The Arab world has finally begun to pick momentum and accept Blockchain technology as an innovative reality. We’ve recently published a report from Dubai, where in a PR stunt of the decade, a real estate company called Aston Plaza Crypto has partnered with BitPay to sell property for Bitcoin in Dubai’s Science Park, a district 20 minutes away from downtown Dubai.
Here in Dubai, we sat down with Talal Tabbaa from Jordan, who is one of the co-founders of Jibrel.
Initially, the founders of Jibrel (Victor Mezrin, Talal Tabbaa and Yazan Barghouthi) were developing a Blockchain remittance solution for migrant workers working in the Arabian gulf to send money home, but misconceptions, regulatory issues and the volatility of Bitcoin and Ethereum didn't jive well with the regional market.
“Cryptocurrencies provided the most efficient method of transferring value, but weren’t the best store of value,” explains Talal.
Enter the ICO boom
After ICOs started accumulating massive fortunes in BTC and ETH, the regulatory and systematic risks became very apparent: a stable way to store value on-chain was needed.
After having several discussions with banks in the United Arab Emirates and Jordan, as well as banks in Western Europe and the US, Talal, Victor and Yazan have decided to develop the Jibrel Network.
The idea gradually evolved into putting traditional assets on the Blockchain. Traditional assets would then be tokenized in the form of “Crypto Depository Receipts” backed by a brick and mortar bank or financial institution, thus allowing real world regulations to be encoded in the form of a programmable smart contract.
Eventually, the aim would be to leverage Blockchain technology and cryptography to fully automate and decentralize consumer/retail banking both in developing countries and western markets.
Jibrel in a nutshell
In many ways, Jibrel is to tether.to what Ethereum was to Bitcoin. The difference is that Jibrel will allow PwC audited, KYC/AML compliant tokens and instruments to be traded in a decentralized fashion as ERC-20 tokens on the Ethereum Blockchain, in the wake of tether’s recent controversies and frozen bank transfers.
In a region ruled by cash deals and bureaucracy, the Jibrel Network will allow entities and companies to tokenize traditional real-world assets through Crypto Depository Receipts (CryDRs). CryDRs are what Jibrel explain as “the next generation of decentralized ‘smart tokens’ that are embedded with real-world rules and regulations.”
Investors can tokenize cash and money market instruments into CryDRs and sell them on-chain, and the banks or financial institutions would profit from on-chain/off-chain arbitrage, to facilitate institutional grade liquidity to flow into the crypto-economy in the form of cash and money market backed tokens. This allows decentralized autonomous organizations and funds to diversify their crypto-holdings into more stable assets such as USD, GBP, EUR, CNY, AED, RUB or US treasury bonds.
Jibrel vs. Tether
As it stands, tether requires centralization with reliance on traditional banking. Their terms of service do not guarantee the consumers will ever redeem the underlying dollar, which is leading to serious issues for USDT holders, and possibly the exchanges trading the token.
To tackle this, the Jibrel Network has maintained a one-to-one ratio with regard to value and correlation by acting as a mediator between banks – who hold the fiat – and the Blockchain.
Simply put, in tether, users purchased USDT directly from an exchange, whereas in Jibrel, one purchases JNT and then uses that to purchase asset backed tokens (CryptoDepository Receipts - CryDRs) from the Jibrel DAO.
This article is part of a mini-series shedding light on fintech-related news, startups, and exchanges in the Middle East.