To understand, why the Pacific Ocean is centre of geopolitical gravity in the 21st century, we’ll have to take a holistic look at how things evolved in the past and how they impacted the seas, the oceans and broader littoral geographies. Let us delve into the detail of it.

The invention of the wheel around 3500 B.C. was a pivotal moment in shaping human civilization. It revolutionized transportation, enabling the movement of people, goods, and materials over long distances. As civilizations advanced, the wheel’s use expanded into machinery like water wheels and eventually industrial equipment, significantly enhancing trade, agriculture, and construction. Alongside this, the development of written language allowed humans to record knowledge, communicate over distances, and preserve information for future generations, laying the foundation for education, governance, and intellectual progress.

In modern times, electricity has been the most transformative innovation. Its discovery in the late 19th century reshaped how people live, work, and interact. Electricity powers almost all modern technologies, from lighting and appliances to the internet and medical advancements, driving the digital revolution that has connected the world. Each of these key innovations—the wheel, writing, and electricity—represents a milestone in humanity’s continuous journey of transformation, with each breakthrough building upon the last to push the boundaries of what’s possible.

The Aegean Sea: Sea of the City States

Let us journey through the ancient times and look at how geographies have been shaped with respect to these developments. In our quest, first we’ll journey from ancient Mesopotamia where the wheel was invented, westward to the shores of the Aegean Sea, a region once teeming with wealth, power, and advanced knowledge, was the center of gravity for global power dynamics.

Here, city-states, or poleis, emerged as the foundational structure of ancient Greek society, comprising urban centers and surrounding countryside. Each polis was fortified and featured public spaces with temples and government buildings, often atop an acropolis, like Athens’ Parthenon, dedicated to the goddess Athena. Over 1,000 littoral city-states flourished, with major ones such as Athens, Sparta, Corinth, and Thebes exhibiting diverse governance and values. Sparta prioritized military strength, while Athens championed democracy and culture.

The Mediterranean Sea: Mare Nostrum

As the city states grew in size and power, the geopolitical centre stage moved from the congested Aegean Sea to the broader Mediterranean sea. The Mediterranean Sea gained prominence after the Aegean Sea as the center of power and influence shifted from the Greek city-states to larger empires, particularly the Roman Empire. Initially, the Aegean Sea was central to the rise of the ancient Greek civilizations, with its islands and coastlines being hubs of trade, culture, and political power. However, as the Roman Republic expanded and later became the Roman Empire, it conquered territories surrounding the entire Mediterranean, transforming it into what the Romans called “Mare Nostrum” (Our Sea).

The Roman Empire used the Mediterranean for trade, military campaigns, and governance, uniting regions from North Africa, Southern Europe, and the Middle East under its control. The strategic location of the Mediterranean facilitated extensive maritime trade routes, connecting Europe, Africa, and Asia, and enabled the exchange of goods, culture, and ideas. During the height of Roman control over the Mediterranean in the 1st century BCE, the economy was thriving, driven by extensive trade routes that connected Europe, Africa, and Asia. Key goods such as grain from Egypt, olive oil from Spain, wine from Italy, and luxury items like silk and spices from the East flowed across the empire, supported by a sophisticated road network and naval dominance.

Politics were centralized under Roman rule, with the emperor holding supreme authority, supported by a complex bureaucracy. Roman law and governance were imposed across the provinces, although local customs and leaders were often maintained to ensure stability. The Roman Senate, while diminished in power compared to the Republican era, still played a role in governance, particularly in domestic affairs. Demographically, the Roman Empire was highly diverse, encompassing a vast array of cultures, languages, and ethnic groups. Major urban centers like Rome, Alexandria, and Carthage were cosmopolitan hubs with large populations.

The Vast Atlantic Ocean 

Fast-forward several millennia, towards the west of the Mediterranean sea, the Atlantic Ocean gained significance on a global scale during the Age of Exploration in the late 15th century. This period marked a shift in maritime focus from the Mediterranean to the Atlantic as European powers, particularly Spain and Portugal, sought new trade routes to Asia and the Americas.

In his book,Monsoon: The Indian Ocean and the Future of American Power, Robert D Kaplan argued that the voyages, “par orientis” “towards the east” and “par occidentis” “towards the west” were baptized by the church, but they were a direct result of the latest invention in ship making and the ships made were named, “Caravel”. They were strong, modern and agile, and helped to fare faster and safer. The explorations by European powers during the Age of Exploration, voyages “to the east” typically referred to the search for trade routes to Asia (like Vasco da Gama’s voyage to India in 1498), while voyages “to the west” referred to expeditions across the Atlantic, like Christopher Columbus’s voyage in 1492.

The discovery of the Americas by Christopher Columbus in 1492 and the rounding of the Cape of Good Hope by Vasco da Gama in 1498 opened new frontiers for exploration, colonization, and trade. The Atlantic became the main artery for the exchange of goods, people, and ideas between Europe, Africa, and the Americas, leading to the rise of the Atlantic trade networks. This included the transatlantic slave trade, the Columbian Exchange of crops and animals, and the expansion of European empires.

By the 17th and 18th centuries, the Atlantic had overtaken the Mediterranean as the primary economic and political theater, with powers like Britain, France, Spain, and Portugal establishing global maritime empires. The Atlantic’s significance continued to grow into the modern era, becoming central to trade, military strategy, and cultural exchanges between the continents.

