Complex Made Simple

Exclusive: “Stablecoins will be a key feature of 2019”

AMEinfo spoke to George Naddaf, Regional Manager, Middle East, at eToro about the growth of cryptocurrency in the GCC, trends, major disruptions, and more!

"Crypto has the power to act as a gateway to long-term investing for people who are new to the market" " Bitcoin has managed to ride the wave of volatility and has started to address questions regarding scalability" "Stablecoins eliminate the hurdle of price stability creating a user-friendly way to interact with the blockchain"

New investors who trade in cryptocurrencies are also taking up investments in other assets such as stocks, commodities, and forex, according to the latest data revealed by global multi-asset investment platform eToro.

About 11 percent of people, globally, who traded in cryptocurrencies on the eToro platform since 2017, went on to diversify their investments. In the GCC and Arab region, the findings are quite similar. Close to 9 percent of crypto traders in the region invested in other assets, with 2.7 percent of this 9 percent investing in commodities.

Global trends show the cryptocurrency market expanding from a valuation of $574.3 million in 2017 to $6.7 billion in 2025 at a compound annual growth rate of 31.3 percent, according to Transparency Market Research. AMEinfo spoke to George Naddaf, Regional Manager, Middle East, at eToro about the growth of cryptocurrency in the GCC region, major trends, important disruptions, and more!

 

George Naddaf, Regional Manager of the Middle East at eToro

 

Q: How is crypto-trading picking up in the GCC region? 

George Naddaf: The Middle East is an incredibly diverse region, which means that interest in crypto assets is growing as the technology that powers it – blockchain – is increasingly embraced by the region’s leaders.

Dubai has led the way in supporting blockchain technology, with His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the Crown Prince of Dubai and the Chairman of Dubai Future Foundation, establishing a blockchain strategy with a goal of securing all government documents on blockchain by 2020.

However, some cities will move faster than others in adopting crypto assets as certain local economies are still heavily reliant on cash and are moving at different speeds to adopt digital forms of payment.

Equally, crypto trading has been highly appreciated among investors in the Arabic World where they believe in the longevity of this asset class – especially as crypto assets and the networks behind them become more organized and regulated. Investors in the Arabic Region are diversifying the crypto portfolio by being able to trade the 14 crypto assets eToro offers them.

 

Q: How has the investment in crypto opened up opportunities to bring in new investors to other asset classes?

George Naddaf: Crypto has the power to act as a gateway to long-term investing for people who are new to the market. As we have seen for eToro, the variety of assets available means that people may have come to the platform to initially trade crypto, but could then choose to diversify into other investment types – all in one place.

Trading in crypto has given new investors a degree of market understanding and experience. It’s enabled them to become familiar with the tools and knowledge needed to make their own investment choices, which can be applied to any asset class they might become interested in. Technical analysis and fundamentals tools are presented in a simple and transparent way on the eToro platform. Users can also take advantage of the knowledge shared between traders on the platform.

 

Q: What is the crypto industry doing to better engage with consumers?

George Naddaf: For bitcoin and other cryptos to succeed their rate of adoption has to be faster than email. We, therefore, need to see more user-friendly applications. That is where the industry needs to focus its efforts. If we achieve this in the next 24-36 months, then mass adoption will arrive.

Focusing on the first crypto – Bitcoin – it has managed to ride the wave of volatility and has started to address questions regarding scalability. Its price, although volatile at times, will fall in line with other assets as its utility increases and speculation reduces.

The first ever Bitcoin transaction took place just eight years ago and today we are already seeing it begin to meet the requirements of everyday money. Given the speed of adoption, we could see bitcoin on the high street within the decade.

Looking beyond crypto as a payment method, blockchain technology has driven an explosion in financial innovation. It offers the potential to upend everything we think we know about financial systems and assets.

Regulations also have a role to play and we believe that appropriate regulation will help encourage the mass adoption of crypto.

 

 

Q: What are the major trends and disruptions likely to impact crypto trading in the coming months?

