A space once dominated by experts of blockchain technology, cryptocurrency is fast becoming a dinner-table topic in both developed and developing economies. More and more people, both from tech and non-tech backgrounds, have warmed up to the idea of a fully digital and decentralised currency. This new asset class is known to have an ‘inherent value’ due to its underlying technology.
As of today, cryptocurrencies are fast becoming a popular investment choice and competing with time-tested assets like real estate and stocks. Many top market investors are inclined to this new asset class, which shows how profoundly crypto could affect global financial markets in the days to come.
This booming, decentralised parallel economy has taken traditional (read centralised) institutions like governments and banks by surprise, who after their initial aversion had to open up to crypto given its peaking global interest and disruptive quality. Meanwhile, everyday users of cryptocurrencies are growing by the day, thanks to the power of decentralisation.
Cryptocurrencies are genuine asset classes. With companies like Starbucks, AT&T and PayPal accepting cryptocurrencies, crypto seems to have arrived. Although it is a new asset class, it found early adopters in developing economies. The decentralised nature and ease of transfer across international borders have made them popular in a very short time.
Lately, South America has seen a surge in interest in cryptocurrencies. Countries, especially those with unstable domestic currencies, are seeing widespread interest among local users. In countries like Venezuela, people are beginning to see cryptocurrency as a way to protect against their volatile currencies. The recent move by El Salvador to legally adopt Bitcoin for general transactions is also being seen as a milestone, giving Bitcoin equal status to the US dollar in the country.
South Asia, too, is fast catching up. As per a report by Chainalysis, India, Pakistan and Vietnam have the highest grassroots adoption of cryptocurrencies in the world. Their South-East Asian neighbours, the Philippines and Thailand, aren’t too far behind. Despite an initial ban on crypto, India has seen a significant increase in the use of crypto exchanges and wallets. In India, the initial traction was concentrated in Tier I cities. However, it seems to be picking up in Tier II and Tier III cities.
Interest in cryptocurrencies is being generated across Central and South America and Africa as well. Countries like Nigeria, Kenya and Colombia are following suit.
Whether it’s trading, mining or spending, emerging markets are dominating the crypto space. Asia (India, Vietnam, China, Philippines and Thailand), Africa (Nigeria, Kenya, Senegal and South Africa) and South America (Brazil, Venezuela, Colombia and Argentina) are already leading the way with the highest adoption rate, mining and trading volume. Apart from its decentralised nature, Crypto’s adaptability for a mobile-only environment makes it a favourable choice for small, developing economies where a big portion of the population is still unbanked.
This trend is expected to remain in the coming years as we see governments warming up to crypto adoption. If we look at India specifically, greater traction can be expected from Tier II and Tier III cities with more interest being generated among smaller-scale everyday investors and freelancers (gig workers) who rely on work outsourced from foreign clients.
While the future looks promising for the emerging markets, the steps regulators must take would also be decisive in paving the way for more widespread adoption of cryptocurrencies.
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