Cryptocurrency investments should more closely follow market adoption patterns.
Many say that Web3 is just a place for imagination because of its ability to make millions overnight, because memes are more important than useful. Old manufacturers and dreamers will soon lose faith in the future of the industry. In addition to media reports, there are other bright spots.
Blockchain and cryptocurrencies are very beneficial to people, especially in emerging markets. Society is experiencing a fundamental shift in the way Web3 technology empowers the poor and underbanked and overcomes the shortcomings of new and legacy financial institutions.
Investment must continue.
Developing countries lead the adoption curve
By 2024, the World Bank estimates that 1.4 billion people worldwide will lack access to finance. The partnership aims to address the problem of unequal distribution of wealth. The industry must support other innovators who are committed to driving change. Africa is one of the leading regions for cryptocurrency adoption, due to low access to banking services. Even in 2021, nearly 300 million adults in sub-Saharan Africa still lack access to basic financial services. Lack of access significantly limits people’s ability to manage their daily lives, save and invest money – let alone run a business.
Crypto is changing that narrative.
According to Chainalysis’ 2024 Global Cryptocurrency Adoption Index, developing countries are leading the pack, with countries like India, Indonesia, and Nigeria leading the way. Sub-Saharan Africa has the highest Bitcoin adoption rate in the world at $98,330 in 2023, with Nigeria leading the global cryptocurrency adoption index. By mid-2023, Sub-Saharan Africa will account for 2.3% of the global cryptocurrency market cap, with a market value of $117.1 billion. In this space, cryptocurrencies have practical uses beyond their intended use.
Things are improving
In emerging markets, we are seeing practical uses for cryptocurrencies beyond their use as a hedge. Local entrepreneurs who understand the local issues are driving meaningful change, and new technological innovations are being developed to meet the desired goals. Projects like CARE’s pilot projects in Kenya and Ecuador, which are distributing cryptocurrency-based loans to vulnerable groups, are demonstrating how cryptocurrency can provide access to basic goods and services and boost economic recovery from the COVID-19 pandemic. Non-fungible tokens have become a cross-border fundraising tool.
Major regulatory issues could hinder adoption growth.
The Indian city of Raipur set a record for blockchain-based assets through an innovative crypto startup called Airchains. This blockchain solution is designed to prevent fraud and reduce processing times from one month to three days. In developing countries, many studies are being conducted to consider this issue. However, Raipur has a bidding process and is willing to deal with this challenging issue.
Use the wallets, not the shiny new ones
Although the flow of capital to cryptocurrency projects in emerging markets is increasing in importance, it is still light compared to the funds available to projects in developed countries.
In 2023, developed countries, especially the United States, will invest approximately $1.975 billion in the third quarter alone, with US companies accounting for 34.5% of all cryptocurrency capital projects.
In contrast, developing countries are finding it difficult to access matching funds, with total investment in Africa reaching $1 billion this year, highlighting the challenges in investment plans in these region. Recently, there has been a growing awareness of the potential of emerging markets. Cryptocurrency investments should now focus on where mass adoption is taking place. In emerging markets, cryptocurrencies are more of a tool than a speculative asset.
