A Brief Introduction To Cryptocurrencies And How Dubai Is Betting On Their Own Digital Currency
We’ve all heard of this ''thing'' called bitcoin or crypto, or even meme-coins around on social media and several news channels.
So what’s the big fuss and why is everyone talking about it? Let’s start over!
Crypto Currencies - What is it?
Cryptocurrencies or digital currencies are entities that were initially created as virtual payment methods. For example, you could buy a service or a product in exchange for a cryptocurrency just like fiat currency (regular money).
One of the first cryptocurrencies created is called Bitcoin. One of the first transactions used as a payment method back in 2011 was to buy a pizza. At that time, two pizzas were bought for 10,000 Bitcoins, at an approx value of 41 USD.
That same pizza would’ve cost a whopping 365 million $ today.
As you can see, digital currencies have come a long way since then.
Today it is being used across industries such as fashion, finance, healthcare and multiple other industries to optimize workflows, give people more control of their money, create efficient processes in organizations, and much more.
Some of the most popular cryptocurrencies you might have come across today and their value:
Binance Coin: $308.70
But you’ll be surprised to know that today there are about 10’896 cryptocurrencies out there across 385 marketplaces. Creating a crypto coin or token, are not just companies and startups but even cities and countries have started implementing their very own cryptocurrency to stay ahead of the curve.
United Arab Emirates: Dubai's Very Own Cryptocurrency
The UAE central bank has announced that it will launch its own digital currency known as GovCoin to progress into the World’s top 10 central banks of the world. This initiative is also one among many as part of its 2023 to 2026 digital transformation plan.
Citizens would have to install digital wallets with the central bank and will be able to use money and perform transactions just like how they used money from their bank accounts.
Countries such as China have already begun launching the phase of their own official cryptocurrency that is being authorized and issued by the Public Bank Of China. It is being tested in the country and aims to digitize fiat currency notes and coins currently circulating.
Other countries such as the US have started seeing merit in digital currencies after a lot of resistance, and are as well in a developing phase.
Risks Around Cryptocurrencies
Cryptocurrencies are driven by the network effect. It essentially means that the more people use it, the higher its value. Unfortunately, it also leads to high volatility, wherein the value can decrease and increase quite drastically within a day.
The Dubai-based company Arabchain Technology recently launched its very own Dubai digital currency called the DubaiCoin. Though Arabchain claimed that the city of Dubai would control and regulate the coin’s value, the government refuted these claims.
Due to these claims, the value shot up by 1000% in its first 24 hours from $0.17 to $1.17.
Dogecoin’s recent event for instance was supposedly a meme crypto coin became a serious investment entity when backed by Elon Musk. However, the value soon dropped by 45% in just a day due to the ban in China.
These are just some case studies showcasing digital currencies’ volatility and how informed one must be before betting on or investing in a cryptocurrency.
There are high rewards in this industry, but they come with high risks.
The future of currency...
The crypto and the digital currency world is still in its early stages. However, it is considered a revolution that can disrupt the finance industry and give back the control of money to the people instead of central banks.
So if you’re looking to be a part of this revolution, get a deeper understanding of the ecosystem and then start investing accordingly.
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