Many argue that Web3 is merely a speculative playground, as it has the power to create millionaires overnight and memes seem to overshadow actual utility. Long-term builders and dreamers can quickly lose faith in the future of the industry. Despite the media’s narrative, there are positive developments.
Blockchain and cryptocurrency are genuinely benefiting humanity, particularly in emerging markets. Web3 technology is bringing about fundamental societal shifts by assisting the underserved and underbanked and combating the shortcomings of modern traditional financial institutions.
Investment needs to align with these advancements.
Emerging markets are leading in terms of crypto adoption. According to the World Bank, as of 2024, an estimated 1.4 billion people worldwide remain unbanked. Decentralization fundamentally addresses the uneven distribution of value. The industry needs to support more builders who are dedicated to driving change.
Africa is one of the regions at the forefront of crypto adoption, primarily due to limited access to banking services. Even in 2021, approximately 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, or run a business.
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 leading the way.
By 2023, Sub-Saharan Africa had the highest adoption rate of Bitcoin (BTC) globally, with Nigeria ranking second on the Global Crypto Adoption Index. In 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 just its use as a speculative asset. Local entrepreneurs, who have firsthand insights into local problems, are driving meaningful change, and new technological innovations are being developed for specific purposes.
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 (NFTs) have become accepted cross-border fundraising tools.
Adoption is also growing out of necessity due to acute governance problems.
The Indian city of Raipur recently put real estate records on the blockchain through an innovative encryption startup called Airchains. This blockchain-based solution aims to prevent forgery and reduce processing time from a month to three days. While developed countries would typically take time to consider such issues, Raipur had a tendering process and a strong desire to urgently solve a challenging problem.
Focus on funding adoption, not just shiny new projects.
Although capital flowing into crypto projects in emerging markets is increasing, it still falls 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. This highlights the challenges that projects in these regions face.
Recently, there has been a growing recognition of the potential in emerging markets. Crypto investment should now pay attention to where mass adoption is happening. In emerging markets, crypto is more than just a speculative asset; it is a functional tool.
Ayush Ranjan is the co-founder and CEO of Huddle01.
This article provides general information and should not be considered legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.