The four dynamics that will govern the wider use of crypto in the UAE
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In my opinion, every merchant in the UAE should start considering how they will implement and embrace cryptocurrencies to future-proof their business models. Whether you are a crypto trading platform building a trusted run from fiat currency, or an e-commerce platform trying to determine what the use of stablecoins means for you, the landscape is changing rapidly. As the technology that supports payments also develops and improves, we see consumers adapting and adopting at a rapid pace. Therefore, companies must pivot based on consumer demand to remain both relevant and profitable.
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At my company, Checkout.com, we’ve recently been looking at some of the cultural, demographic and socio-economic dynamics that are likely to pave the way for the future of money built on the blockchain. Of these, four dynamics will prove particularly important for businesses to consider in 2022 as the crypto ecosystem matures – these include:
1. CUSTOMER APPEAL Consumers in the UAE wishes to use crypto. They are increasingly finding utility and benefits in paying with cryptocurrencies, whether they are stablecoins or offline cryptos. Faster transactions and lower fees, especially for cross-border purchases, provide additional benefits for consumers. Younger demographics are particularly attracted to crypto, with 40% of 18-35 year old consumers globally wanting and planning to use cryptocurrencies to pay for goods or services within the next year. That’s up from less than 30% last year, and it marks a significant shift in attitude from digital currencies being viewed only as a means of investment to a means of doing business regularly. In the UAE, over 54% of 18-35 year old consumers either have or plan to hold crypto assets in the next 12 months.
2. THE BUSINESS OPPORTUNITY The growing appeal among consumers opens up opportunities for companies. Overall, sellers who have already entered the crypto space (or work with third parties facilitating a back-end conversion) report positive results in terms of reputation and attracting new consumers. Almost two-thirds (73%) of merchants who have offered crypto as a means of transaction for customers in the past 12 months said they had positive marketing results, 80% have seen positive mentions in the press and social media, and 82% said they have been able to attract new customer demographics.
This commitment from well-known and trusted brands will be crucial to deepening the crypto ecosystem. A study by Visa showed that over half (59%) of crypto-aware consumers believe that cryptocurrency requires the participation of established financial institutions before it achieves mainstream adoption. The report also shows that 81% of crypto-curious consumers would be interested in buying cryptocurrency if their traditional bank offered it. In January 2022, Visa announced that the use of crypto-linked cards reached $2.5 billion in the first fiscal quarter.
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3. TRUST Cryptocurrencies continue to suffer from a trust gap as a result of well-publicized breaches that have cost investors billions. This is reflected in consumer sentiment, where half of the surveyed population believe that all forms of cryptocurrencies (including stablecoins) are risky. A third believes that all cryptocurrencies are too risky to ever become mainstream. Widespread confidence in the value and utility of cryptocurrencies and the safety and efficacy of the technology will be critical to regaining consumer confidence.
4. ADOPTION GAP Although crypto penetration is deepening, there is still a large adoption gap based on age and gender. Apart from the age difference mentioned above, we see that gender plays a dominant role in the choice of crypto. Men are more likely to simultaneously view cryptocurrency as risky while having a strong appetite to invest and spend with it, i.e. to override any perceived risk. But in general, men also tend to have greater previous experience with crypto and thus a higher degree of confidence in its security and usefulness.
Across job descriptions, gig economy workers are leading crypto adoption, with the study showing content creators, gamers and gig workers embracing crypto in far greater numbers. Almost half (46%) of online advertisers say their fans and audiences have sent them digital currencies to support their work. Like all important trends, the “creative class” will lead the way for the rest of the crypto community.
How businesses respond to crypto will define success for years to come. Volatility and security concerns aside, cryptocurrencies and the blockchain technology that underpins them are too big to ignore. A clear strategy and a willingness to embrace change herald a new future for UAE merchants.
Related: How Decentralized Finance is Supporting Dubai’s Growing Crypto Economy
