Bitcoin in Emerging Markets: The Middle East

Before her panel “Crypto Across Emerging Markets” at Consensus: Distributed, Leigh Cuen wrote a three-part column on the use of cryptocurrencies in developing countries. In this first part of the series, she deals with the Middle East.

It is a truth widely recognized by experts on Crypto Twitter that emerging economies are more likely to see revolutionary bitcoin usage in at least the near future than in Silicon Valley.

However, the term “emerging markets” encompasses most of the planet, with the exception of a handful of wealthy nations. Even when fiat-denominated quantities are overshadowed by Asian whales or US institutions, scratchy crypto traders in Turkey have a disproportionate effect on the global Bitcoin economy.

Register: Leigh Cuen organizes on May 11th at Consensus: Distributed “Crypto Across Emerging Markets”

In general, regions with weak states and educated diasporas see more grassroots adoption. For example, Lebanese entrepreneur Michel Haber said that most of the 26 remote workers involved in his web services startup, cNepho Global, now prefer Bitcoin paychecks.

Haber has been paying some developers this way for two years – with bitcoin from Beirut’s basic trading networks. Now that most employees would rather get Bitcoin, he encourages coworkers to buy mobile wallets.

This is no longer a marginal prospect.

The Arab Weekly published a column in April on how the collapsed banking system is destabilizing Lebanon. Protests surrounded the central bank in April, and protests around bank branches even became fatal. The situation continues to boil.

Protesters in Baabda, Lebanon, November 13, 2019.

Source: Shutterstock

“The peer-to-peer bitcoin market is very robust as the Lebanese banking system has failed and people have more cash than banks,” said Haber. “Because of the corona virus, you can no longer really wait at the bank. … You are not sure if the Lebanese bank will actually give you the money. “

However, this does not mean that Bitcoin can easily replace the local currencies. As seen in Iran, which was once a thriving bitcoin mining and retailing industry, authorities began restricting usability as mainstream adoption increased.

Continue reading: Iranian bitcoiners risk fines, jail time as the government regulates mining

But instead of stamping out the demand for cryptocurrency, raids can only change its manifestation. Some people are now using Bitcoin for savings and Altcoins for transaction alternatives. Markets in countries like Iran and Argentina are now seeing increasing demand for stable coins.

Likewise, Argentine Crypto Exchange founder Federico Ogue, CEO of Buenbit and Buendolar, said many first-time cryptocurrency users are drawn to dollar-denominated stablecoins.

More coverage of cryptocurrency in the Middle East:

Volatility of the stable coins

In regions with volatile currencies and little access to dollars, the demand for stable coins increases.

According to a bitcoin trader in Iran who wanted to remain anonymous for security reasons, falling oil prices have not increased local demand for bitcoin. This is partly due to the government’s efforts to boost the local stock market. As the dollar exchange rate fluctuates and paper bills run short, tether stablecoins (USDT) sell for Iranian rials worth more than a dollar.

“The government is trying to push the financial market requirements on the Tehran stock exchange in order to avoid increasing demands on the currency or gold markets,” said the anonymous Iranian trader. “Local [crypto] Exchange changed [USDT] In order to artificially increase the demand, the demand was also so high compared to the low supply of USDT on peer-to-peer exchanges. “

The most desirable aspect of stablecoin is not a stability mechanism or security, just the network effects. After all, many of these users are turning to cryptocurrency because they want a global asset, whether it’s paper bills or software.

CoinDesk Senior Reporter Leigh Cuen to host the Crypto Across Emerging Markets panel on May 11 at 7:30 PM ET at 8:30 PM ET Consensus: distributed, CoinDesk’s first virtual, free conference. Register here.

Dapps

The Middle East is also one of the few regions where decentralized applications (dapps) that don’t focus on gambling are still attracting routine users.

Dmail founder Mohamed Abdou, whose Egyptian team built a privacy-focused email service using Blockstack, said the dapp now has 15,000 active monthly users. Because of this, Dmail raised a starting round of $ 500,000 in April, an amount that goes much further in Cairo than in Silicon Valley.

Continue reading: The encrypted e-mail service is started on a block stack with bitcoin functions

“Users can exchange emails, text chat, voice calls, video calls, billing and charging in crypto,” said Abdou of Dmail’s 2020 Roadmap. Although Dmail does not collect user information (and therefore does not know where users are located), this Egyptian project was inspired by a local context where remittances and international payments are a lifeline for an economy plagued by depleted foreign currency reserves.

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