Many argue that Web3 is merely a speculative playground due to its ability to create millionaires overnight and the prevalence of memes over actual utility. This has caused long-term builders and dreamers to lose faith in the future of the industry. However, despite these narratives, there are positive developments.
Blockchain and cryptocurrency are genuinely benefiting humanity, particularly in emerging markets. Web3 technology is bringing about fundamental societal shifts by helping the underserved and underbanked populations and addressing the shortcomings of traditional financial institutions.
It is crucial for investment to align with these developments.
According to the World Bank, as of 2024, approximately 1.4 billion people worldwide remain unbanked. Decentralization is fundamentally about addressing the unequal distribution of value. The industry needs to support more builders who are dedicated to driving change.
Africa is leading the way in crypto adoption, primarily due to limited access to banking services. Even in 2021, around 300 million adults in Sub-Saharan Africa were unable to access essential banking services. This lack of access severely restricts people’s ability to carry out everyday transactions, save, invest, and run businesses.
Crypto is changing this narrative.
According to Chainalysis’ 2024 Global Crypto Adoption Index, developing nations dominate the rankings, with countries like India, Indonesia, and Nigeria at the forefront.
As of 2023, Sub-Saharan Africa had the highest adoption rate of Bitcoin (BTC) globally, with Nigeria ranking second on the Global Crypto Adoption Index. By mid-2023, Sub-Saharan Africa accounted for 2.3% of the global cryptocurrency transaction volume, amounting to approximately $117.1 billion in on-chain value. In these regions, crypto serves practical purposes beyond speculation.
Functionality is advancing.
In emerging markets, we are witnessing the practical use of crypto rather than its use solely as a speculative asset. Local entrepreneurs, with their firsthand knowledge of local issues, are driving meaningful change, and new technological innovations are being developed to address specific needs.
Initiatives like CARE’s pilot programs in Kenya and Ecuador, which distribute crypto-based vouchers to vulnerable groups, demonstrate how crypto can provide access to essential goods and services while promoting economic recovery from the COVID-19 pandemic. Non-fungible tokens have also become accepted as cross-border fundraising tools.
Moreover, acute governance problems can lead to increased adoption out of necessity.
A city in India called Raipur recently put real estate records on the blockchain using an innovative encryption startup called Airchains. This blockchain-based solution aims to prevent forgery and reduce processing time from one month to three days. While developed countries would typically have an inquiry process to address such issues, Raipur took immediate action due to a strong desire to solve this challenging problem urgently.
It is essential to prioritize funding adoption rather than focusing solely on new and shiny projects.
Although capital flows into crypto projects in emerging markets are increasing, they still fall short compared to the funding available for projects in well-developed nations. In 2023, developed nations, particularly the United States, led with approximately $1.975 billion invested in Q3 alone, with US-based companies accounting for 34.5% of all crypto venture capital funding.
In contrast, emerging markets struggled to secure comparable funding, with Africa’s total venture capital investment amounting to around $1 billion for the entire year, highlighting the challenges faced by projects in these regions.
Recently, there has been growing recognition of the potential in emerging markets. Crypto investment should now focus on where mass adoption is occurring. In emerging markets, crypto is a functional tool rather than a speculative asset.
Ayush Ranjan is the co-founder and CEO of Huddle01.
Note: This article is for informational purposes only and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed in this article are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.