Baroness Bitcoin of Arabia: Michelle Mone and Douglas Barrowman on their delve into the world of cryptocurrency

Building a huge complex in the Emirates isn’t itself remarkable – the Middle Eastern playground for the rich is peppered with luxury apartments, largely paid for in state-owned petrodollars over the last two decades.

What makes it interesting is that the apartments are up for sale in bitcoin, the cryptocurrency de jour, favoured by techies and participants of the dark web, up over 400 per cent in value this year.

I meet the Scottish partners, just one of 32 international journalists invited to the Dorchester Hotel over 48 hours, to better understand a move which, I suggest to the pair, will be met with due scepticism.

“Everyone thinks the Bitcoin bit is the main part,” says Mone, “but it’s the development. It’s the global launch of Aston Plaza. There are 1,113 apartments, and there’s a shopping mall, and it’s a £250m development, which is pretty big.”

I suggest that Dubai, and the UAE as a whole, is notorious for empty and unfinished property – projects valued at $81bn have been put on hold as leaders across the region adjust to prolonged low oil prices, according to the Middle East Economic Digest. It seems offbeat to build yet another one, I add.

Barrowman says that the properties in the region “are not really empty. I think a lot of it is unfinished, and the reason why it’s unfinished is financiers, the banks, are not overly-willing to lend on large scale developments… what you found is that from 2009-2010 – the crash – a lot of people just shut up shop and didn’t continue with the build. So what Sheikh Mohammed is trying to do is get them all back on stream for the Expo 2020.”

The apartments, in an area Mone refers to as “the Beverly Hills of Dubai” are presently about 25 per cent complete after a year of building, with 480 units already sold. She has set up an interiors company to furnish the premises at an extra cost. The other 700 or so units are going to be offered in bitcoin – but why?

“I’ve been a fan of cryptocurrency and bitcoin for a couple of years now, and I’m quite heavily invested in the sector,” says Barrowman. “I’m quite conversant with this as a currency, which I believe is here to stay. Bitcoin is the gold standard, so we wanted to offer the people who have made quite a lot of money over the last few years in this space the opportunity to offload some of their crypto gains into bitcoin and back into fiat currency, to then buy an apartment with us.”

The front end sale will be handled by BitPay, a sort of PayPal for bitcoin. Someone who holds a large quantity of the currency can pay Barrowman in bitcoin, who will use BitPay to “immediately convert” it into a fiat-backed currency, which will pay for the development at the back end. The dollar price is fixed, convertible on the day.

“I’m not currency speculating,” he says. “So what’ll happen with BitPay is, they’ll convert at the price, at the time, whatever. So I’ll have no currency exposure. I’ll immediately convert back into fiat currency – I’ve got a development to build. I’m not hanging on to bitcoin and trying to trade it, I’ve got to get it into the development in a conventional currency sense.”

Purchasing one of these properties can be seen as a low-tax investment vehicle for converting large holdings of bitcoin into bricks and mortar, which can then be sold or rented out as the buyer sees fit. Interestingly, Barrowman is offering the units at 15-20 per cent below market value – people in the crypto scene “like to have rewards and discounts” he says.

One crypto stalwart I spoke to said that only three types of people hold that much bitcoin, though: the Chinese, hackers, and those involved in organised crime.

The reason being is the semblance of anonymity it provides. The unregulated currency is often described as anonymous, but that’s not entirely accurate. It is possible to send and receive bitcoins without giving any personally identifying information. It uses a public ledger, meaning that a unique identifier (address), and every transaction involving that address is stored forever in the blockchain. If your address is linked to your identity, every transaction will be linked to you.

In the original Satoshi whitepaper – released by the anonymous person(s) who designed bitcoin – it was recommended that users use a new address for each transaction to avoid the transactions being linked to a common owner. Sort of the equivalent of writing many books under different pseudonyms. So how then, will Barrowman and Mone ensure that the bitcoin they are receiving is clean?

Barrowman says that because they’re “using conventional back-end conveyancing,” they “still need a passport. We need to know who we’ve accepted the bitcoin from, and therefore, there is what you call ‘anti money laundering client checks’ in place, in order to satisfy Dubai authorities. So anyone that has ‘dark side of the web’ bitcoin, we’ll have their name, number, passport.”

Analysts I spoke to last week said this would be extremely simple to work around with the right know-how, and using shell companies to hide the original owner. To clarify, I ask Barrowman to confirm that “he won’t be taking bitcoin from any nefarious sources?

“No, not at all really,” he insists. “There’s tens of thousands of people who have successfully made money through mining, or just holding on to bitcoin as early adopters who are looking for an outlet other than just to back the next ICO [initial coin offering] that comes along – to put it into a tangible asset.”

Since the start of the bitcoin surge, the price has increased rapidly, on a vertical trajectory doubling that of the dotcom bubble. For anyone holding bitcoin, concerned about the bubble bursting investing in one of these properties seems a sensible hedge. Is Barrowman concerned about a bubble?

“There’s talk of it dropping to $2,500,” he says. “I would say well, in that case, get my apartments bought and in October – it’s at 4,750 now [against the dollar] – get them bought now, and I’m relaxed because I’m going to convert them immediately into fiat.”

One theme that occurs throughout our conversation is that of trust. Both were keen to highlight their track record as business people. Mone said that it’s “what the crypto world is all about, it’s trust. And I think Doug being very successful, 55 businesses all the rest of it – I call him the King of Business and I’m the Little Princess – and with me in the House of Lords, a Baroness, they can trust us. We’re not this fly-by-night developer coming in, taking money and running off. We can’t run off.”

You must appreciate that people are going to very sceptical of this? I ask Mone before leaving.

“Do you think so? Even with us?