Cryptocurrencies are a form of digital currency that operates independently of a central bank.
The most popular cryptocurrency globally in market capitalization is Bitcoin, with Ethereum being the second biggest global player.
Many other cryptocurrencies, including Ripple, Litecoin and IOTA, also exist.
The blockchain revolution has given rise to many forms of alternative finance; ICOs (Initial Coin Offerings), STOs (Security Token Offerings) and ITOs (Initial Token Offerings).
More recently, cryptocurrencies like Ether, Litecoin and Monero have enjoyed significant gains against fiat currencies like the US Dollar.
However, the UAE Central Bank warned its citizens about investing in cryptocurrencies months ago, warning that people were losing all their savings through trading them.
After reaching an all-time high of USD 20 000 last year, Bitcoin’s price has recently plummeted below USD 7000. The fall has been attributed to several factors, including increased regulation in South Korea and India, where cryptocurrencies are banned altogether.
The news website ccn.com reports that this week saw Google ban all cryptocurrency advertisements on its search platform. Not just those for ICOs but also for other digital currencies like the ones mentioned above.
Further to this, several major crypto tax reports support this.
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Is crypto a good investment?
Investing in cryptocurrencies has been a hit or miss affair for many people.
The price of the dominant cryptocurrency, Bitcoin, has fluctuated over time and drawn criticism from some quarters as a speculative bubble.
On the other hand, Ether, Ripple, and Litecoin have all seen value grow manifold since their inception. Initial Coin Offerings (ICOs) for raising capital has also allowed investors to get into new projects at their early stages.
Is crypto legal in Dubai?
Authorities have made no official statement about illegal cryptocurrencies in Dubai or elsewhere in the UAE.
However, several media reports state that financial regulators want to take a closer look at digital currencies and ICOs, given their proliferation globally and among retail investors remarkably.
Some countries like UAE’s neighbor Saudi Arabia have outright banned cryptocurrencies, while others like China and South Korea are more divided on the issue.
Is crypto a good investment in Dubai?
The verdict is still out on whether cryptocurrency is here to stay or it is just another fad that will eventually fade away.
Financial regulators worldwide seem united in their view that they want to investigate digital currencies further before taking any action on controlling them.
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What does this mean for individuals?
It could be argued that there isn’t enough information yet about how these currencies can affect markets, either positively or negatively. That being said, many countries are actively trying to get cryptocurrencies under control through regulation.
It sometimes has negative implications for investors, so they need to know what to expect in the future.
There are other forms of alternative finance coming into existence, and it remains uncertain whether cryptocurrencies will maintain their market value going forward.
If given enough time, cryptocurrencies can become a viable alternative to fiat currencies which are used every day for transactions and investments alike.
But until authorities around the world devise clear regulatory guidelines on how these digital assets will be treated, perhaps caution is advisable when trading them or investing in ICOs or ITOs related to them.
On the other hand, cryptocurrencies are an exciting addition to the world of investments, and there is no reason why they cannot co-exist with fiat money for years to come.
It’s no guarantee that cryptocurrencies will become more prevalent in Dubai or elsewhere over time, but like many things in life, it is best to go where the action is taking place.
Many countries across Europe and Asia have designated cryptocurrency exchanges; some exist in Dubai already.
Cryptocurrencies have grown increasingly popular over time and continue to be seen as an investment opportunity by some.
However, there isn’t enough information yet on how they will affect markets and whether or not they should be addressed cautiously.
As such, it may be best for investors to wait and see where the future of cryptocurrencies goes.
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