Published on: November 26, 2023
Author: Derar Hasn
|Table of Content
|How to invest in cryptocurrencies in Dubai
|What is cryptocurrency?
|How does crypto work?
|Why is crypto popular?
|What are altcoins?
|Is crypto legal in Dubai?
|What is the best crypto exchange in Dubai?
|Tips on how to invest in crypto in the UAE
Crypto has become a hot topic in recent years, and if you're in Dubai and looking to invest in cryptocurrencies, you're in the right place. In this blog, we'll walk you through how to invest in crypto in Dubai, sharing valuable insights and tips to help you confidently navigate the cryptocurrency landscape. So, let's explore the fascinating world of crypto trading and investing in Dubai!
A cryptocurrency, or crypto, is a digital or virtual currency that utilizes cryptography for securing transactions, controlling the creation of additional units, and verifying the transfer of assets. Unlike traditional currencies issued by central banks, crypto operates on decentralized networks called blockchains, which stay away from government interference, at least in theory.
These blockchains serve as transparent, immutable ledgers recording all transactions for a particular cryptocurrency. The most well-known and widely used cryptocurrency is Bitcoin (BTC), but hundreds of other cryptocurrencies are also available in the market, each with unique features and use cases.
Cryptocurrencies can offer various advantages, such as fast and inexpensive cross-border transactions, the potential for high investment returns, privacy, and the ability to bypass traditional financial intermediaries. However, they also carry risks, including volatility and security concerns. As the popularity of cryptocurrencies continues to grow, it’s become a significant asset class attracting attention from traders, investors, and businesses worldwide.
Cryptocurrencies are digital or virtual currencies that operate using a “mystical” technology called blockchain. Essentially, a blockchain is a decentralized and transparent ledger that securely records and verifies transactions. When a cryptocurrency transaction takes place, it's added as a "block" to the chain. And before a new block is generated, it must undergo a verification process, making it extremely hard to forge transaction histories. Each block contains information about the transaction, such as the sender, the recipient, and the amount transferred.
Miners, individuals, or groups with powerful computers validate and confirm these transactions by solving complex mathematical problems. Once a block is confirmed, it's added to the blockchain, creating a permanent and immutable record. This decentralized nature of cryptocurrencies eliminates the need for intermediaries such as banks, allowing for peer-to-peer transactions. Additionally, cryptocurrencies provide security and privacy through encryption techniques, ensuring the integrity and confidentiality of transactions.
Investing in cryptocurrencies can be a worthwhile endeavor for several reasons. Firstly, cryptocurrencies tend to offer increased volatility. Bitcoin, the king of crypto, went from a few cents to over $60,000 over a span of only a decade, jumping more than a whopping 85,000,000%. Yes, we know – that’s a lot of zeros. And it isn’t a calculation mistake. But then, it crashed, reaching a little over $16,500. So, as you can see, the volatility was like a thrilling roller coaster ride, showing crypto's speculative and risky nature.
In terms of the total crypto market capitalization (Bitcoin + altcoins), in 2021, the number hit over $3 trillion, an all-time high, starting from more than “only” $5 billion in 2014. But guess what happened later! The market took a dive and stopped at $744 billion. Volatility can be a double-edged sword.
Secondly, cryptocurrencies operate on decentralized networks, which means they aren’t controlled by any central authority like banks or governments. This gives individuals more control over their assets and reduces the risk of interference or manipulation.
Additionally, the blockchain technology that underpins cryptocurrencies provides increased security and transparency, making it harder for fraudulent activities to take place. Lastly, the growing acceptance and adoption of cryptocurrencies by both individuals and businesses indicates a promising future for the digital asset class. As more industries and institutions embrace cryptocurrencies, the demand and value are likely to increase further.
What are altcoins?
Altcoins, or alternative coins, are digital currencies that have emerged as alternatives to Bitcoin. While BTC is the most well-known and widely adopted cryptocurrency, altcoins offer different features and functionalities. These coins are usually built on blockchain technology, just like Bitcoin, but they often have their own unique protocols and purposes.
