The Four Dynamics That Will Govern The Broader Adoption Of Crypto In The UAE
Whether you're a crypto trading platform building a reliable on-ramp from fiat currency, or an e-commerce platform trying to decide what the advent of stablecoins means for you, the landscape is changing rapidly.
In my opinion, every merchant in the UAE should start to consider how they would implement and embrace cryptocurrencies to future-proof their business models. Whether you're a crypto trading platform building a reliable on-ramp from fiat currency, or an e-commerce platform trying to decide what the advent of stablecoins means for you, the landscape is changing rapidly. As the technology underpinning payments also evolves and improves, we see consumers adapt and adopt at pace. Therefore, businesses must pivot based on consumer demand to remain both relevant and profitable.
At my company, Checkout.com, we recently looked at some of the cultural, demographic and socioeconomic dynamics likely to forge the path ahead 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 ecosystem around crypto matures- these include:
1. CUSTOMER APPEAL Consumers in the UAE want to use crypto. They increasingly find utility and benefits in paying with cryptocurrencies, be they stablecoins or non-pegged crypto. Faster transactions and lower fees, particularly for cross-border purchases, provide additional benefits to consumers. Younger demographics are especially drawn 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 is up from less than 30% last year, and it marks a substantial shift in attitude from digital currencies being seen as solely an investment vehicle to a means of doing business regularly. In the UAE, over 54% of 18-35-year-old consumers either hold or plan to hold crypto assets in the next 12 months.
2. THE CORPORATE OPPORTUNITY The growing appeal among consumers opens up opportunities for corporates. Overall, merchants who have already entered the crypto space (or work with third parties who facilitate a back-end conversion) report positive outcomes regarding reputation and attracting new consumers. Almost two-thirds (73%) of merchants who have offered crypto as a means of transaction for the customers in the past 12 months said they had positive marketing outcomes, 80% have seen positive press and social media mentions, and 82% said they have been able to attract new customer demographics.
This involvement by well-known and trusted brands will be pivotal to deepening the crypto ecosystem. A study by Visa showed that over half (59%) of crypto-aware consumers believe that cryptocurrency requires participation from established financial institutions before it achieves mainstream adoption. The report also shows that 81% of crypto-curious consumers would be interested in purchasing cryptocurrency if their traditional bank offered it. In January 2022, Visa announced that its crypto-linked card usage hit $2.5 billion in its first fiscal quarter.
3. TRUST Cryptocurrencies continue to suffer from a trust gap resulting from well-publicized breaches that have cost investors billions. This is reflected in consumer sentiment, where half of the surveyed population believes that all forms of cryptocurrencies (including stablecoins) are risky. A third believes that all cryptocurrencies are too risky ever to become mainstream. Widespread trust in the value and utility of cryptocurrencies and the technology's security and efficacy will be crucial to regaining consumer confidence.
4. ADOPTION GAP Although crypto penetration is deepening, there is still a vast adoption gap based on age and gender. Apart from the age divide mentioned above, we see gender playing a dominant role in choosing to use crypto. Men are more likely to simultaneously view cryptocurrency as risky, while also having a strong appetite to invest and spend with it, i.e. to override any perceived risk. But overall, men also tend to have greater prior experience in handling crypto and, therefore, higher levels of trust in its security and utility.
Across job descriptions, workers in the gig economy lead in crypto adoption, with the study showing content creators, gamers, and gig workers are embracing crypto in far greater numbers. Almost half (46%) of online creatives say their fans and audiences have sent them digital currencies to support their work. Like all significant trends, the "creative class" will lead the way for the rest of society in crypto.
How businesses respond to crypto will define success in years to come. Volatility and security issues 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.