As the world becomes more digitized and interconnected, it’s no surprise that cryptocurrencies have become increasingly popular. Despite the various challenges related to their adoption, cryptocurrencies continue to grow and attract new users around the world. However, while we often hear about the growing adoption of cryptocurrency in places like the US and Europe, the fact is that some of the most significant growth in the sector is happening outside of these traditional markets.
In fact, the trajectory of crypto adoption in the coming years suggests that the epicenter of cryptocurrency could well shift permanently to regions of the world that are now seemingly at the periphery of the industry. Asian countries, for instance, have been major players in the crypto industry for years, leading the way in areas such as mining and trading. Crypto adoption is also booming in Latin America, with countries like Argentina and Venzuela experiencing significant growth in the use of cryptocurrencies as an alternative to traditional currencies that are subject to hyperinflation and other economic challenges.
So why is it that the US and Europe, typically seen as the most far-reaching global financial centers, are lagging behind in the adoption of cryptocurrencies? One major challenge has been the regulatory environment. Europe and North America are known to have some of the strictest cryptocurrency regulations in the world, which can make it difficult for businesses to operate in the space. Moreover, while some countries in Europe have taken steps towards creating more supportive frameworks for cryptocurrency, there remains considerable resistance from traditional finance players, which is impeding the sector’s growth.
Another factor is the preponderance of mainstream financial institutions in North America and Europe. For many years, financial institutions like commercial banks and investment firms have been a key part of the traditional financial services ecosystem. They are often seen as the gatekeepers of economic power and have significant influence over governments and regulatory bodies. Understandably, the rise of cryptocurrencies, which are often designed to operate outside of traditional financial systems, can be perceived as a threat to the status quo. Many of these institutions have been vocal critics of cryptocurrencies and have been actively lobbying against regulatory frameworks that would make it easier for businesses and individuals to adopt crypto.
Despite these challenges, there are reasons to believe that the future of cryptocurrencies still looks very bright. For one, the hype around cryptocurrencies continues to grow unabated. While the 2017 ICO hype cycle may be a distant memory, there is still considerable interest in cryptocurrencies and the unique applications they offer, ranging from decentralized lending platforms to non-fungible tokens and voting systems. Moreover, the infrastructure to support cryptocurrencies continues to mature rapidly, with improvements to scaling technologies and incentive mechanisms that are making the use of cryptocurrencies more simple, accessible, and secure.
So where does all of this leave us in terms of crypto adoption in the coming years? As we have already noted, the current centers of crypto activity are moving away from North America and Europe, towards regions where regulatory structures are more supportive and where there is more willingness to explore the possibilities offered by blockchain-based technologies. In the coming years, governments that have been traditionally skeptical of cryptocurrency may begin to take a more open-minded approach, due to the tangible benefits that can arise from participation in the crypto ecosystem. Meanwhile, businesses that are used to operating within the boundaries of traditional financial systems, should start looking beyond hard currencies and begin exploring the possibilities offered by cryptocurrency.
If the current trends in crypto adoption persist, then we may witness a major shift in the global financial landscape over the next few years. Bitcoin Builders 2023 may be a very different affair from what we have seen in the past, with more emphasis on networks, applications, and use-cases that are being developed in regions that have traditionally been on the margins of the global financial system. As new technologies emerge and as the utility of blockchain-based systems becomes more apparent, the barriers to adoption that currently exist will continue to be eroded, and we may see a more decentralized and democratized global financial system emerging.
While crypto adoption is still only getting started in the United States and Europe, it’s already taking off in emerging markets that are finding everyday practical uses for cryptocurrencies. As Daniel Fogg of IOV Labs explained in an interview with Cointelegraph’s Joe Hall, among the most significant macroeconomic challenges facing people in many emerging markets are the need to protect their income, access U.S. dollars, and obtain loans. As a result, the first significant digital banking experiences for many will happen on crypto rails, with cryptocurrencies offering practical solutions to these problems.
Fogg notes that these markets offer “scale opportunity” to retail finance and are therefore a central focus for Rootstock and IOV Labs. The former is the smart contract platform that IOV Labs supports, alongside other projects. The development of DeFi products for these areas is seen as vital, with two primary crypto use cases: DeFi solutions for people seeking outsized returns and alternative investment opportunities, and people acquiring stablecoins pegged to the US dollar to protect against inflation, devaluation, and other monetary issues.
Fogg believes that while Bitcoin is a remarkable innovation, it alone is not enough for the crypto space to be accepted by billions of users worldwide. Instead, the crypto industry’s future will be shaped by those “everyday” use cases that will emerge from emerging markets. These will be focused on practical solutions such as payments, savings, borrowing, and lending, much as we already see in countries such as Turkey, Colombia, Nigeria, and Argentina.
Indeed, Fogg argues that the crypto industry is evolving through two major use cases. One is the advanced DeFi that will likely be popular in the US and Europe, while the other is the “everyday DeFi” that will take off in emerging markets. Rather than being held back by a traditionalist mindset, Fogg thinks that experimentation is crucial to developing these use cases.
In conclusion, mass adoption in the crypto space is being driven by practical use cases that provide solutions to significant macroeconomic challenges and emerging markets’ needs. Rather than looking to Bitcoin as the flagship asset for mainstream acceptance, we should be focusing on developing everyday use cases that address everyday needs such as payments, savings, borrowing, and lending. It is by developing these practical solutions that we will achieve mass adoption of cryptocurrencies around the world.
