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In this Op-Ed, Ahmed Jacob Aly, CTO of INVAO explores the cryptocurrency and the adoption of blockchain in the Middle East and is a great success opportunities for the region to become a global leader in innovation in blockchain-based technologies.
We have reached a crucial point in the blockchain and cryptocurrency sector. The global volatility in the cryptocurrency market has been insufficient to discourage large financial and corporate players from charging their claims. After the recent uncertainty, investors have become increasingly aware that the purchase and use of digital currency is a financial decision not to be taken lightly. Without a doubt, cryptocurrency is real, powerful and has enormous potential for impact on tangible wealth. Likewise, we have shown that blockchain technology can and provides solutions to seemingly limitless problems in the real world and cement its place in everyday life.
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A series of significant events in 2018 turned international attention to the MENA region regarding blockchain technology and cryptocurrency developments. Among these is the Emirates Blockchain Strategy 2021 launched in the United Arab Emirates in April of last year, aiming to transfer almost 50% of government transactions on the blockchain. If successful, the United Arab Emirates it will save around 77 million working hours per year and Dh11 billion transaction costs. In March 2018, the small island nation of Bahrain, in the Arabian Peninsula, issued a regulatory sandbox for cryptocurrencies where they conducted further research on four crypto-exchanges. The blockchain industry of the MENA region ended in 2018 with another positive note, with the December announcement by the Central Bank of Egypt which is studying the possibility of issuing a digital currency supported by the state.
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Despite these positive movements, the Middle East has had its fair share of difficulties and stops with the adoption of cryptocurrencies, with some countries that have completely banned the encryption. For example, in Kuwait, The regulators essentially prohibited institutional traders from working with cryptocurrencies at the end of 2017. In August 2018, the Saudi monetary authority made it illegal to trade bitcoins in the kingdom. Although it is not illegal to own cryptocurrencies in the United Arab Emirates, they can not be used as legal tender according to the Dubai Gold & Commodities Exchange (DGCX).
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Entering 2019, the MENA region brings with it the recognition of the potential of blockchain technology to revolutionize economies, business environments, the quality of life of citizens, government operations and beyond – but also the hesitation to fully embrace the emerging technology. Perhaps deriving from negative associations between cryptocurrencies and criminal activities, or between blockchain technology and borderless sharing of information – not something universally accepted in the Middle East – the region seems not to have let go of the fears that will prevent it from moving forward. While being able to take a leading role worldwide, with a skilled technological workforce and a range of emerging innovation centers available to support growth, it remains to be determined whether or not it achieves this potential.
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The future of blockchain and encryption in the region will be defined by the will of individual nations to implement global regulations to facilitate the growth of a mature industry and legitimate businesses. Fears related to criminal associations can be canceled by providing the industry with clear and transparent laws and by educating the participating populations on the subject. In other blockchain centers around the world, smaller nations have driven this growth, proving to be the fastest acting in creating fast-growing industries by being smaller and more agile. It is entirely possible that the Middle East will follow this path, with nations like Bahrain leading the charge forward and overcoming many larger and economically powerful countries in progressiveness and adaptability.
On the other hand, major central banks in the Middle East have also shown a certain level of support for the adoption of cryptocurrency, demonstrating that the largest and most economically powerful nations in the region are coming to the fold. With many of these countries on a mission to reduce dependence on natural resources, such as oil technology, crypto and blockchain, the prospect of becoming a fundamental geography for both is increasingly tempting. This, among other factors, may have contributed to the announcement at the end of 2018 that Saudi Arabia will develop its national cryptocurrency in 2019 to be used by banks. Meanwhile, in the United Arab Emirates, the central bank said it had already begun to design state-supported cryptocurrency.
There is a growing hunger for the progress that blockchain technology will bring to the Middle East. In 2019, the region not only has the opportunity to become a global leader in innovation in this space, but also to pave the way for regulation to benefit all parties, solve social and daily problems and improve the 39, economy of every single nation. The first ten years of blockchain and cryptocurrency technology, from 2008 to 2018, laid the promising bases for the rise of the MENA region, which is now ideally positioned to utilize its vast resources, competent international workforce and 39; innovation to push it forward in a blockchain-based future.
(Ahmed Jacob Aly is the CTO of INVAO)
Image credit – INVAO
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