September 12, 2024
These Developing Markets are Reshaping the Crypto Landscape
Dear Subscriber,
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| By Jurica Dujmovic |
The global crypto landscape is shifting as we speak.
And the epicenter of this change isn't where you might expect.
There’s a quiet crypto revolution underway in developing markets.
Crypto trading is just part of the story.
These emerging markets are redefining the role of crypto in economies and societies worldwide.
And the implications stretch far beyond the trading floors of New York or the tech hub of Silicon Valley.
How far?
The Henley Crypto Adoption Index 2024, a comprehensive study of global crypto integration, gives us a clue.
Established financial hubs like Singapore, Hong Kong and the United Arab Emirates have advanced regulatory frameworks and tech ecosystems.
So, it’s no surprise they top Henley’s 2024 list.
What is intriguing is the movement in countries like Malaysia and Thailand. They rank 8th and 10th, respectively.
Chainalysis’ 2024 Global Crypto Adoption Index gives us a look at what this surge looks by region.
DeFi use (light blue bars) surged year over year in Latin America, Sub-Saharan Africa and Eastern Europe.
Compare that to the dark blue bars, which represent the use of centralized exchanges.
The adoption of cryptos in developing markets is driven by three key factors:
- Remittances: The global remittance market, valued at $887 billion in 2024, is being revolutionized by cryptos offering instant, low-cost transfers.
- Inflation Hedging: In countries that grapple with economic instability, cryptos provide a way to preserve wealth beyond the reach of government monetary policies. Recent data shows Bitcoin reaching new all-time highs in countries like Argentina and Nigeria, where local currencies have sharply devalued.
- Financial Inclusion: With about 1.7 billion adults remaining unbanked globally, cryptos — coupled with increasing smartphone penetration — provide banking-like services to previously underserved populations.
The challenges people face in emerging markets have driven some remarkable innovations.
Innovation Born from Necessity
For instance, in countries with unreliable power grids, we're seeing the development of offline transaction solutions and mesh networks for Bitcoin transfers.
These innovations, born from necessity, could potentially revolutionize how cryptocurrencies are used globally.
Moreover, many emerging markets are fostering strong, localized crypto communities.
In places like Kenya and the Philippines, we're seeing the rise of crypto-based savings groups and peer-to-peer lending networks.
These community-centric approaches harken back to the early days of Bitcoin, where the focus was on building a new financial ecosystem rather than pure profit.
Beyond Speculation:
Crypto as a Lifeline in Africa
Then there’s Nigeria.
The country has embraced Bitcoin and other cryptos as tools for economic sovereignty, particularly in the face of government restrictions on crypto trading.
When the Central Bank of Nigeria banned banks from facilitating cryptocurrency transactions in February 2021, this spurred innovation in DeFi and peer-to-peer (P2P) trading.
Numerous WhatsApp and Telegram groups emerged as decentralized marketplaces where Nigerians trade cryptos directly with each other, bypassing traditional financial intermediaries.
These groups, often organized by local communities or university students, embody the core principles of decentralization and financial inclusivity that cryptos were designed to promote.
Moreover, Nigerian developers have been at the forefront of creating Africa-centric DeFi solutions.
Projects like Xend Finance (XEND, Not Yet Rated), a DeFi platform built on the Binance Smart Chain, allow credit unions and individuals to save and invest in stable cryptos, protecting their funds from naira devaluation.
As of early 2024, Xend Finance reported over 50,000 active users across Nigeria and other African countries. This demonstrates the real-world utility of crypto in combating currency instability.
Storing Value in South America
Argentina presents an equally compelling case.
Amid recurring currency devaluations, Argentinians are increasingly using stablecoins pegged to the U.S. dollar as a store of value.
This trend has led to the emergence of crypto-based savings accounts and lending platforms. These provide financial services that traditional banks struggle to offer in a volatile economic environment.
A 2023 survey by the Universidad de Buenos Aires found that 22% of Argentinians hold some form of crypto, with 68% of those citing "protection against inflation" as their primary motivation.
3 Lessons for the West
The adoption patterns in emerging markets offer valuable lessons for developed economies:
- Focus on Utility: The success of cryptos in solving real-world problems in emerging markets demonstrates the importance of utility over speculation. Western markets could benefit from developing practical applications that address genuine financial needs.
- Financial Inclusion as a Priority: The role of crypto in bringing financial services to unbanked populations highlights an often-overlooked aspect of financial technology. Developed economies should consider leveraging crypto to address their own issues of financial exclusion, rather than pushing for centralized solutions like CBDCs (Central Bank Digital Currencies) that can and will compromise financial privacy and autonomy.
- Regulatory Balance: Many emerging markets are finding innovative ways to balance regulation with innovation. Countries like Malaysia are implementing regulatory sandboxes that allow for controlled experimentation with crypto technologies. This approach could serve as a model for Western regulators grappling with how to oversee the crypto industry.
Indeed, the future of crypto may not be shaped in the gleaming skyscrapers of Singapore or the tech campuses of Silicon Valley.
It’s clear that the most profound impact and innovative use cases are likely to emerge from:
- The bustling markets of Lagos, where peer-to-peer networks circumvent traditional financial barriers …
- The remote farms of rural India, where blockchain-based microfinance initiatives are taking root …
- Or from the streets of Buenos Aires, where cryptocurrencies offer a lifeline against crushing inflation.
These emerging markets, unburdened by entrenched financial systems and driven by urgent economic needs, are becoming the real laboratories for cryptocurrency innovation.
Here, the original vision of crypto as a tool for financial empowerment and economic sovereignty is not just a lofty ideal, but a daily reality being built from the ground up.
For Investors, the Message Is Clear
The most promising opportunities in the crypto space may lie not in the next memecoin or DeFi protocol but, rather, in solutions that address the real needs of billions of people in emerging markets.
These emerging crypto ecosystems provide not just investment opportunities, but a roadmap to a more resilient, and truly decentralized financial future.
For those with the foresight to engage with these emerging trends, the potential rewards — both financial and societal — could be transformative.
Best,
Jurica Dujmovic
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