Embracing the Future: Why Do We Focus on Emerging Markets

In the fast-paced world of blockchain technology, our decision to focus on emerging markets is a strategic move that holds immense promise. At Lisk, we have embarked on a journey to prioritize these regions, recognizing the transformative potential they offer not only for the company but also for the global community as a whole.

By Lisk

19 Mar 2024

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Understanding Emerging Markets

Traditionally, an emerging market economy refers to the economic landscape of a developing nation that progressively engages more with global markets as it advances.

While they may not exhibit all the characteristics of developed economies, such as robust economic growth, high per capita income, well-established equity and debt markets, openness to foreign investment and a reliable regulatory framework, they do offer tremendous opportunities for early investments, albeit with greater exposure to inherent risks.

Real-world adoption of Blockchain

With the economic growth of emerging markets often comes real-world adoption of blockchain. The real-world adoption of blockchain technology in emerging markets has been remarkable. In 2022 alone, African blockchain startups secured an astounding $474 million in funding, marking a staggering 429% year-over-year increase from the $90 million raised in 2021. Notably, Africa boasts the highest funding growth rate compared to any other region globally, contrasting with the relatively stagnant funding levels seen in the US.

This showcases the continent's burgeoning role as a key player in the global blockchain landscape. For instance, amidst economic volatility, countries like Nigeria, South Africa or Kenya have embraced cryptocurrencies as alternative financial solutions, highlighting the continent's immense potential for driving innovation and fostering real-world use cases for blockchain technology.

Blockchain: Financial opportunities rather than risks

While countries like the U.S. and Germany exercise caution regarding Blockchain technology due to concerns about market volatility and scams, its technological and economic advancements present practical solutions to numerous everyday challenges encountered by residents of emerging markets.

From providing access to stable stores of value to facilitating secure cross-border payments, blockchain empowers individuals to navigate economic uncertainties and establish a more secure financial footing. This transformative potential is underscored by the significant levels of crypto awareness and comprehension in countries such as Nigeria, South Africa, Kenya, and Indonesia, where cryptocurrencies are perceived as financial opportunities rather than risks.

A recently released report on global blockchain adoption and awareness by Consensys highlights Nigeria's exceptional crypto awareness, with 99% of respondents indicating familiarity with cryptocurrencies, while 70% demonstrated a clear understanding of blockchain technology.

In South Africa, 98% of the population reported awareness of cryptocurrencies, with a prevailing sentiment associating them with the future of money and digital ownership, rather than merely a speculative means of quick gains or losses. As this technology continues to evolve, this advanced understanding of Blockchain technology in Emerging Markets is likely to allow these regions to play an increasingly significant role in reshaping financial systems and empowering individuals worldwide.

The original spirit of Blockchain

With positive demographic growth and an unmatched energy to jump into a new era, it seems clear that emerging markets hold the key to widespread blockchain adoption.

Unlike developed economies with entrenched legacy systems, emerging markets provide a clean slate for blockchain technologies to flourish. By establishing a presence in these regions and collaborating with local communities, governments, and businesses, we aim to co-create solutions tailored to their unique needs and challenges.

Our recent partnership with the Indonesian Government underscores our commitment to driving positive change and leveraging blockchain for real-world impact and is a clear confirmation of the willingness of those countries to work hand in hand with blockchain technologies to answer some of their most pressing challenges.

By embracing emerging markets and unlocking new opportunities, we can pave the way for a brighter, more prosperous future for all. As we stand on the brink of a new era of technological advancement, the potential of blockchain to reshape the world has never been greater, and emerging markets are poised to lead the way.

Did you know?

Economic Growth Rates: Emerging markets have shown higher economic growth rates compared to developed economies with an average annual GDP growth rate of around 4-6%, outpacing developed economies' growth rates of around 2-3%. (Source: International Monetary Fund - IMF)

Share of Global GDP: As of recent data, emerging markets already contribute approximately 40-45% of the world's GDP, compared to around 55-60% for developed economies. (Source: World Bank)

Population Growth: The population growth rate in emerging markets is estimated to be around 1.5-2% annually, while in developed countries, it's typically less than 1%. (Source: World Bank)

Poverty Reduction: Over the past few decades, the proportion of people living in extreme poverty in emerging markets has declined substantially, from over 40% to less than 20% of the population. (Source: World Bank)

Investor Participation: Emerging markets attract a significant portion of global investment flows. Institutional investors such as pension funds, sovereign wealth funds, and asset management firms allocate a substantial portion of their portfolios to emerging market assets, accounting for approximately 20-25% of global institutional investment allocations. (Source: Institute of International Finance - IIF)