Emerging Markets: Blockchain Technology’s Potential Influence

Blockchain technology’s potential to change emerging markets is increasingly becoming a topic of interest. Between July 2022 and June 2023, the Sub-Saharan African region received $117.1 billion in crypto on-chain value, a further increase from the incredible 1200% growth to $105.6 billion recorded between July 2020 to June 2021. Several signs indicate that this technology is striking a chord with emerging markets.

Making Sense of Emerging Markets

Emerging markets are characterized by their signs of economic development and an increasing standard of living. Such markets offer fertile ground for blockchain solutions to address longstanding challenges within such economies.

An emerging market economy can be identified as economies of developing nations starting to gear up and progress as opposed to mature economies such as those seen in the US and most of Europe. Some qualities of emerging markets include fluctuating GDP per capita rates, usually younger median age, starting to establish a regulatory and policy system, and slowly obtaining accessibility to foreign investors.

Blockchain’s Role in Alleviating Emerging Markets

Blockchain’s potential to continue infiltrating emerging markets is clear, and in some countries, it has already started to rear its head visibly. Nigeria ranks second globally in the 2023 Chainalysis Global Crypto Adoption Index and also had the third-best year-on-year growth in crypto transaction volume (9%).

Remittances reached $656 billion globally in 2023, with $54 billion of those heading to Sub-Saharan Africa. Remittances are notorious for their high fees; the UN’s 10th Sustainable Development Goal suggests a 3% fee, while the average fee in Sub-Saharan Africa hovers around 8.46%. Crypto is appealing in this regard due to its lower fees (around 3%) and faster execution compared to traditional sending methods.

With approximately 57% of the African population being unbanked, and high mobile penetration within these regions, crypto offers an alternative way to financial freedom for emerging markets. E-commerce and online payments, investment and savings, retail transactions, cross-border trade, p2p lending, and microfinance are other areas that have been touted to add to the plethora of use cases for blockchain in emerging markets.

Future Prospects and Support for Blockchain Entrepreneurs

Increasingly, interest is being generated in this field as there is a high growth potential for these emerging economies. Such economies would need hedging against inflation and help costly remittances, and amidst the regulatory advances that have taken place recently, it looks like something plausible to invest in.

That is what companies such as Paxful – a leading P2P Bitcoin marketplace – did, where it heavily invested in expanding its operations in Nigeria and Kenya. With budding local African businesses such as AZA Finance, Yellow Card, and Golix, to name a few, excitement seems to be picking up for this category.