Bitcoin ups and downs: A question of trust
https://arab.news/zm9pp
It is currently hard to scan the business news headlines without seeing something about cryptocurrency. The exchange medium can hit wildly varying highs and lows in a matter of days, so there is always something new to raise eyebrows at a dinner party.
Institutional investors have been betting big and when the digital currency Bitcoin is mentioned with the likes of Tesla, Morgan Stanley, Mastercard, and even the UAE government, it is hard not to pay attention.
But are people ready to trust cryptocurrency? That is the 1-million-coin question.
Is it a volatile asset that can be heavily swayed — sent soaring or crashing — by a single tweet, or is the media being sensationalist? Is it a currency or commodity (conveniently compared to both the early days of Amazon and the price of gold), or a new, hybrid asset class?
A recent Harris Poll survey of 2,000 Americans showed that only 14 percent knew about Bitcoin, let alone Dogecoin, and Ethereum. So, what would a pulse check in the Middle East look like?
Back to dinner party talk, I have noticed a pattern at gatherings when the subject of crypto comes up (fun person that I am), and there are three distinct camps.
The first is the die-hard enthusiast who believes digital money is more revolutionary than Wi-Fi itself. My husband was a founding member of the Dubai Blockchain Council in 2015 when Bitcoin was for nerds only. “It’s decentralized and unhackable,” he said.
Then there are the skeptics, the ones whose trust must be earned tenfold before any actual investment takes place. That is me, because I am a trained journalist and former Merrill Lynch banker who always asks, “would you invest your entire life savings in crypto?”
The third category politely withdraws from the conversation out of disinterest or a fear that crypto is for shady business. I started actively reading stories beyond the headlines. Hard facts are hard to dismiss. Bitcoin is the best-performing asset class of the last decade. Other crypto currencies, such as Cardano, have done even better. Cheap, often free, crypto remittances can be done in seconds on a smartphone. Remittances from the Gulf to India alone were valued at $83 billion in 2020, according to a World Bank report, meaning banks and money transfer operators stand to lose out on billions in transfer fees if digital currency gains popularity, and trust.
Basil Younes, managing director of Audalion, a corporate advisory and venture capital firm specializing in crypto education, said: “Regional clients went from expressing curiosity about crypto in 2017 to finding it imperative to hold part of their total net worth in crypto today. We advise them on how to do so with the highest levels of security.”
Intrigued, I went beyond the basics.
A staggering 70 percent of institutional investors plan to buy digital assets within the next five years, according to a recent survey from Fidelity Digital Assets, and more than 90 percent of them said they expected to include digital assets in their clients’ portfolios in the same time frame. The demand — and the powerful research backing crypto — is real. While the conversation remains polarizing, one thing is clear: Crypto is far from mainstream with retail investors. But it would be wise to learn about it before missing out completely.
Regional exchanges, including Bahrain-based Rain (with a big Saudi audience) had more than $1 billion in trading volume in the first half of the year, while BitOasis witnessed a 200 percent increase in users in the first half of this year as investor interest grew in the Middle East and North Africa region.
A new era of digital money has arrived. At the very least, learning more about it may be worth the time, and, in the long run, the money too.
• Sara Hamdan is a former Merrill Lynch banker, NYT journalist and editor at Google. She writes on startups, women in business, and post-COVID-19 work trends.
Twitter: @SaraHamdan
