January 4, 2020
As mainstream interest in digital assets continues to surge, the conversation around crypto’s potential to shape the future is still defined by hype. Investors, entrepreneurs and analysts have been far too eager to chase the hottest new trends.
The global market capitalisation of non-fungible tokens (NFTs) – unique digital assets verified and stored on blockchain, often works of art – was estimated at US$43 billion in October.
Quite a lot of attention is consumed by NFTs, by the latest DeFi (decentralised finance) derivatives, by meme currencies and the speculative bubbles they cause. What if more energy, resources and intellectual capital were directed towards crypto’s potential to uplift the developing world?
Easier access to vital medicines, new agricultural markets, more efficient transport – crypto adoption can facilitate those outcomes in less-developed nations. Given the tools and funding to innovate in the crypto space, entrepreneurs in emerging markets will be able to produce innovative solutions to real-world problems.
Models for how crypto can change lives in these regions are already developing organically.
In the Democratic Republic of the Congo, for example, a locally based entrepreneur and crypto blogger helped sustain a community displaced by a volcanic eruption, buying smartphones for some, providing a seed amount of bitcoin, then educating individuals and business owners on how to use the currency.
Future endeavors to create micro economies around shared use of crypto could help disadvantaged people take ownership of their own financial future, especially where traditional banking services are not widely accessible.
The transformative effect of mobile phones in Africa provided a glimpse of how crypto could revolutionise economic activity in less-developed regions. In many African countries where fixed landlines only ever covered limited areas, mobile phones provided internet access to significant portions of the population for the first time.
As a result, local carriers and developers created tools to meet the needs of the areas they served. Crypto adoption could follow the same path, allowing underbanked regions and individuals to skip past the need for institutionalised banking services.
Mobile payment services have become a major driver of trade throughout Africa. According to a recent study, Kenya and Ghana have the second- and third-highest mobile payment rates in the world, after China, with transactions via mobile wallets and phones representing 87 per cent of Kenya’s GDP and 82 per cent of Ghana’s.
Jockeys watch a video of their race on a mobile phone at Ngong Racecourse in Nairobi, Kenya, in October 2018. In many African countries where fixed landlines only ever covered limited areas, mobile phones have provided internet access to significant portions of the population for the first time.
Jockeys watch a video of their race on a mobile phone at Ngong Racecourse in Nairobi, Kenya, in October 2018. In many African countries where fixed landlines only ever covered limited areas, mobile phones have provided internet access to significant portions of the population for the first time.
Given that cash is vulnerable to theft and hard to track, displacement of cash by digital transfers is a clear advantage. Increased use of crypto would be a logical next step.
The developed world did not envisage or create the mobile revolution for Africa. Similarly, it doesn’t have to be the driver of crypto solving real problems in the developing world.
Perhaps a more productive approach would be to intentionally support the innovations people in these countries are making, through inclusion, empowerment and education. For instance, by planning to include emerging markets in the Bullish exchange’s product roll-out, we are providing access to digital assets and new financial tools.
Empowerment can take many forms, such as capital allocation and even technological focus. For one, since the most innovative ideas are often born out of necessity, perhaps focusing on lighter-weight blockchain protocols that work over poor internet connections will yield a breakthrough.
Educating the entrepreneurs of the future on how blockchain works is another essential step towards a more inclusive financial future.
The digital assets industry could also support projects that enable local communities to self-govern. If everyone in a rural village in Kenya, Cambodia or Venezuela has their own wallet to use cryptocurrency, for example, they could use that same wallet to vote, receive government services, and even to monitor the status of public initiatives in which the community has a collective stake – for example, the building of a new school.
Blockchain and crypto can bring integrity and development to the developing world. This is more than just a philosophical or moral pursuit – it can make a difference to the livelihoods of people and enable innovation that will move us all forward.
Max Nam-Storm, based in Hong Kong, is chief technology officer at Bullish, a technology company developing products for the digital assets sector. The article was previously published in the South China Morning Post.
