Heads or tails on cryptocurrency?

dubai - Launch of cryptocurrencies accelerates in the Middle East, but are they safe?

The increasingly accelerated rate at which different cryptocurrencies are entering the market has left many small time investors wondering if there is a real value in investing in the new technology.

While many remain concerned about volatility in the market as well as the difficulties in investing, experts say with the proper security standards in place, investors have a number of options they can comfortably pick from. And with the arrival of new and secure blockchain trading platforms in the market, it will soon be easier for investors to buy, sell and trade in cryptocurrencies.

Palmex, one such trading platform by ArabianChain, which came online on October 30, 2017, is one of the first digital asset exchanges to be born out of the Middle East and North Africa. The exchange offers investors and amateurs an intuitive user experience with advanced trading tools, multiple cryptocurrency pairs, rigorous security measures and minimal trading fees. Palmex follows in the footsteps of BitOasis, the UAE's first digital currency exchange launched in 2014.

Speaking to Khaleej Times on Monday, ArabianChain founder and CEO Mohammed Alsehli said there are more than a thousand cryptocurrencies on the market today. "Cryptocurrencies are here to stay and they are the future. They will change the way we look at the economy and the way we do business. The whole banking industry is going to be evolving into something very different from what it is today."

He noted that the demand to trade and issue digital assets has grown exponentially with the phenomenal surge in valuation of cryptocurrencies like Bitcoin, and the rapid evolution of blockchain technology. "The regional market is ripe and hungry for a user-friendly platform that makes it possible for them to buy and sell in a secure environment," he said.

Charles Habak, vice-president of Booz Allen Hamilton, who leads the firm's banking and FinTtech business in the Middle East and North Africa, explained that due to its decentralised network, blockchain does not have a central point of failure and changes to public ledgers are viewable by all parties, which ensures that all transactions are immutable and transparent.

"The technology provides a streamlined and effective distributed transaction model that enables digital trust," Habak said. "It reduces the risk of cyber threats by creating distributed ledgers that maintain unchangeable lists of ever-growing data records. It enables secure value exchanges - which could be money, stocks, property, data access rights - between different parties. It also creates a more secure, efficient and collaborative ecosystem for sharing and accumulating critical data and information."

"In the GCC, regional governments have already started to experiment with the application of blockchain technology in both the public and the private sectors. Among its many advantages, it can help reduce costs, boost the accuracy of data and enable faster cross-border transaction speeds to stimulate economic diversification in the region."

Interest in cryptocurrencies has also spiked in the UAE ever since officials hinted that Dubai might be getting its own official cryptocurrency.

"When it comes to cryptocurrencies, we are still reading the fine lines," said Dr Aisha Bint Butti bin Bishr, director-general of the Smart Dubai Office. "We don't have specific news cases around cryptocurrency yet, but regulations in the UAE cover these products. We are focusing not only on financials, but are also talking about the whole city experience. The financial sector is one among those experiences. Our focus is government and public services."

In September last year, Dubai government's economic website announced it had established a partnership to facilitate financial transactions through contactless payment. This saw the birth of emCash, an encrypted digital currency, which people can use to pay for various government and non-government services.

Earlier, OneGram made waves in the industry when it became the first digital currency to be completely backed by gold. In December 2016, the Shariah Gold Standard, which OneGram complies with, was introduced by the Accounting and Auditing Organisation for Islamic Financial Institutions, the World Gold Council and Amanie Advisors. As a result, Muslim investors will now be able to take advantage of an increasing range of gold-backed investment opportunities.

- rohma@khaleejtimes.com