George Naddaf: Last year was a rollercoaster year for crypto assets as the market was balancing itself off the back of highs seen in 2017. However, eToro holds a positive outlook for the year ahead: from increased institutional interest to more regulatory certainty in the market, the infrastructure that traditional markets rely on has grown stronger.

It’s safe to say that the crypto asset space has seen incredible growth and all signs are pointing towards 2019 being the year that we see a greater level of integration between crypto and traditional markets.

We believe that the rise of stablecoins will be a key feature of 2019. One of the key obstacles that crypto assets need to overcome for mainstream adoption is price stability. Stablecoins largely eliminate this hurdle, creating a more user-friendly way to interact with the blockchain. It is well known that eToro is working on the launch of its exchange. Our own suite of stablecoins will form part of the evolving range of tokens listed on the exchange.

 

Q: Bitcoin is still stuck under the key resistance level of $4000-$4,200. What will BTC need to break past this?

 

George Naddaf: $4000 – $4200 remains a key area of resistance on Bitcoin. The price has reached this area on numerous occasions this year and sold off. For the price to potentially break through this level, a significant catalyst, or set of catalysts, is needed to encourage new 'investors' to buy into it. A couple of potential ones that I can point out are:

  • major retailers starting to accept BTC, which will potentially come with viable scaling solutions such as Lightning Network
  • SEC approval of crypto ETP products – such as VanEck SolidX ETF
  • Intercontinental Exchange’s launch of crypto exchange – BAKKT
  • regulatory approval of exchange tokens such as Bitcoin.

 

Q: What are the challenges preventing blockchain payment methods from becoming mainstream? 

George Naddaf: The first ever Bitcoin transaction took place just eight years ago and today we are already seeing it begin to meet the requirements of everyday money. Given the speed of adoption, we believe that we could see bitcoin on the high street within the decade.

Yes, many challenges remain such as scalability, regulation, energy usage, awareness etc. but we believe that in time these can and will be overcome.  We must remember that crypto assets are still in their infancy and are, rightly so, developing under close scrutiny.

One of the greatest challenges is understanding. The Venn diagram between the individuals who understand what is being developed and the ones that write about them simply have very little overlap. We need to change this. We need to work together. The industry knows there are only a handful of cryptocurrencies. Ethereum, for example, is not a currency. It is like saying my Nectar points are money, or my shares on Facebook are money. Other tokens, crypto assets or cryptocurrencies as you refer to them are not currencies, but they can be converted to a currency such as Bitcoin. Just as when gold was used as money, we didn’t have every element within the periodic table used as money we will not have 1.5million cryptocurrencies.

If we had critiqued the Internet as we do crypto assets, we would not have experienced the changes we have in the last three decades. It wasn’t scalable, we all knew Internet addresses were limited in number. It wasn’t possible to send files larger than 1Mb over email. I couldn’t watch a video. Every time I tried to read something, ‘The Internet went down’. It was pretty useless, but a few people continued to dream and delivered possibly one of the greatest innovations.

 

 

Q: How are initiatives like eToro helping in the development of new investors?

George Naddaf: eToro was founded in 2007 with the vision of opening up the global markets for everyone to trade and invest in a simple and transparent way. We wanted the eToro to become a community where people could share their ideas. We built the platform as a social network for traders and investors, where they can execute trades, but also see what others are doing and talk to each other. We invented copy trading, or at least brought it to the masses, and 'copy' remains a key feature of our multi-asset platform today. Around half of our clients use it, both in terms of following others or investing in our growing range of CopyPortfolios.

We believe that investors are looking for three things: 1) access to the assets they want, 2) knowledge and insight, and 3) someone to make the process easy.  Unlike traditional fund managers, eToro offers all three and at a price point which makes investing accessible to everyone. Joining eToro gives investors of all types of access to the assets they want today from commodities and stocks, through to crypto assets.  

They also benefit from being part of a global community of more than 10 million registered users who share their investment strategies and insights and anyone can follow the approaches of those who have been the most successful. It is simple and easy to set up an account, then buy, hold and sell assets. For those new to investing, the community aspect of eToro’s platform and the educational resources introduce users to the risk profiles of the different asset classes and the types of returns to expect. Our community is alive 24/7 to answer questions and share insight.