Industry News The Middle East is an Emerging Crypto Market

The Middle East is an Emerging Crypto Market

May 5, 2020

In the present day and age of the cryptocurrency ecosystem, there are very few elements where the broader community agrees on any particular topic. This is practically a tradition in the very decentralized and very authority-rejecting space that was practically built around the idea of no governance. However, even in the second decade of the bitcoin network, there are some generally agreed-upon facts.

These are so entrenched and so tested-out through time and real-world examples that all experts agree about them, including the formal academic and the Twitter-based pundits. One of these universal truths is that emerging markets are more inclined to become aware of the revolutionary potential in bitcoin usage than any major entity of Silicon Valley.

While all seem to agree about this, there are many problems with the same concept. Firstly, the majority of the world, including half of the developed nations is an emerging market. This is seen in the fact that crypto whales in Asai and US institutions wield most fiat funds that come in and out of the crypto domain, bitcoin traders in Turkey or Lebanon, for example, might offer a lot more influence on the global digital currency economy than their sheer weight in USD or EUR.

Necessity as an Engine

In general, regions that have overall weak state mechanisms and systems, as well as big and disproportionately educated diaspora see the highest level of grassroots crypto adoption. A Lebanese entrepreneur called Michael Haber recently showed a figure of his 26 remote workers who are engaged with his web service startup mainly preferring to get paychecks in bitcoin. Haber has been using the same means of payments for more than two years.

Presently, he is encouraging his workers to attain mobile wallets for their payments. Examples like this show that this is no longer just an off-shoot fringe possibility. Instead, it is a valuable and employed mechanism of financial transactions. At the same time, Lebanon is not a unique nation when it comes to the same example. Other countries around the Middle East and associated regions are experiencing a similar rise in the use of digital currencies. Like esports, messaging apps, and many other features of the modern world, the physical location does not hamper any, including those around the Middle East to employ digital currencies.

Failing Banks

Most locations in the world that struggle with their governments and basic mechanisms of the state usually have one thing in common (at least): a failing banking system. This is a reality that many Lebanese faces in their everyday lives as well. Furthermore, the system is next to useless under the coronavirus pandemic pressure because the banks do not work directly with their customers. Because of this, local citizens are never sure whether or not they will be able to get their funds. This is why bitcoin transactions are a much safer and expedient option.

But, this does not mean that BTC is taking the role of the local currencies. Similar to Iran, authorities can curtail its usefulness as the adoption in the mainstream began to grow. For the government in Tehran, this included the legalization of the cryptocurrency mining industry but also a clampdown on the use of all non-national currencies in the country. However, the citizens in those countries are reacting as well and adapting to the new measures. In this particular case, people in Iran are using bitcoin to save funds and altcoins to complete transactions. In other spots, like in Argentina, there is a growing demand for stablecoins and the trend is getting a big foothold in the Middle East as well.

Motivation for Instability

Big economic shifts in the global economy are also spearheading adoption through a further degradation of the trust and validity of the traditional financial system. Oil prices and their historic plummet are a great showcase of one such event. In the Middle East, more precisely Iran, the same means that the government is trying hard to promote its local stock market, but that the citizens want to reach stablecoins as a means of safeguarding their money.

The government would like to see these individuals invest their money in the same stock market but most just want to protect their funds, not risk it in a completely unproven system. This impulse is strengthening the demand for both cryptocurrencies and gold. The two are similar in the sense that they allow money to break free from the Teheran’s direct influence and oversight. They are also a global asset that can be easily traded everywhere and crypto even has the benefit of being digital. Local currency brings none of those benefits and the identical things applied to the Iranian stock exchange and its tradable assets.

Local Dapps

There is another big element of the local bitcoin and crypto adoption in the Middle East and that is the widespread use of dapps. Applications that are built on decentralized platforms are popular all over the world, but these are either games or activities focusing on crypto gambling. In the nations of the Middle East, dapps that offer privacy for communications are gaining in popularity.

These include platforms like Blockstack, an email service built around privacy that has over 15,000 active users each month. Similar to Chinese giants like WeChat, these encompass not just text communication, but also voice and video calls, as well as limited financial services. Here, users might employ a dapp to send an invoice or collect fees. The usefulness of that option is made even more prominent in places where alternatives to traditional banking, like PayPal, might feature limited or no availability.

Crypto seems like a natural alternative in that scenario. Furthermore, with a large young population, places like Iran, Egypt, and Lebanon can skip the problem of users being unfamiliar with cryptocurrencies. There, young people have more than enough reasons and basic tech knowledge to overcome all of this and begin using crypto. Ultimately, many of them need to do the same if they want to work and earn in their local challenging environments.

Source: CoinDesk