, Polygon, Achigonye got the idea for Coinazer when he realised how hard it was to convert the salary which he received in MATIC crypto tokens to naira.
This was 2020. Before the Central Bank of Nigeria implemented the crypto ban that made peer-to-peer (P2P) crypto trading very popular.
"If you tried to use P2P back then, you could lose some money if you didn't know how the market works. So I built a protocol that takes crypto coins and converts them to different African fiat currencies."
That protocol became Coinazer and now the company does so much more than just converting crypto to different fiat currencies.
Coinazer's competitive advantage
The basic function of a crypto exchange is to help you go from fiat to crypto, trade that crypto for other cryptocurrencies, and withdraw your profit or loss as either fiat or crypto.
However, exchanges have had to offer more than this to stay competitive. Quidax for example, allows users to save in USDT and earn interest. Binance also allows users to earn money by staking and performing a wide variety of Web3-based transactions.
Coinazar's competitive advantage, however, is its B2B services.
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These services make it more than just an exchange/another way to buy and sell crypto. With a few lines of code, Achigonye says Coinazar allows other businesses to accept crypto payments and even create another exchange off its API.
"The same way you implement Paystack, is the same way you implement Coinazar Payout, and your users will pay in crypto, while you withdraw in any fiat of your choice," he says.
The two-year-old company already has two Nigerian companies and one in Hong Kong using its API.
But Achigonye sees these API services as more than just a competitive advantage. According to him, he and his co-founders want to build an ecosystem just like his inspiration, Coinbase.
The Coinbase of Africa
The Coinbase ecosystem is massive. The $61 billion American crypto company has a suite of cloud services, from Coinbase Commerce that allows eCommerce websites to accept crypto payments to non-custodial wallets that can be connected to decentralised finance platforms.
When it IPO-ed in 2021, Coinbase was valued at $85.58 billion. As of 2020, it had 45 million users and recorded a revenue of $1.2 billion.
Coinazar has a long way to go before it becomes the Coinbase of Africa or any version of the second-largest crypto exchange in the world, but for a two-year-old company, it isn't doing too badly.
It has processed $4 million in transactions and has over 6,000 users in 7 countries including Brazil where it recently expanded to.
The team's dream of becoming the Coinbase of Africa is a big one. Even in Nigeria, Coinazar is far from being one of the largest, but he is determined to do what it takes to achieve his dream.
When asked what would happen when bigger exchanges decide to copy their idea of offering B2B services he said: The team is fearless.
The lack of fear is not the only power the Coinazer team has. The founders — Achigonye, Ikenna, Chidera, and Nnaji Joshua — have skills that range from software development to marketing, and even communications.
Achigonye said that when they completed the first iteration of Coinazer, some users were so impressed that they decided to invest in the company. Although he says the total amount didn't go a long way, he was proud.
Given how little the funding was, we might as well say the company is still bootstrapped. Achigonye said the company is funded by himself and his co-founders.
While he isn't keen on sharing the company's figures, he says that the company is not yet profitable.
However, it has an interesting way of generating revenue. Using an AI algorithm, it calculates how much fee is charged for transactions carried out by customers.
"Other platforms have a flat fee they charge, but ours is very dynamic."
It is dynamic because everyone isn't charged the same on Coinazar. If you're performing an Ethereum transaction, for example, the Ethereum network will charge you a gas fee for that transaction.
Coinazar's algorithm finds the best gas fee for the transaction and calculates a fair fee that will be charged by the platform.
The company also makes money from the B2B services it offers. It charges a percentage when merchants that use Coinazar Payout make withdrawals and when exchanges using its API facilitate transactions.
Interestingly, Coinazar isn't targeting other exchanges to use its infrastructure — although they can — it is targetting crypto merchants that buy and sell on WhatsApp and Telegram.
Achigonye said he wants to get them to digitise their process within the Coinazar ecosystem.
"These guys will not have to pay a huge amount of money for developers."
Although building with the Coinazar API will still require some technical skills, Achigonye says that his company could offer developers as an add-on.
Dealing with regulation
Coinazar might have dreams of building a vibrant crypto ecosystem like Coinbase, but Coinbase is in the US and Coinazar is in Nigeria, two countries with different regulations.
The Nigerian government has shown its apathy towards cryptocurrency since it stopped banks from facilitating crypto-related transactions in 2021.
This year, the country has intensified its clamp down on crypto platforms, shutting down some websites and even detaining crypto executives.
However, Achigonye says the Coinazar website is up and unaffected by the current clampdown on crypto by the government, while doing its best to remain compliant.
Becoming the Coinbase of Africa is bound to draw attention to the company, but with a fearless team, Achigonye is assured of Coinazer's success.
