3air 42Thanks to several important macroeconomic, political, and technological factors, many developing nations are experiencing adoption rates of blockchain– and cryptocurrency-based platforms, solutions, and applications that are markedly higher than those seen in many developed nations. Here we explore why this is the case – and the opportunities that this fact presents in developing markets.
Blockchain Adoption in Developing Countries
According to the latest research, blockchain and crypto adoption in many developing countries has outstripped the adoption rates seen in many more developed countries. For example, according to research from KuCoin, a leading cryptocurrency exchange, about 35% of Nigerians between the ages of 18 and 60 are in some way involved with cryptocurrencies – well ahead of the penetration rate in the US (23%).
Similarly, reports from Chainalysis, one of the earliest blockchain analysis firms and a trusted partner to many of the world’s leading financial institutions, have found that the top three nations for crypto growth are Vietnam, India, and Pakistan – all developing nations. Kenya and Nigeria, ranked 5th and 6th, respectively, place ahead of the United States, which ranks 8th – the highest ranking of any developed nation. The UK, France, Australia, and many other more developed nations don’t even crack the top 20 in the list.
What factors contribute to this growth, and what is preventing crypto adoption in more developed nations?
The Drivers of Blockchain Adoption
In general, we can expect higher rates of crypto adoption when:
- There are many actors in the market
- Trust in the market is generally low
- There is a substantial amount of friction in the market
- The implementation costs of new, blockchain-based solutions are low to medium
- The time to implement new solutions is low to medium
- The cost-benefit ratio of implementing new solutions is high
Based on this rubric, it is easy to see why crypto adoption is faster, easier, and comes at a lower cost than it does in more developed countries.
Take the US example. Consumer protection and oversight agencies such as the SEC are tasked with ensuring that new products and offerings do not pose unjustifiable or excessive risks to consumers. Because of this, it can take years, a considerable amount of legal legwork, and millions of dollars worth of investment to approve new solutions for use, such as Ripple for financial transactions or healthcare solutions that must comply with HIPAA. Many developing countries are not bound by such restrictions, so it is much easier for private concerns to set up shop, release new apps or solutions to the public, and quickly and easily onboard new users.
Similarly, many developing nations benefit from not having any legacy infrastructure to upgrade or replace when adopting new technologies. Rolling out new products, solutions, or offerings is as simple as delivering something to the user and having them install and run it and they are ready to go.
For example, Immunify.Life is a health startup that uses crypto rewards to improve HIV treatment adherence rates in Kenya. Millions of people in Kenya have HIV, and although treatments are available, many of these people do not use them. Using crypto rewards, Immunify.Life hopes to change this narrative and save lives in the process. Doing something similar in a developed nation could take years or even decades to approve, but Immunify.Life has quickly secured the necessary approvals and is ready to launch this year.
Another project that is tapping into the strategic benefits of using the blockchain in a developing setting is 3air. 3air is building a mesh network of interconnected nodes to deliver fast, secure, and reliable internet, digital TV, and telephony services in hard-to-access regions across Africa. With low setup costs, an extensive geographic reach, and the ability to serve many more customers than traditional mobile towers, 3air can serve millions of new users at a fraction of the time and cost that would be required to roll out connectivity infrastructure built on mobile towers or fiber optic cables.
3air also taps into the benefits of the blockchain to pay participation rewards and provide incentives to people for joining the network and providing coverage and access points to other users – all while complying with local laws and regulations.
What the Future Holds
We can look at the evolution of phone connectivity in developed nations to draw meaningful insights into what the future may hold for blockchain adoption in developing nations. Many modern countries had to progress from manual phone exchanges to switchboard, automated, TDM, and IP-based exchanges. Upgrading to a new system – say, one that uses blockchain-based rewards for sharing bandwidth or setting up connectivity nodes – would mean replacing legacy infrastructure and dealing with the many different agencies and players that operate and have interests in different jurisdictions.
In stark contrast to this, although many developing nations lagged behind Western countries in terms of access to phone services, these countries have been able to skip right ahead to internet-based hybrid and unified communications without having to go through the same slow evolution.
What may seem like technological, political, or macroeconomic disadvantages can prove to be beneficial in the long run, and if blockchain adoption in developing nations is anything to go by – evidenced by the growth and potential of organizations such as Immunify.Life and 3air that are providing real-world, value-added use cases in different settings – then we may likely see developing nations taking a leading role when it comes to blockchain and crypto governance, rollout, adoption – and the efficiency and cost-savings that will accrue therefrom.
Land a High-Paying Web3 Job in 90 Days: The Ultimate Roadmap
