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LONDON: It was the year the cryptocurrencies fell on the ground – the crash was so severe that the parallels were drawn with the dotcom bust at the turn of the millennium.
Bitcoin is down 80% from just under $ 20,000 12 months ago to around $ 3,500 in December. Similar falls were recorded by others encrypted as ethereum.
The reasons for the failure are well tested: increased regulatory oversight, particularly from the United States and China, the emergence of frauds linked to a proliferation of cryptocurrencies launched by initial offers of coins (ICO) and disagreements between cryptocurrency developers on how to update the underlying Software.
But respondents told Arab News that the market would recover and that just as the dotcom boom continued to produce Amazon, the cryptocurrency world should not be erased.
The entrepreneur and investor of Dubai, Najam Kidwai, board member of Fusion.org, a non-profit foundation that aims to develop the blockchain infrastructure for crypto-fiction, told Arab News that all the innovations they need time to mature and the cryptocurrencies have not been different.
He added: "Change must be regulated, but if you do
all of the above, the new technology should improve the user's experience, this is the idea of technology – to simplify life ".
In the meantime, he predicted, institutional money will move to "cryptographic space", even if retail investors get scared. Banks and hedge funds examined cryptocurrencies and built a risk and compliance infrastructure to support trading, he said.
Chris Beauchamp, a senior market analyst at the London-based IG Group, told Arab News: "They (the cryptocurrencies) are not condemned, they will not change the world from one day to the next." Bitcoin still weighs remain part of the financial world, but others will probably fade or evolve over time, like the airlines and car companies of the past. "
Despite the cryptocurrency crash, most observers agree that blockchain, the technology that supports the new tokens, will continue to stimulate public and private investment, and perhaps nowhere more than in the Gulf.
Here, there were some important developments in 2018. Al Hilal Bank, based in Abu Dhabi, carried out a blockchain-based transaction for an Islamic bond worth $ 500 million; Abu Dhabi National Oil Company (ADNOC) is collaborating with IBM to pilot a blockchain supply chain system; and the central bank of KSA signed an agreement with the US company fintech Ripple to carry out a pilot project to help the banks to settle the payments via blockchain.
Kidwai said, "Cities like Dubai have been betting a lot on the blockchain." A lot of proofs of the concept is under way while Dubai wants a paperless government, so here is an initiative called Smart Dubai, led by the sovereign of Dubai.There is a desire for transparency and speed in the government ".
At its core, blockchain is a relatively simple concept. It is a ledger of information blocks, such as transactions or agreements, stored on a computer network. This information is stored chronologically, can be viewed by a user community and is generally not managed by a central authority such as a bank or a government. Once published, the information can not be changed.
Gartner analyst Rajesh Kandaswamy told Arab News that even if speculators had poured billions into cryptocurrencies, it did not "invalidate the technology behind the blockchain".
"Blockchain could allow different parts of a supply chain to interact without intermediaries – and to ensure that all records are protected in one place – this allows for further simplification, increased efficiency and lower costs," he said Kandaswamy.
Abdul Nasser Al Mughairbi, director of the digital unit of the Abu Dhabi National Oil Company (ADNOC), said the blockchain "would improve our business processes with a shared, secure and transparent ledger.
"Blockchain is helping us to trace, irrefutably, every molecule of oil and its value, from the good to the end customer," he said in an email response to the Arab News applications.
He added: "Every day there are big and complex production and accounting transactions between all our activities … that have to be taken into consideration … Until now this has been a laborious process, but the blockchain application we have developed is simplifying this in a single platform. "
Operating costs could be reduced "by eliminating time-consuming and labor-intensive processes".
Blockchain would be a turning point in oil and gas transactions, he said.
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GCC REQUESTS THE GLOBAL BLOCKCHAIN STATE
The GCC states are leading blockchain developments to underscore their efforts to become a global technology hub linking trade and finance between east and west. Saudi Arabia, Bahrain and Kuwait have announced a series of initiatives that add to the buzz of the blockchain that buzzes over the entire Arabian peninsula. The UAE and KSA have launched a proof of concept (PoC) to test the blockchain to help cross-border payments between the two countries.
Just this month, United Arab Emirates Ripple and US Ripple announced plans to launch cross-border remittances to Asia via blockchain from the first quarter of 2019. Dubai has long sought to consolidate its position in the heart of a commercial freeway that connects China, Africa, Europe and the United States.
There has even been talk of the launch of its digital currency to oil the wheels of world trade, even if the US / China tariff war continues. Dubai is already home to a bitcoin exchange, BitOasis and other startups and accelerators dedicated to the blockchain are being born.
The Crown Prince of Dubai, Sheikh Hamdan bin Mohammed Al Maktoum, said he wanted all government documentation, such as visa applications, bill payments and license renewals, to be carried out digitally using blockchain by 2020. In A recent report, Ahmed Bin Sulayem, president of the Dubai Multi-Commodity Center (DMCC), said: "Commercial and commercial finance will be revolutionized by blockchain and other emerging technologies".
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Despite a huge increase in embryonic and pilot projects involving the blockchain, Gartner's Kandaswamy said that in his opinion there were "very few large-scale investments" in blockchain by companies. True, blockchain had been the number one search term when people looked at the Gartner website.
But the investigations were more about the curiosity that surrounded technology and "not the allocation of capital".
He added: "Our customers are struggling to see where blockchain would make sense in their business.When I did a webinar last year, companies said that the" lack of business houses "was the number one problem. how the blockchain could do things better than other technologies already available ".
However, he said that there were some unique emerging stores with blockchain. For example: the ability of different parts in an ecosystem to have the same sense of proof, data contained in a single point that can not be tampered with.
Of course, blockchain does not seem to leave early. Walmart has recently become one of the first retailers to explain how it will use the technology. The company said it would require lettuce suppliers to upload their blockchain-related data within a year. Large companies such as Accenture, Facebook, Google, IBM and Microsoft are developing patented products and services based on blockchain digital open-source technology.
Last month, Amazon said it would offer blockchain for developers who used its cloud computing services.
The global market for products and services related to the blockchain is about 700 million dollars and is expected to exceed 60 billion dollars a year in 2024, according to Wintergreen Research.
IBM and Microsoft have been leading global blockchain development projects in 2018, according to Wintergreen.
Kandaswamy said that a distinction should be made between a public and a private blockchain system. This last was for internal business processes, such as the IBM application that allows the localization and tracking of shipping. The largest battlefield centered on the public blockchain. For these public exchanges used for similar bitcoins, there was still work to be done after a series of hacking incidents in 2018.
Kidwai said that custody issues are "the most important thing that holds back cryptocurrencies, that is by ensuring that my crypto or bitcoin is not stolen".
Solutions to problems were pending but not so far, he said, perhaps no more than 12 months.
Once the custody problems are solved, "institutional capital would flow, if it would not flow into this space," he said.
As with the Internet, blockchain technology will take hold – "and like the Internet, in a very big way," Kidwai said.
