The global economy is on the edge of a deep and prolonged
recession. The news is grim from growing inflation, skyrocketing energy prices,
the war in Eastern Europe, and uneven recovery from the COVID-19 pandemic. The
result is falling asset prices and the real possibility of a global food
crisis. It’s not just traditional markets that are taking a hit.
Cryptocurrencies, including major coins such as Bitcoin and Ethereum, have seen
major sell-offs in line with falling markets. Many of these assets were meant
to act as a hedge against inflation but that has not been the case. This has
led to panic across the crypto community, but two markets have not felt the
sting in the same way: The UAE and the Baltic countries. As a result of their
relative insulation from the current dips because of long-term thinking, these
countries are in an enviable position to use this crisis as an opportunity.
اضافة اعلان
These countries are not stressing about the market
downturn because they have invested in the underlying technology underpinning
cryptocurrencies at the state level. Estonia
leads the way, investing
substantial resources into blockchain technology to run its government. The
technology provides a digital ledger of transactions held on hundreds of thousands
of computers that is virtually unhackable. Estonian citizens interact with
their government through digital interfaces secured on a private blockchain.
This makes the services run more efficiently and makes the country more secure.
Given their checkered history with Russia, the
Baltic states have used blockchain technology to set up systems that enable
their governments to function remotely. In the case of a Russian invasion, the
political leadership can access their private blockchain and the reins of power
from anywhere. When blockchain is this integral to the fabric of government,
the price of Bitcoin doesn’t cause many earthquakes.
While the UAE has not needed to take such
extravagant national security steps, the country has recently embraced blockchain
technology. In 2016, the Dubai government unveiled a bold blockchain strategy
that called for the rapid integration of government services and blockchain
technology. This manifested in initiatives such as the paperless strategy that
saw various government offices move away from paper to transactions securely
stored on a blockchain. While the ambition is there, implementing this new
blockchain world has come in fits and starts. Even for small countries like the
UAE moving systems to a blockchain takes time.
Countries that invested in blockchain infrastructure projects with a long-term horizon have less concern about the short-term crypto price fluctuations.
The UAE has also been reticent to allow for
unfettered access to cryptocurrency by citizens and residents. While you can
now buy and sell cryptocurrency with relative ease, it was not always this way.
The slow uptake of crypto, coupled with the relatively large amount of
expendable cash among locals, might have something to do with the UAE’s
relative insulation from the mayhem in the crypto markets. What is apparent in
all of this is that the UAE sees blockchain technology (and cryptocurrency to a
degree) as a crucial part of creating its knowledge economy.
As the government continues to embrace other aspects
of a modern knowledge economy, from the metaverse to agricultural technology,
blockchain will continue to feature prominently, the price of a Bitcoin
notwithstanding. Creating the world’s first ministry of artificial
intelligence, which also has a blockchain mandate, should help the transition.
Let’s not forget that the UAE is a critical hub in the global remittance
market. As more remittances move to the crypto space, the UAE will likely
unveil its coin or digital currency to remain on top of this lucrative economic
sector.
What does this mean for the UAE and the Baltics’
attitudes about the current dip in crypto prices? Well, it should be clear.
Countries that invested in blockchain infrastructure projects with a long-term
horizon have less concern about the short-term crypto price fluctuations. The
UAE is also home to substantially more capital to buy the crypto dips, but that
diverts from the more significant point.
The price of the world’s leading cryptocurrency,
Bitcoin, is impressively volatile. In the last year, it has gone from a high of
roughly $67,000 to its current lows of around $30,000 per Bitcoin. This sort of
price variance won’t likely end anytime soon. This reality shouldn’t cloud the
potential of blockchain technology to transform how we live and interact with
each other. The underlying technology is going mainstream as more investors and
governments understand the lasting power of blockchain. In smaller countries
with nimble legislative environments, the ups and downs of the crypto market
haven’t slowed the process of bringing blockchain to the mainstream. As crypto
markets continue to cool, these small countries will enjoy the lion’s share of
innovation in the blockchain world.
There is an excellent opportunity in the current
market downturn, and in a few years, it is unlikely many will remember this
blip on the radar.
The writer is the former senior editor of Exponential View, a weekly newsletter about
technology and its impact on society. He was also the editor-in-chief of
emerge85, a lab exploring change in emerging markets and its global impact.
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