Have you noticed a surge in businesses targeting on-chain capital and users lately? It’s happening all around us.
Here are just a few examples:
• Mercuryo recently launched a BTC-funded debit card in partnership with MasterCard.
• MetaMask is testing its own self-custodial debit card with Visa in a beta release.
• Archax, a regulated tokenized securities exchange, now offers over 80 tokenized fund products, spanning money markets, sustainability, and emerging market equities.
As the on-chain market continues to expand, this trend is set to accelerate.
But if you’re running a business—or planning to—how do you position yourself to capitalize on this growth? Which on-chain markets and customer groups should you target to ensure your business thrives?
This is the number one question I get asked in my go-to-market advisory work. And it’s crucial.
Get this right, and you could cut years off your journey to success, with a revenue stream that scales steadily. Get it wrong, and you risk wasting years of effort and burning through your investors’ capital.
To help you avoid the latter, I’ll share some key insights I’ve learned.
When catering to on-chain capital, there are four key questions every business must answer:
1.Which market has the most capital? – Without capital, there’s no business.
2.Which market has the highest adoption rate? – High adoption means easier onboarding and faster customer growth.
3.What problems are digital assets solving in these key markets? – Understand what your customers truly care about.
4.What are their preferences when purchasing digital assets? – Know how your customers want to allocate their financial resources.
To keep this clear and concise, I’ll break down the answers in a series of posts. In this first part, we’ll tackle the first two questions. The rest will be covered in the following research posts.
Let’s dive in.
Top Onchain Markets By Country
The first task at hand is to figure out the lay of the land. Where are the biggest markets by value of transactions? Using data from Chainalysis, I compiled the top 10 markets by value received via crypto in 2023.
Perhaps it is not surprising that the global onchain markets are split between the big developed markets and fast-growing emerging markets.
The US leads the pack with 25% of the global onchain market, mirroring its absolute economic size and general populace affluence vs rest of the world. Other leading economies, such as the UK, Canada, Germany and S.Korea, fill the spots and combine for 15% of the global market.
The EM bucket makes up 20% of the global market with India, Turkey, Russia, Vietnam and Thailand making the top 10 list despite their much smaller economies.
What is interesting is that 3 out of the 5 biggest markets are EM countries: India, Turkey and Russia. Remember the backdrop for this is that in both India and Russia, crypto is highly marginalized/banned until recently. For example, in 2022, the Central Bank of Russia pushed for a complete ban on crypto and the India government considered a complete ban of private ownership of crypto the same year.
This suggests to me that crypto is solving specific hair-on-fire problems in these EM countries.
While the numbers make it clear that the US is unequivocally the No.1 market in the world for onchain products and services, it is also one of the more difficult places to do digital asset related business given the SEC’s enforcement-focused regulatory approach.
To cater to this market, a business must be prepared for higher regulatory and compliance costs given its strict regulatory hurdles and requirements.
However, if we were to rank the markets by crypto adoption penetration relative to their economy size, the list becomes very different.