Cryptocurrency, established from blockchain technology, can desperately change the way we do business and can build global deals faster and flawlessly.
Cryptocurrencies are prevailing recently. From the period Bitcoin started in 2008, the market financing has reached about $2 trillion. Cryptos are not just a replacement for funding, but they can mitigate the economic and financial disturbance.
But many countries have still not legalized cryptocurrency, although its popularity is gaining, only a few countries have used it in their economy. Several Middle East countries are still restricting cryptocurrency trading and mining, however, digital alteration has advanced at a rapid rate in the region.
The fact is that the Middle East is not new to the concept of decentralized payment systems. For a period, people used the Hawala (Trust) system as an informal value transfer system to divert traditional banks. Still, cryptocurrencies have restored the trust established with the Hawala system with algorithms, and they are the basics of the regional nature placed on blockchain technology.
How the Middle East is adopting cryptocurrency?
Cryptocurrencies have found attention from buyers in the Middle East in the past years. A developing resistance of cryptocurrency-related favors to give, exchanges, and dealing platforms that cracked up rapidly in the country.
Though crypto became a highly eruptive investment, the development of Bitcoin from $1 in 2011 to almost $43,000 in 2021has shown the world encouraging profits.
Countries in the Middle East recognize the importance of adopting Bitcoin and other cryptocurrencies, as this digital benefit gets more ground each day.
There has been promising development in the Middle East where some governments are in front of the curve and adopting this technology and accustoming frameworks that allow investors and industries to thrive.
Government assists not only in the UAE but other regional markets in Saudi and Egypt so that the Dubai-based principles plan to develop in the future.
Although talks are still going on explaining the strategy of how it works, the license is withheld to wait for the right time to be signed. There are challenges for the regulation in the crypto space as the speed of the technology matters.
There is an expectation by regulators and crypto members to work together to form a strategy with industry standards so that it will not hamper the transformation and allow the adoption of normal transactions.
How the pandemic made changes?
The recent pandemic impact on world finance has boosted the opportunities for cryptocurrency, as financiers are demanding substitute benefits as a shield against inflation.
A crypto member has more choice for exchange with regulation and license, as there is necessary infrastructure available for the retailers in the region.
As cryptocurrency is developing fast, then it is important that countries need to be dynamic. The question here arises when it will be synchronized and not if it should be regulated or not.
There is no alternative but to regulate because the speedy development will play a major role in an integral part in financial services and transforming economies worldwide.
It has to be noted that cryptocurrencies are still in funding and trading purposes, as we do not see them in payments and other types of normal activities and services.
People purchasing cryptocurrency is not only a chance to fund, but it is a shelter for savings against the decline of local currencies and financial crises.
Scams and cheating are ordinary in the crypto world. The relative involvement and the lack of awareness of cryptos may reveal funds and savings to huge risks.
Crypto users in the Middle East manage a business in many types, depending on the rules of their countries of residence. Most of them use different mobile apps. Some shareholders that have foreign bank accounts use established swap platforms, including Coinbase. But some exchanges don’t function in some of the Middle East countries. So, they have to rely on local swap platforms such as OTC remittance or individual brokers that administer several platforms for a business like WhatsApp, Telegram, Facebook, and Twitter.
Another trend is that new cryptos are gaining popularity, but the most famous is Bitcoin. The second choice would be Ether, which was started by Vitalik Buterin in 2015. Lately, Dogecoin, crypto, has gained popularity because of the involvement of Elon Musk, CEO of Tesla.
As there are limitations, lack of regulatory support, or ambiguity over funding cryptos, not all countries in the Middle East can use the popular swap platforms. They use Coinbase, Binance, and other such platforms, and also some local platforms like BtcTurk or Rain.
Apart from business, mining is a necessity in operating for buying and selling cryptos. Mining is the operation for market circulation, verifying bitcoin transactions, and putting down public blockchain records.
Like the rest of the world, the Middle East is also trying to develop Central Bank Digital Currencies (CBDCs). It is an effort to hold and confront Bitcoin and other Cryptos.
Since they relate cryptocurrencies to energy resources, not all countries in the Middle East can afford financial instruments based on blockchain.
It is early to discuss if CBDCs can support local or boundary transactions. Also, till now no central bank has provided retail CBDC. The present regulatory is still in a premature stage to get an assessment of this adoption.