Ever since Bitcoin hit the headlines in 2009 when the open source software was released and the mining of the genesis block took place, the financial marketplace has struggled to determine not only the validity of Cryptocurrency but more importantly, the investment potential. Interest was driven partly by the simplicity of peer-to-peer transactions and the dissolution of a central authority. Cryptocurrency exchanges appear to be the emerging growth sector within the industry, along with third party e-wallet providers. However, many of the questions concerning the sustainability of cryptocurrency remain unanswered, and so the immediate future is a little uncertain, which in turn damages the confidence within the market, and somewhat hinders any development.
Dubai-based BitOasis – a company registered in the British Virgin Islands – is a leading digital asset wallet and exchange, trading in the UAE. In May 2018, the company contacted their account holders advising them that, “AED – Arab Emirate Dirham – electronic deposit transfers and electronic withdrawal transactions would be temporarily suspended on the 15th of May with the exception of credit card deposits until the 16th of June”. BitOasis went on to say, “the problem was down to the issuing bank but the usual buying and selling of all other cryptocurrencies will remain unchanged.” The statement continued, “If you decide to leave your fiat money – legal tender – after the 15th of May, the only way to withdraw the funds would be to convert it to a cryptocurrency and send it to an external wallet. If you choose to keep your AED fiat balance after the 15th of May, there is no date set for the reactivation of the service.” The worrying part about the announcement was the lack of reassurance given to the account holders. Not needing to trust the central bank was the original beauty of Bitcoin, but by accepting BitOasis’s statement, it would seem that particular ideal is well and truly up the swanny.
Undoubtedly, news stories of cybercrime have highlighted the vulnerability of Bitcoin operators, and this is probably causing a hesitancy in the market that could eventually lead to it stalling completely. The crypto movement hasn’t got off to the greatest of starts. In 2014, the MT. Gox fiasco unfolded, and it provides us with the perfect example of how it can go badly wrong. At the time, MT. Gox were handling 70% of all bitcoin transactions worldwide when they announced that approximately 850,000 bitcoins had gone missing – just like that. The full extent of the fallout, in all likelihood, won’t be known. In short, $450 million was – in their own words “most likely stolen.” Needless to say, subsequent bankruptcy and liquidation followed shortly after.