Cryptocurrency has become a widely discussed subject across the global financial market. The rise of virtual coins has skyrocketed, partially because they are not regulated by any central banking authority or prone to counterfeit. Many cryptocurrencies are usually decentralized networks based on blockchain technology. Even Dubai has stepped up its exploration of cryptocurrencies by introducing its own currency known as Dubaicoin.
What are Cryptocurrencies and Blockchain Technology?
A cryptocurrency is a digital virtual currency based on a network that is distributed across a large number of computers. Blockchain is the technology that usually enables the existence of cryptocurrency. Blockchain is known as a decentralized ledger of all transactions across a peer-to-peer network. By utilizing blockchain technology, participants can easily confirm transactions without requiring a central clearing authority. Thus, this decentralized structure allows cryptocurrencies, such as bitcoin, etherium, Dubaicoin, and others, to exist outside the control of governments and central authorities.
Cryptocurrencies can also be identified as systems that allow for secure payments online, which are dominated by virtual "tokens." They are usually represented by ledger entries internal to the system. Bitcoin is the first blockchain-based cryptocurrency and remains the most popular and most valuable. However, there are many other cryptocurrencies in existence today.
UAE Cryptocurrencies
Recently, Dubai-based Arabianchain Technology launched Dubaicoin as the first public blockchain-based cryptocurrency in the Arabic world; however, in a statement made by the Dubai Media Office, Dubaicoin was never approved by any official authority, and investors should be cautious of this potential phishing scheme.
Making e-Commerce More Secure
UAE residents can potentially use cryptocurrencies like bitcoin to make e-Commerce stronger and more secure. The use of credit and debit cards to make online purchases is susceptible to issues like fraud and identity theft. Blockchain transactions, on the other hand, are far more secure against fraudulent activities, making cryptocurrency ideal for e-commerce. In 2020, retail e-commerce sales growth increased by 19.8% in the Middle East and Africa, over-indexing the global increase of 16.5%. With this growing trend of online shopping and digital transactions, consumers will be eager to use methods that protect their financial assets from virtual threats.
How to Smartly Invest in Cryptocurrencies
There are different ways UAE residents can smartly invest in cryptocurrencies:
Choose the right cryptocurrency
The cryptocurrency market is usually volatile, with frequently changing values. It is important to choose the right coin that has the potential to earn you more money in the future. Low-value, less-profitable, short-term cryptocurrencies can make your investment worthless. Cryptocurrencies like bitcoin and etherium are typically safe areas of investment due to their tendency to increase in price value.
Only allocate a small percentage of your portfolio to cryptocurrencies
No matter the hype around a certain cryptocurrency, experts advise that only a small part of your portfolio should be invested in the crypto market. Investments of more than 10% of your portfolio can lead to much bigger risks that are harder to recover from in case the price value falls.
Choosing the right platform to buy cryptocurrencies
There are several platforms for buying, holding, and selling cryptocurrencies. Some of the platforms you can use in the UAE include Rain and eToro. These platforms feature services where users can buy, trade, and exchange cryptocurrencies. Keep in mind that banks don't offer cryptocurrencies, neither do investment brokerage firms.
As the Middle East's hub for technology and innovation, Dubai is poised to be the region's leading market in digital currencies and blockchain technology. With an aggressive economic growth plan and unrivaled lifestyle opportunities, the emirate is also a top choice for business setup and corporate expansions. For more information on how to launch your new business in Dubai or partner with a business center for all your office needs, Sentinel has you covered.