Altcoins can range from cryptocurrencies focusing on privacy and anonymity to those designed for specific industries or applications. Some popular examples of altcoins include Ethereum, Binance Coin, Dogecoin, and Solana.
The market cap of altcoins changed drastically, skyrocketing to $1.51 trillion in 2021 from a modest $4 million in 2014. And the Internet is full of stories of people who invested a few hundred bucks to later discover their holdings were worth dozens or hundreds of thousands of dollars. That's why investors and traders are attracted to altcoins for their potential to offer higher returns and diversify their cryptocurrency portfolios. But there's a price to pay. Cryptocurrencies are generally highly volatile assets. So, it's important to do thorough research and manage your risk properly.
Yes! Although the Central Bank of UAE hasn’t licensed cryptocurrencies or acknowledged them as legal tenders, there are no restrictions on crypto assets. So, it means that crypto trading and investing are allowed for UAE citizens.
On February 28, 2022, Dubai implemented its first crypto law, known as the Virtual Assets Regulation Law (VAL). The VAL aims to regulate cryptocurrencies in Dubai and protect investors.
This significant move was also accompanied by the establishment of the Virtual Assets Regulatory Authority (VARA). It’s an independent regulatory body responsible for overseeing the crypto sector in the region. The announcement of these measures was made by His Highness Sheikh Mohammed Bin Rashid, Dubai's ruler, who emphasized these laws would solidify UAE's position in the crypto industry. On March 11, 2022, the crypto law in Dubai officially came into effect.
Why is it beneficial to invest in crypto in Dubai?
So, if you’re a resident of Dubai, you’re lucky because not only is crypto trading and investing allowed, unlike in many countries in the world, but there is no capital gains tax in Dubai. You don’t need to worry about income and cryptocurrency tax, either. It means that no matter what your gains are, you won’t pay any taxes after cashing out your assets. That’s why it’s one of the most crypto-friendly countries worldwide, with many crypto traders and investors living there.
What is the best crypto exchange in Dubai?
Several crypto exchanges operate in the UAE, offering crypto investors and traders a wide range of options, including Binance, OKX and HTX.
You can also trade crypto on the amana app. With over 10 years of experience, the amana app is the place where you can invest and trade over 100 different cryptocurrencies but also other assets like currencies, global and regional stocks, gold, oil, and more.
If you want to invest in crypto in the UAE, there are two ways to do that. First, let’s start with the faster and more convenient.
You can trade and invest in Bitcoin and other leading cryptos on the amana app without sending your holdings to an external wallet. amana, regulated by multiple reputable international regulatory authorities, keeps your coins safely on its platform.
Just download the amana app, open a free account, make a deposit and you’re ready to start investing and trading cryptocurrencies in Dubai.
The best part is that you can buy and hold cryptocurrencies on the amana app or speculate on the crypto market, taking advantage of prices going up and down. How is this possible? It’s simple – we offer unleveraged and leveraged cryptos, so you have a choice.
That’s not all! We know that buying whole units of cryptocurrencies is not what everybody wants or is able to do. That’s why fractional trading is possible on the amana app. Whether it’s 0.13 BTC or 0.62 LTC, we got your back!
If you want to go through a more hands-on (and more complicated) process:
Choose a reputable cryptocurrency exchange.
Set up your account.
Make a deposit and buy cryptos.
Transfer your crypto to an external wallet if you plan to hold it longer.
The last point might be tricky, especially because you have to find a safe and trusted (online or hardware) wallet. It’s your responsibility to never lose your private key and safeguard it from hackers. Otherwise, your coins might be gone forever. It's not a great situation to be in, right?
Congratulations! You’ve made it to the very end. Now you know that investing in cryptocurrencies in Dubai can be an exciting and potentially lucrative venture. With the freedom to own, trade, and invest in cryptocurrencies, along with no capital gains and income taxes, Dubai is the perfect place to start your crypto adventure. But remember, it’s smart to approach cryptocurrency investments with caution and conduct thorough research before making any decisions.