Most banks, exchange houses and government of countries have over the years increased their interest in adopting blockchain technology in order to cut the cost of doing business, but we are yet to see a fully functional institutionalized cryptocurrency. In 2018, the Middle East doubled their spending and investments in the blockchain technology. Last December, the Securities and Commodities Authority (SCA) of UAE identified initial coin offering (ICO) tokens as securities. Although the government is not in the crypto craze frenzy by promoting the blockchain and the cryptocurrency market, but the authorities in UAE especially have continued to support and encourage blockchain companies by providing a friendly investment environment. Mind you, investment into the blockchain technology is different from cryptocurrency. Especially as the government of the Middle East countries, despite their endorsement of the prospect of the technology have threaded consciously on the endorsement of Bitcoin or any other altcoin. Now, these countries are emirates, ruled by royals. And they have over the years emphasized on the importance of the control of affairs being at the helms of authority, one can only conclude that maybe they simply want to create a cryptocurrency that they can control.
So, on the 19th of January, the United Arab Emirates (UAE) and Saudi Arabia announced a partnership agreement to create a cryptocurrency. According to reports, a meeting which was held in Abu Dhabi had a total of 16 executive members of both countries in attendance, and they discussed the possible joint initiative in the Strategy Resolve. The Strategy Resolve is made up of seven initiatives that include the civil aviation, youth training, and the building of a cryptocurrency that is somewhat set to be flexible with cross border payments within the emirates.
About the Cryptocurrency
When the report was released on the said 19th of January, the council made it clear that the new cryptocurrency was created to facilitate a cross border payments medium between the apex banks in the countries and local banks. It would therefore provide easy transactions between Saudi Arabia and the Emirates. It was also noted that the cryptocurrency was considered to be in its experimental stage. And in this experimental stage, it will be used to test the prospects of the blockchain technology within the Arab nations – emphasis on blockchain. There were few technical details in the report, but the name of the cryptocurrency was not given and the network on which it runs was also not given. However, the only information that was given was on how the technology would exchange data. According to the report, the cryptocurrency project will involve the leveraging of a network of database, distributed among the central banks of the two countries; it will also connect local banks to this network of database. However, despite the fact that it is in its experimental stages, it is being tested in real life situation. So the council laid emphasis on security as it claimed that one of the strong hold of the cryptocurrency project is in the safeguarding of customer interest.
There are not much technical details regarding the project as I write, but from all indications, the central bank of Saudi Arabia and that of UAE will likely host a node for the cryptocurrency. But there have also been speculations on the probability that this project, since it is in its experimental stages, would it be hosted on Etherum blockchain network? Or will the government of the countries build a whole new network? Whichever way it is, we can be certain that the cryptocurrency is going to be centralized, somewhat an institutionalized cryptocurrency.
What are the Prospects of this partnership?
With a long history of large scale importation and exportation established between the two countries, one can only expect this partnership to make things even better. Currently, Saudi Arabia exports commodities totaling $6.7 billion USD annually to the UAE. And UAE on the other hand exports commodities at a total of $8.5 billion USD. With a partnership project like this, it is expected that the difficulty that is experienced in the use of cash and digital banking will be reduced. However, one can only but wonder how they intend to blend this technology with their culture.