What the Western World Should Understand About the Asian Crypto Market

By Lihan Hyunwoo Lee, CTO / Co-Founder, Xangle

Crypto is abounding worldwide. In just over ten years, cryptocurrencies and other crypto assets have gone global, with 154 countries across the developed and developing world implementing the technology for their country’s various needs.

A variety of new altcoins have been added alongside crypto giants Bitcoin and Ethereum to allow for financial freedom outside of institutions, and to give more opportunity to unbanked populations worldwide.

Crypto is growing as an asset class as well, with more start-ups offering tokens to investors as an alternative to traditional financing. Crypto asset trading volume is on the rise as well. Additionally, blockchain technology is being implemented across an array of industries, providing secure and transparent solutions for finance, government, healthcare, and more.

And because crypto isn't confined to one country or region, we're seeing it flourish across the world in groundbreaking new applications. But the future of crypto innovation, adoption, and trade will be found in Asia.

Those in the Western world who may only be familiar with Bitcoin may be surprised to learn that 31% of all cryptocurrency transactions from mid-2019 to mid-2020 occurred in East Asia, totaling $107 billion — 77% more than Europe. There’s also wider investment across a number of crypto assets as well than are typically found in the West. Additionally, Asia is a crypto mining hub, containing over half the world’s hash rate.

A Brief Look at Asia’s Crypto Market

Asian countries are not only embracing crypto asset investment, but are applying unique applications of crypto and blockchain technology, with exciting opportunities for growth. Here are a few examples of why Asia will be a hub for crypto — and in many ways why it already is.

Utility Tokens over platforms: The South Korean market is an important testing ground for crypto use cases, especially since it's more focused on altcoin and utility token issuance. We'll see widespread adoption here, as, for example, over 30% of convenience stores accept crypto already. While Japan is more Bitcoin-driven, it’s turning more towards altcoins with recent Bitcoin caps in the market. There's a much younger investment culture in Asia who are more interested in actively trading than the Western approach to buying and holding (or HODLing). Additionally, US and European markets are still quite conservative around altcoins. Altcoins also provide unique opportunities for investing in new projects, as more start-ups issue ICOs — and new exchange listings are always popular for investors. Altcoins also show the region’s priority: A focus on building applications, not platforms.

Mobile first and digital adoption: Asia’s mobile-first region is comfortable with conducting nearly all aspects of everyday life on their phones, including making digital payments, paying bills, taking out loans, booking travel, accessing public services, paying rent, and more — things that the Western world isn't accustomed to doing yet or with such frequency. This creates the opportunity for a faster, more widespread adoption of cryptocurrencies and other crypto asset utilizations since the culture is already on board with digital technology of this kind.

Unbanked opportunities: There's great opportunity to use crypto for unbanked populations, which is where the Philippians focus is. Those who are unemployed or lost jobs because of COVID-19 are finding new income streams through a “Play to Earn” Dapp on the Ethereum blockchain.

Chinese commitment: The Chinese government has committed to blockchain as part of its five year plan. Still, while they maintain a ban on buying crypto, they've become the leader in building infrastructure for CBDC innovation, and are making plans for a national currency. China is also a major player in crypto mining, possessing 65% of the world's hash rate due to low electricity and labor costs and easy access to hardware.

Large crypto exchanges: Asia also has exchanges trading at very high volume, with a high frequency of rotating listings from new crypto projects. And while Japan has been more conservative in its exchange regulations, and while China only allows C2C trading, Asian exchanges are trading at a frequency of almost four times higher than North American exchanges.

Misconceptions Still Abound

Unfortunately, despite crypto’s growth, there are still misconceptions about the Asian markets, specifically that the investments are speculative and the companies are scams — especially the companies issuing altcoins. While crypto has seen its fair share of exit scams and volatile trading, the companies issuing these coins and tokens are largely serious projects with big dreams. Yet oftentimes investors want to see faster returns and quicker listings on exchanges, resulting in misaligned objectives with teams focused on long-term innovation. Obviously there's opportunity for improvement around better investor relations, visibility into start-up projects, and technology enhancements, but these growing pains shouldn't be seen as a barrier to investment.

Looking to the Future

With this kind of commitment to crypto, it's easy to see how Asia will be center stage for crypto innovation. Going forward, we're likely to see some of the following:

  • Markets and innovations focused much more on blockchain technology and crypto asset utilization.
  • Asia's financial activity shift to being based on crypto assets, like financial holdings and custody, lending, and trading.
  • A move to make small sized assets like patents, copyrights, or online reputations be turned into crypto assets, that can then be tokenized and traded publicly on the blockchain.
  • Passive income gained from crypto holdings move into the public.
  • A complete disruption of payment systems that will be replaced with crypto options.
  • A unification and standardization of markets and corporate funding, due to crypto’s borderless and decentralized nature.

Finally, keep an eye on Asia. It’ll be exciting to see how crypto will realize its many potentialities in that region in the years to come.

About the author

Lihan is a serial entrepreneur and technologist who solves real world problems with a data-oriented approach. He previously founded OpenSurvey, Korea's first and largest mobile survey startup. He was also the co-founder of a leading F&B startup that deals with sensitive medical data. His current passion is towards using data analytics to help solve the transparency issue that plagues the crypto industry.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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