In spite of mix signals from the cryptocurrency world about the future of cryptocurrencies, many countries are planning to test this new technology. Earlier, we heard that Iran is going to launch its own cryptocurrency to counter the American economic sanctions. Venezuela had also launched its own cryptocurrency ‘Petro’ in 2018 to fight the economic sanctions.
Now, reliable resources report that Saudi Arabia and United Arab Emirates are also planning to launch their own cryptocurrency for cross border trade. This digital token will work between these two countries. Here, it is noteworthy that Saudi Arabia and UAE are among the richest nations of the world. Due to being neighbors, much of the trade takes place between these two allies.
Both the countries have already started the testing phase of the cryptocurrency. Currently, local and national banks of both the countries have access to this cryptocurrency. The main objective behind this launch is to facilitate the trade between the two nations.
They want to test the real benefits of blockchain technology for cross border trade. It is important to mention that cryptocurrencies have revolutionized the cross border trade. This is because cryptocurrencies have made it possible to process the cross border remittances in seconds. Earlier, the remittances took 15-20 days for processing with conventional methods.
The invention of blockchain technology has reduced this time. Now, the global transactions complete in a matter of seconds. For example, a cross border transaction completed in just 3 seconds in Ripple’s blockchain platform. Also, cross border transactions have become cost efficient.
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Saudi Arabia and UAE also want to make these transactions cost efficient and fast. They also want to check the influences of a state owned cryptocurrency on monetary policy of the country.
UAE and Saudi Arabia have collaborated to strengthen the mutual relationship with the help of seven point cooperation plan. The launch of this cryptocurrency is also a part of that plan. Local and central banks in both the countries will control of this Saudi-Emirati virtual coin. The availability of these virtual coins for general public in both the countries is unknown.
Mutual statement issued by the allies states only the banks will use cross border digital currency in the testing phase. The main objective is to test the implications of blockchain technology on cross border remittances. A distributed database will be at the back of this digital currency. Central banks and the other participating banks in both the countries will share the database.
Testing phase of the virtual currency will help both the countries to safeguard customers’ interests and set certain technological standards by keeping in view the cyber security risks. After successful implementation of this digital currency, the banks will also judge its influences on monetary policies of both the countries.
We can hope that many more countries may launch their own cryptocurrencies. The wider adoption of these currencies will revolutionize the global trade and make it quite efficient and cost effective.
All this seems quite surprising when the values of all the digital tokens are fluctuating. Nowadays, all the cryptocurrencies including Bitcoin are in the red zone. We are receiving controversial statements of the financial experts on the future of virtual currencies. Some are saying that the fantasy of cryptocurrencies is over while others are considering these the future of global economy.
But, most of the experts admit the benefits of blockchain technology and are supporting its global reach. This is why tech giants all around the world are developing cryptocurrency apps. These apps will enhance the global reach and make it easy for the public to buy digital tokens from their cell phones.
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