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In my opinion, every merchant in the UAE should start thinking about how they would implement and adopt cryptocurrencies to future-proof their business models. Whether you are 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 that underpins payments also evolves and improves, we are seeing consumers adapt and adopt to the pace. Therefore, businesses must pivot based on consumer demand to remain both relevant and profitable.
In my company, Checkout.com, we recently looked at some of the cultural, demographic, and socio-economic dynamics that may shape the way forward for the future of money built on 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 CALL Consumers in the UAE want to use cryptography. They find more and more usefulness and benefits in paying with cryptocurrencies, whether stablecoins or unpegged crypto. Faster transactions and lower fees, especially for cross-border purchases, provide additional benefits to consumers. Young people are particularly drawn to crypto, with 40% of consumers aged 18-35 globally wanting and planning to use cryptocurrencies to pay for goods or services within the next year. This represents an increase from less than 30% last year, and it marks a substantial shift in attitude from digital currencies being viewed solely as an investment vehicle towards a way to do business regularly. In the UAE, over 54% of consumers aged 18-35 hold or plan to hold crypto assets in the next 12 months.
2. THE CORPORATE OPPORTUNITY Growing consumer appeal opens up opportunities for businesses. Overall, merchants who have already entered the crypto space (or who work with third parties that facilitate a back-end conversion) report positive results regarding reputation and attracting new consumers. Nearly two-thirds (73%) of merchants who offered crypto as a means of transaction for customers in the past 12 months said they had positive marketing results, 80% saw positive mentions in press and media social, and 82% said they were able to attract new customers.
This involvement of well-known and trusted brands will be key to deepening the crypto ecosystem. A study by Visa showed that more than half (59%) of crypto-aware consumers believe that cryptocurrency requires the participation of established financial institutions before it can be adopted by the general public. The report also shows that 81% of crypto-curious consumers would be interested in buying cryptocurrency if offered by their traditional bank. In January 2022, Visa announced that its usage of crypto cards had reached $2.5 billion in its first fiscal quarter.
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3. TRUST Cryptocurrencies continue to suffer from a lack of trust resulting from high-profile breaches that have cost investors billions. This is reflected in consumer sentiment, where half of the population surveyed believe all forms of cryptocurrencies (including stablecoins) are risky. A third think all cryptocurrencies are too risky to go mainstream. Widespread confidence in the value and usefulness of cryptocurrencies as well as the security and effectiveness of technology will be crucial to regaining consumer trust.
4. ADOPTION GAP Although crypto penetration is deepening, there is still a wide adoption gap based on age and gender. Besides 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 having a strong appetite to invest and spend with it, i.e., to ignore any perceived risk. But overall, men also tend to have greater prior experience in dealing with crypto and, therefore, higher levels of confidence in its security and usefulness.
Across all job descriptions, gig economy workers lead crypto adoption, with study showing content creators, gamers, and gig workers are embracing crypto in far greater numbers number. Almost half (46%) of online creatives say their fans and audience have sent them digital currencies to support their work. Like all major trends, the “creative class” will lead the way for the rest of society when it comes to crypto.
How businesses react to crypto will define success for years to come. Volatility and security issues aside, cryptocurrencies and the blockchain technology behind them are too important to ignore. A clear strategy and a willingness to embrace change herald a new future for merchants in the UAE.
Related: How Decentralized Finance Is Supporting Dubai’s Growing Crypto Economy