Cryptocurrency investment should favor emerging markets

Opinion by: Ayush Ranjan, co-founder and CEO of Huddle01

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Many claim Web3 is just a speculative playground because of its power to mint millionaires overnight, and because memes seemingly win out over actual utility. Long-term builders and dreamers can quickly lose faith in the industry’s future. Despite the media narratives, there are bright spots.

Blockchain and crypto are genuinely benefiting humanity, especially in emerging markets. There are fundamental societal shifts as Web3 technology helps the underserved and underbanked and combats the deficiencies in modern traditional institutions in finance and beyond. 

The investment needs to follow. 

Emerging markets dominate adoption rankings

As of 2024, the World Bank estimates that 1.4 billion people worldwide remain unbanked. Decentralization is fundamentally about addressing uneven value distribution. The industry needs to support more builders who are committed to driving change. 

Africa is one of the regions leading the charge in crypto adoption, mainly owing to limited access to banking services. Even in 2021, around 300 million adults in Sub-Saharan Africa couldn’t access essential banking services. This lack of access severely limits people’s ability to conduct everyday transactions and hopefully save and invest — let alone run a business. 

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Crypto is changing this narrative.

According to Chainalysis’ 2024 Global Crypto Adoption Index, developing nations dominate the rankings, with countries such as India, Indonesia and Nigeria leading. 

As of 2023, Sub-Saharan Africa had the highest Bitcoin (BTC) adoption rate in the world, with Nigeria ranking second globally on the Global Crypto Adoption Index. By mid-2023, Sub-Saharan Africa accounted for 2.3% of global cryptocurrency transaction volume, receiving around $117.1 billion in onchain value. In these geographies, crypto serves practical purposes beyond just speculation. 

Functionality is advancing

In emerging markets, we are witnessing the functional use of crypto rather than just its use case as a speculative asset. Local entrepreneurs with first-hand insights into local problems drive meaningful change, and new technological innovations fit for purpose. 

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 fostering economic recovery from the COVID-19 pandemic. Non-fungible tokens have become accepted cross-border fundraising vehicles. 

Acute governance problems can also mean adoption is growing by necessity. 

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The Indian city of Raipur recently put real estate records on the blockchain with an innovative encryption startup called Airchains. This blockchain-based solution aims to prevent forgery and reduce processing time from a month to three days. In developed countries, there would typically be an inquiry to consider the issue. Raipur, however, had a tendering process and a strong desire to solve a challenging problem urgently.

Fund adoption, not shiny new things 

While capital flows into crypto projects in emerging markets are becoming more significant, 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 VC funding. 

In contrast, emerging markets struggled to secure comparable funding, with Africa’s total venture capital investment around $1 billion for the entire year, highlighting the challenges projects face in these regions.

Lately, the recognition of the potential in emerging markets has grown. Crypto investment should now pay attention to where mass adoption is happening. Crypto is a functional tool, rather than a speculative asset, in emerging markets. 

Ayush Ranjan is the co-founder and CEO of Huddle01.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.