How Arabs will adopt Cryptocurrency
Here’s a breakdown of why using Bitcoin in the Middle East is not a fantasy: When it comes to owning a bank account, the difference between rich and poor countries is crystal clear: more than 90% of American adults own a bank account, whereas less than a quarter of those living in the Middle East can afford owning a formal bank account.
The bureaucratic nightmare that leads Middle Eastern people to own a credit card or even transferring their money in any way make it impractical to use banks in the Middle East. Couple that with high transfer costs, long wait times, and a volatile political situation in the region and you have a recipe for disaster waiting to happen if you’re banking all of your money, especially in local currencies.
This corners Middle Eastern expats living abroad to face tough remittance costs and horrible exchange rates when transferring allowances to their families via services like Western Union. Also, Paypal users from the Middle East are restricted in withdrawing funds to their local bank accounts, and are only allowed to withdraw if they had an American bank account linked to their Paypal*.
So if less than 18% of Arabs own a local bank account, how many of them do you think own a bank account based in the United States?
This is where the idea of Bitcoin in the Middle East comes in.
Say what you want about the Cryptocurrency’s volatility, but with the ability to send millions across the globe, have it show on a Public Ledger and receive your funds (with no chargebacks) at fees costing less than a dollar, at no bureaucratic restrictions from your Government, accepting Bitcoin in the Middle East looks more and more like a viable solution.
Suddenly the e-commerce merchants in the Middle East are able to ship their products to customers as soon as they get their payments, and employees working abroad can transfer allowances to their families instantly at negligible fees. People in developed countries could hire freelance graphic designers and web developers from the Middle East at cheaper costs and pay via Bitcoin, with nobody to stop them.
Weary e-shoppers no longer have to worry about sharing personal information such as their credit card number, expiry date, and CSV number with merchants and expose themselves to loss of their money or identity theft.
But Bitcoins is decentralized, and is not backed up by anything. How can we trust it?
Perfect question. Bitcoin being decentralized IS the selling point. You do not have to depend on corrupt governments to protect your funds. You can move your money without daily or monthly limitation (see Cyprus). Bottom line: The financial and political power no longer resides in the hands of the few.
The chart below shows the current legality of Bitcoin around the globe, with some countries viewing it as legal digital assets, others as taxable currencies, and a third portion views Bitcoin as outright illegal currencies to own and trade.
Even if Bitcoin in the Middle East was “prohibited”, its usage cannot be stopped. Sure, you can make it more difficult to acquire by banning exchanges in the region, and adoption in brick and mortar shops can be monitored, but but e-commerce will still flourish because Bitcoin is peer-to-peer based and you cannot ban math.
*Until January of 2015, where some businesses based in the Gulf are now allowed to withdraw their funds to their bank accounts.
Originally published at www.danieldib.com on April 14, 2015.