Blockchain technology has proven itself to be the backbone of digital transformation in any sector or region it is adopted. Although it started as a tool to boost the financial sector, its widespread adoption in various industries indicates that tech is both the present and the future of innovation. It has completely changed the way we store, share, and create value. For developing nations, this is a doorway into economic empowerment, technological advancement, and even global financial inclusion.
While we do not know for sure where crypto originated from, the United States has emerged as a global leader in the space. It has played a major role in taking this innovative technology to unprecedented heights, from zero to a $3.3 trillion industry. So what can developing nations learn from the US when it comes to the crypto economy?
Brief Overview of the US Crypto Economy
The US has always been at the forefront of the crypto economy since its inception in 2009 so much so that some users believe it was founded in America. While there is no hard evidence to back that claim, the US has certainly helped in shaping crypto into what it is today. In particular, the rise of Decentralized Finance (DeFi) and Ethereum smart contracts owe a big thank you to private US companies. Additionally, favorable government regulations from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have allowed various niches in the industry to continue growing.
One such niche is online casinos. Traditionally, online casinos only process payments using vouchers, credit/debit cards, or using payment gateways such as Swipe. However, due to its efficiency, security, and transparency, many operators have adopted crypto. This rise in crypto casino sites means more players from all over the world can deposit and withdraw payments in Bitcoin or any major acceptable crypto without the hassle of exchange rates. It also goes to show how versatile blockchain technology can be, merging finance with gaming effortlessly.
But that’s only one industry in which cryptocurrencies and blockchain-enhanced services are becoming a deal breaker. From real estate and travel to consumer goods and mainstream payments, the US economy has truly become a crypto-supportive environment.
Lessons from the US Crypto Economy for Developing Nations
Some of the lessons developing nations can learn include;
1. Embracing Financial Inclusion Through Crypto
According to The World Bank Group, financial exclusion is a major contributing factor to extreme poverty. A recent report also revealed that about 17% of adults in the world (a whopping 1.4 billion) are considered to be financially excluded, meaning they do not have a bank account (or any account for that matter) in any financial institution. Additionally, 55% of the 1.4 billion unbanked population is based in rural areas. This is a common problem, especially in developing nations where resources are limited. The US uses crypto to bridge such gaps since all that is required is a smart device and internet (both of which are probably already available). The same report shows that only 4.5% of US households are unbanked, showing that the initiative is working.
Developing nations can learn from this and embark on similar projects. It doesn't have to start with crypto either. Kenya’s M-Pesa initiative, for example, has been widely praised globally for its success in financial inclusion. It started using USSD codes and airtime for payments but has now integrated blockchain technology, making it faster and more secure for users.
2. Promoting Innovation Through Policy and Regulation
The need for clear regulatory guidelines cannot be overstated. The US SEC has been exemplary in this regard. It has laid out clear policies and regulations on how crypto can be used in the US. What this does is show that the government acknowledges and accepts crypto. With that out of the way, the government takes an active role in ensuring that crypto usage is safe for Americans and is also used ethically. This kind of attitude towards innovation is what has led to consistent growth in the industry.
A common trend in developing nations is that they tend to have restrictive policies towards crypto because many policymakers have yet to accept it as a legal means of exchange. By accepting crypto and creating favorable policies, these nations stand a chance to boost their economy using advanced technology and attract foreign investment along the way.
3. Using Education and Talent Development
Recently, many US universities have added crypto and blockchain into their teaching curriculums. There are now several degrees available at the undergraduate and graduate levels. This kind of talent nurturing is creating a new breed of professionals who will drive the industry forward. Even businesses too are now partnering with research facilities to gain a competitive advantage through research and development.
Developing nations can learn from the US by partnering with reputable international institutions to educate and develop talents for their country. Having blockchain academies or university degrees is one cost-effective way of developing the next generation of crypto experts.
Challenges and Risks in Replicating the US Crypto Model
While it is easy to simply ask developing nations to copy the US crypto model, some challenges and risks come with that. They include;
1. Lack of Infrastructure
Many of these nations do not have the technological infrastructure needed to sustain adopting a US crypto model. Some of these challenges include poor internet supply, poor power supply, underdeveloped payment systems, and an underdeveloped national identity database. To overcome these challenges, developing nations need to invest heavily in technological infrastructure.
2. Regulatory and Political Barriers
Although corruption is a global issue, it remains thriving in developing nations as there are only a few checks and balances to hinder its growth. There is also the issue of political instability in some regions. All these can hinder crypto adoption. Developing nations need to embrace transparency and put effective systems in place to overcome these barriers.
3. Volatility and Public Perception
For many, even in the US, crypto’s volatility is of great concern. People generally don't like the idea of losing money even if the possibility of making money is greater. In developing nations where the idea of crypto seems so fictional, this is an even bigger challenge. Unless there is a major campaign to educate the public on the benefits of crypto, developing nations will not fully embrace it regardless of any infrastructure put in place to support its growth.
Success Stories
It is not all gloomy on the horizon. Some developing nations have already started applying some of these lessons and are seeing early successes.
In 2021, El Salvador adopted Bitcoin as a legal tender. This historic move has already started yielding positive results for the economy. The country’s tourism industry saw a 22% increase in 2024 as tourists make payments without the hassle of exchange rates.
Across the ocean, Nigeria is emerging as a leader in crypto adoption in Africa. Lagos, its commercial capital, is also becoming a hub for crypto innovation among tech-savvy youths. Nigeria’s fintech sector is currently in a boom, thanks to blockchain technology. While the country may still have a long way to go compared to the US, it is setting standards that other African countries aspire for.
