Usage of Non-fungible tokens (NFTs) is on the rise and significantly impacting the world, developing into a $40 billion USD market in 2021. The NFT trends 2022 is expected to witness, for example, digital tagging for artwork, indicate a sector that will continue growing, disrupting industries, and changing our daily lives. Southeast Asian countries are standing out for their interest in this new technology.
NFTs are unique, non-interchangeable data units stored on interlinked cryptographic blocks known as a blockchain. A great benefit of these units of data is that they can be used as a licence for digital assets and are tradable online. NFTs can also work as a ledger for accurately tracing the ownership of transacted virtual assets, such as artworks or music albums.
According to research from Finder, NFT adoption in Southeast Asia is rising, with the region having the highest adoption rates worldwide. Finder’s online survey polled over 28,000 people across 20 countries and asked about their NFT ownership status. The Philippines ranks first with 32% ownership, Thailand second with 27%, and Malaysia third with 24%. Vietnam rounds off the top five worldwide with 17% NFT ownership, just below the United Arab Emirates (UAE) at 23%.
We explore the rise of metaverse opportunities in Southeast Asia
These rankings show that Southeast Asia can be in the driver’s seat on NFT ownership in years to come. As documented by Finder, the current forecast is that the adoption of NFTs will be as high as 41% in the region.
The percentages of people who do not currently have NFTs but plan to in the future stands at 11.6% in Vietnam, 11% in Singapore, 10.5% in Malaysia, the Philippines at 9.5%, and Thailand at 7.9%. According to Keegan Francis, cryptocurrency editor at Finder, the higher rates of NFT adoption are typically in countries that pay workers low average wages.
NFT adoption rates and the crypto market in Southeast Asia
In 2020, Statista conducted a global survey on cryptocurrency adoption in 55 countries, with 2,000 to 12,000 respondents per country. Researchers found that Vietnam had the second-highest share of respondents at 21.1%, who said they either owned or used cryptocurrencies. The Philippines came third at 19.8%, Thailand came fifth with 17.6%, Indonesia tenth with 13%, and Malaysia twelfth at 12.3%.
According to cryptocurrency payments company Triple-A, there were over 300 million crypto users worldwide in 2021, and the average ownership rate stood at 3.9%. Asia had 160 million users, with Southeast Asian countries such as Indonesia recording over 7 million crypto owners. In total, Southeast Asia had over 21 million cryptocurrency users.
The high rate of cryptocurrency adoption in the region and the global surge of NFT sales in the third quarter of last year show that the crypto market is ripe for investment.
Impact on the DeFi sector
Decentralised Finance (DeFi) is a term used to describe a novel way of carrying out financial services in an open, accessible, and fair manner through peer-to-peer blockchain technology. DeFi is an alternative to the big centralised banks, financial institutions, and money markets that control the economic sector. It is a fast, flexible, and secure system that safeguards personal information and allows users to obtain instant loans or other monetary services.
While the rising NFT and cryptocurrency adoption trends are exciting and promising, they will put untold pressure on DeFi since it is still in its nascent stages. As DeFi is currently unregulated, it poses challenges for users who fall victim to scams or hackers. Furthermore, there remains unresolved questions regarding system maintenance and the high energy consumption when creating cryptocurrencies.
In addition, there is a steep learning curve for DeFi, and users might take a while to figure out how everything works. This new financial system also gets complicated, as users must figure out their area’s regulations and tax requirements. Even so, most of these issues can be addressed over time.
For Southeast Asians, getting information about crypto, NFTs, and DeFi in their local languages will go a long way in clearing up misconceptions and encouraging NFT adoption and cryptocurrency usage.
According to the Finder study, NFT adoption in Southeast Asia shows a higher percentage of adults in the region know what NFTs are, compared to countries like Japan, where 90% of the people say they do not know about non-fungible tokens. Surprisingly, countries such as the UK and the US rank poorly, with 78.8% and 70.6%, respectively, saying they do not know about NFTs.
Regardless, the crypto and blockchain sectors are increasingly becoming mainstream, and these changing attitudes will help raise more awareness and boost the industry. The NFT trends 2022 we are likely to see shows that an exciting future awaits us where people will be earning while gaming, buying exclusive tickets to special events, creating unique digital avatars, and immersing themselves in the developing metaverse.