Web3 adoption is growing fast across Asia, and as the cryptocurrency and blockchain markets continue to evolve, it is likely that we will see more innovative uses of these technologies across the region. Here are 5 key drivers of growth:
1. Adoption and regulation
Cryptocurrencies have gained significant traction in Asia, with countries like Japan, South Korea, and Singapore being early adopters. However, there is a need for clear regulation to ensure the safe and fair use of these technologies.
Some countries, such as China and India, have implemented stricter regulations on cryptocurrency activities, while others, like Japan, have taken a more permissive approach. In 2017, Japan recognized bitcoin as a legal form of payment and has since implemented regulations to ensure the safe use of cryptocurrencies.
China is launching its first state-backed NFT marketplace, the latest sign of embrace for a technology that has occupied a legal gray area within the country’s notoriously strict regulations on cryptocurrency.
The platform will be run by three state-owned and private entities, including China Technology Exchange and Art Exhibitions China, both of which are government-backed, and Huban Digital, a private company, according to a report by Chinese state media outlet China Daily.
The marketplace, whose name translates to “China Digital Asset Trading Platform,” will also be used to trade digital copyrights and property rights along with collectibles.
South-East Asia, especially Vietnam and Philippines, have ongoing high levels of crypto adoption, due in part to unbanked populations, and the remnant effects of the play-to earn gamefi craze in 2022.
2. Blockchain gaming
Gamefi, or blockchain gaming, is a trend that is gaining popularity in Asia. Gamefi refers to the use of decentralized finance (DeFi) protocols to power gaming experiences and allow players to earn cryptocurrency rewards. This trend is particularly appealing in Asia, where there is a large and passionate gaming community, as well as a growing interest in DeFi and cryptocurrency.
One of the key benefits of Gamefi is that it allows players to earn cryptocurrency rewards by participating in games, and also take ownership of in-game assets via NFT technology. This can be especially appealing to players who are looking for ways to monetize their gaming skills and make a living from their hobby.
There are a number of Gamefi projects and platforms that are active in Asia, including Axie Infinity by Sky Mavis in Vietnam, CryptoSpaceX, and Cryptovoxels. These projects offer a variety of games and experiences, ranging from virtual worlds and collectible games to multiplayer online games. Some of these projects have already gained a significant following in the region, with thousands of active players and millions of dollars in cryptocurrency rewards distributed.
3. Cryptocurrency mining
Asia is home to a large portion of the global cryptocurrency mining industry, and there has been significant investment in mining infrastructure in the region. China is still a major player in this industry, with a significant share of global mining operations, despite bitcoin mining being made illegal in 2021. However, there have also been developments in other countries, such as Kazakhstan and Malaysia, which have attracted miners with their cheap electricity costs.
Stablecoins, which are cryptocurrencies pegged to the value of a traditional asset such as the US dollar, are gaining popularity in Asia as a way to facilitate cross-border payments and reduce the volatility associated with local currencies.
For example, the Hong Kong Monetary Authority and the Bank of Thailand have both launched pilot programs to test the use of stablecoins for cross-border payments.
US dollar stablecoins allow Asian consumers to save money in US dollars. This is a feature often not provided by local banks, or accessible to unbanked populations, and means consumers can mitigate the risk of currency devaluation.
5. Decentralized finance
The use of decentralized finance (DeFi) protocols, which allow for peer-to-peer financial transactions without the need for intermediaries, is a growing trend in Asia.
DeFi has the potential to disrupt traditional financial services by providing alternative, decentralized solutions for a variety of financial services, such as lending, borrowing, and payments.
In Asia, there is a growing interest in DeFi as a way to bypass traditional financial systems and increase financial inclusion for underbanked populations. In addition, the high levels of mobile phone and internet penetration in many Asian countries have made it easier for people to access and use DeFi applications.