Dubai Launches Digital Currency: Emcash
Starting with Bitcoin, there are over a thousand cryptocurrencies including Ethereum, Monero, Litecoin, zCash, Tezos and so on. Dubai just announced that it’s going to promote a digital currency of its own. So is this currency in the same league as Bitcoin and Ethereum…or is it a different animal altogether?
The Basics
Emcash is a partnership between Emcredit, a subsidiary of Dubai Economy (a Dubai government department), and a UK based blockchain start-up Object Tech Grp which works in the identity and privacy space.
Tom Morgan, Co-Founder of Object Tech Grp, cites 3 advantages:
1. Cheaper
2. Faster
3. Secure
Muna Al Qassab, CEO of Emcredit, makes 3 noteworthy points about the new currency:
1. “emCash payments are settled directly between the user and merchant”, with no 3rd parties involved
2. “It reduces fraud as well as inflation since currency is issued in real time based on actual demand”
3. “the blockchain technology deployed allows for distributed and shared ledgers so that control over payments is not limited to any single member in the emPay ecosystem and transactions are recorded instantaneously.”
What does it mean?
Let’s look at Bitcoin. The core objective of a distributed ledger is “decentralization” — which means no central entity controls the value or supply of the cryptocurrency and zero trust in a 3rd party is required to deal in Bitcoins.
Does emCash fulfill this condition?
The Emcredit CEO says: our “currency is issued in real time based on actual demand”…
Does that mean that more currency units will be issued when demand goes up and vice versa? And Emcredit will do it at its discretion? And the value of the currency will be pegged to the UAE dirham — or something else?
It’s clear that the supply of the currency is not fixed or pre-defined. A central authority (Emcredit or Dubai Economy) will determine its price and supply. Which means it can be manipulated. Which means…
It’s a fiat currency in disguise.
So what’s the smokescreen and is it any good?
Emcredit and Dubai Economy are using some buzzwords: Encrypted Digital Currency and Blockchain — to “imply” that they are a new cryptocurrency.
And they’re being honest.
Emcash will use blockchain technology and cryptography instead of 3rd parties like Visa/Mastercard and multiple Banks to make transactions happen between users and merchants. If irreversible, these transactions will be cheaper, faster and secure (as correctly pointed out by Tom Morgan) because you’re cutting out middlemen.
And that could be good to pay for your coffee.
It’s a possible improvement in user experience and cost, yes…but is it a fundamental shift towards a decentralized future?
Not at all. Because the currency supply and price is controlled by a central authority.
But that’s not necessarily a bad thing. The future isn’t going to be as simple as Bitcoin or Ethereum doing everything. It’s going to be a complex mix with global currencies, market-based currencies, community currencies, local currencies and so on all working side by side serving different needs.
Look at Emcash as a local currency with a fixed price backed by the government and accepted by all merchants in the city built on a blockchain.
I like it. Great work Dubai!
So which city is next?
