What does the future hold for Cryptocurrency in the UAE?

Cryptocurrency has become a global phenomenon in recent years, although much is still to be learned about this evolving technology. Many concerns and worries are swirling around the technology and its capacity to disrupt traditional financial systems.

Dubai's largest and most trusted business consultancy, Creative Zone, recently held a webinar discussing the emerging world of Crypto and Blockchain and how this could be the beginning of the future of the financial world. Crypto Attorney Dr Irina Heaver, Arshad Khan, CEO, Arabian Bourse and Sharjil Ahmed, CEO, Co-Founder of Cykube UK, shared their expert opinion on the future of Cryptocurrency.

MAIN DISCUSSION POINTS

Are banks Crypto friendly in the UAE?

There are two parallel crypto worlds in the UAE, and there's one that is not formal, operates independently and does not come under any regulatory framework. To such entities, banks are not receptive because the crash risk is too high. On the other hand, several well-regulated entities offer their clients transparency and operate under a recognised regulatory authority. However, Cryptocurrency is still a relatively new concept, and it will be some time before banks ease to the idea. Jurisdictions like ADGM and DIFC have come out with crypto regulations, and last year central bank of the UAE rolled out a virtual asset scheme and with the international organisations stepping in, it is a matter of time that virtual currency and blockchain technology will enter mainstream transactions.

If central banks start issuing their version of Cryptocurrency, can it be a threat to other coins?

No, it will not represent a threat of any kind. On the contrary it could prove to be supportive of the industry as assets will back it. There is an ongoing discussion about crypto being backed by assets such as gold or real estate, and very soon, we will start seeing non-fungible tokens where one can digitise and tokenise any asset, and that would be highly beneficial to the industry, but a lot needs to be done to first stop independent players and companies from launching their currencies without any backing. Institutionalising the system, i.e., to create more structures for investors to protect their investment, is the way forward for industry.

What is the market share of Cryptocurrency in the Middle East?

It's still at a nascent stage not only in the region but globally. Yet, there's rapidly growing interest and awareness of the virtual currency world, especially amongst the younger generation who have acquired deep knowledge of the technology and have gained in millions.

What type of opportunities are there for startups? Except trading

The opportunities are endless. The younger generation doesn't want to go to banks to open their accounts when they can just grab their phones and open a wallet and start banking all in under one minute.

Currently, less than 1.3% population of the world hold Cryptocurrency, making it a very exciting time for entrepreneurs to start leveraging blockchain and crypto technology.

"They need to start somewhere, and to start, they need to educate themselves, play with it, learn about various other coins, what a smart contract, decentralised finance is and what an NFT is", said Dr Irina Heaver.

The first step for conventional companies selling goods and services should be to start accepting bitcoins as a mode of payment; this way, you can open an account with an exchange or a crypto wallet, start receiving in crypto and learn how to manage and protect it. Once people realise how easy it is, they can start building on it and leverage it to their business needs.

Over the last ten years, Bitcoin has been the best performing asset, and this year alone, the return has been 300%, which means if a business that received payment early this year has 300 times the original fee.

How valid is Cryptocurrency in funding startups?

This is a very interesting concept for entrepreneurs. It is difficult for entrepreneurs first to find investors and then convince them to fund their startup, and if you manage to do that, you end up losing a significant equity portion of the venture. With Initial Coin Offerings (ICOs) one can launch themselves, and it makes for an excellent platform for entrepreneurs trying to get funding. One of the critical aspects of blockchain in disintermediation is that it minimises the intermediaries. From the fund-raising perspective, one can pitch the business directly to investors. ICOs sit between IPOs and crowdfunding. It is a wonderful opportunity for startup owners to back their venture using blockchain and ICO.

Let's talk NFTs

NFTs are non-fungible tokens. Non-fungible more or less means that it is unique and can't be replaced with something else. For example, a bitcoin is fungible — trade one for another bitcoin, and you'll have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you would have something completely different.

NFTs solve a big problem in IPs, trademark counterfeiting etc.

What would be a safe percentage of someone's investment portfolio that should be considered to be invested by Cryptocurrencies?

“It depends; Crypto has been the best performing asset, and other coins contributing to the success. The investor should always do their homework on their investment profile. Its nature is as it is a volatile asset and has been performing very well and will continue this bright future. However, putting all your eggs in a basket is something that should not be encouraged. Place a substantial portion of your investment in crypto as they have been performing well and decide what way or form you will be placed in, whether taking newer coins or established ones. It depends on your risk profile and the investment size you are looking at, something reasonable”, discusses Arshad Khan, Co-Founder CEO of Arabian Bourse.

The bottom line

Like most investments, crypto assets come with a host of risks and vast potential of rewards. Cryptocurrency is indeed a revolution to the digital transaction sector and poised to join the ranks of conventional payment methods. It is accurate to state that the future belongs to Cryptocurrency, and it is undoubtedly here to stay. But like every new technology, it needs to be underpinned by regulatory clarity and robust systems in place for ensuring safety and security. It can be a reliable form of investment only if we are aware of the best methods to prevent our cryptocurrencies from frauds and risks.

To learn more on how to become a Cryptopreneur, visit: https://lp.creativezone.ae/cryptopreneur/

Watch Full Webinar: https://www.youtube.com/watch?v=vRGfoF76aYg&t=2s