During the 19th century, the Atlantic became a critical force in the rise of industrialized nations. The abolition of the Atlantic slave trade early in the century led European powers to focus on global commerce and colonization, particularly in Africa and the Americas. The invention of the steamship revolutionized maritime transport, making Atlantic crossings faster and more reliable. Millions of Europeans migrated to the Americas, especially the U.S., driving economic growth and urbanization on both sides of the ocean. The installation of the Transatlantic Cable in 1866 allowed instant communication between Europe and North America, transforming diplomacy, business, and financial exchanges.

The volume of trade across the Atlantic grew significantly due to the Industrial Revolution. By the mid-19th century, transatlantic trade in goods like cotton, sugar, tobacco, manufactured goods, and raw materials had reached unprecedented levels, with steamships dramatically reducing the time needed for transport. Between 1800 and 1850, British trade across the Atlantic increased fivefold, and by the late 19th century, British exports across the ocean were worth £230 million. Migration also boosted trade, as millions of European migrants created demand for goods and sent remittances home. Free trade policies, such as the repeal of the British Corn Laws in 1846, further spurred the expansion of transatlantic commerce.

By the 20th century, the Atlantic remained a key strategic and economic space, particularly during both World Wars. The Battle of the Atlantic in World War II was crucial for maintaining supply lines between North America and Europe, while after the war, the Atlantic’s importance persisted during the Cold War as NATO guarded the ocean against Soviet threats. The rise of commercial air travel reduced the Atlantic’s role in maritime transport, but it enhanced its importance as a global bridge for air travel and international diplomacy. Meanwhile, the growth of multinational corporations and the development of new industries like oil ensured that Atlantic nations continued to dominate global trade and politics.

Transatlantic trade expanded significantly during the 20th century, with surges following both World Wars. In 1913, global trade reached over $38 billion, with a significant share involving Atlantic powers like the U.S., Britain, Germany, and France. By 1970, world trade volume had surpassed $260 billion, driven by post-war recovery efforts such as the Marshall Plan and facilitated by international agreements like GATT. By the late 20th century, trade between the U.S. and Europe alone exceeded $1 trillion annually, particularly in high-value goods like machinery, chemicals, and technology. The Atlantic’s role as a central artery for global trade and movement of ideas made it one of the busiest trade routes of the century.

The Pacific Ocean: Vast and the Deepest

Let’s come to our contemporary age, as with the dawn of the 21st century, things are taking another course one more time and the center of gravity is shifting once again. On the western coast of the great Atlantic ocean, in the capitol hills of Washington, the secretary of state, Hillary Clinton gave a clue about this shift in gravity, as she talked about shifting the country’s broader foreign policy priorities in the Pacific Ocean from the Atlantic in the 21st century.

Observing from the broader Pacific Ocean region can provide a clearer perspective on the gravity of these changes. Starting from the western coast of the United States, there lies California, the global hub of technology and innovation, where Silicon Valley stands as a symbol of cutting-edge advancements and entrepreneurial spirit. This epicentre of technological development not only drives global tech trends but also brings significant economic and strategic importance to the Pacific region.

The Scale and the Gravity 

Now, as we are voyaging through the regions, Let’s get deep inland towards the western littoral states of the great Pacific Ocean.

China

If we travel about 373 miles upstream on the Yangtze River, we’ll find The Three Gorges Dam in Hubei province of China. The dam is enormous and is a marvel of human engineering. It gives the footprints about the level of advancements that humans have so far achieved, since the invention of the wheel in ancient Mesopotamia. The dam is multipurpose and it alone can generate massive 22,500 megawatts (MW) of electricity. The giant dam is made to fulfill the energy demands of the enormous Dragon economy, to supply power to millions of homes and businesses in the Eastern developed coasts of China.

As of water holding capacity, the Three Gorges Dam holds a massive volume of water, approximately 42 billion tons. This significant mass of water has a measurable impact on the Earth’s rotation. Specifically, it is estimated that the dam’s water storage has increased the length of a day by about 0.06 microseconds.  Moving along the coastal regions of China, one can easily understand the enormity of transformation, and how China has lifted unprecedented millions of its populace out of poverty in just a few decades.

Japan – The Most Industrialized Nation

Alongside China lies Japan, which stands out as one of the most industrialized nations along the Pacific Ocean littorals, renowned for its technological leadership and manufacturing prowess. With a GDP of approximately $4.11 trillion as of 2024, Japan is the world’s fourth-largest economy and a major exporter, particularly in automobiles, electronics, and machinery, with Toyota being the largest automobile manufacturer globally. The country’s rapid post-World War II recovery transformed it into an economic powerhouse, and its strategic Pacific location has reinforced its role in global trade. Despite facing demographic challenges, with 28.7% of its population over 65 years old, Japan continues to lead in technological innovation, particularly in robotics, to address labor shortages.

South Korea: Tech and Global Manufacturing Leader

South Korea is a global leader in industries such as electronics, automotive, shipbuilding, and semiconductors. The country’s economy, valued at over $1.761 trillion in GDP is largely driven by its advanced technological sector. South Korean conglomerates like Samsung, LG, and Hyundai are household names worldwide and dominate markets in smartphones, home appliances, and automobiles.

Taiwan: Global Semiconductor and Tech Hub

Taiwan, although smaller in size, plays a disproportionately large role in the global economy due to its dominance in semiconductor manufacturing and electronics. With a GDP of over $791.61 billion in 2024, its economy is heavily export-oriented, with semiconductors being the backbone of its industrial might. Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, accounts for over 54% of the global foundry market. TSMC is the main supplier of chips for tech giants like Apple, Nvidia, and Qualcomm. Taiwan’s semiconductor industry is projected to generate over $154 billion in revenue in 2024 alone.

Although Taiwan is an Island nation, but it has gained so much leverage through semiconductors manufacturing, that the Economist wrote like this about Taiwan, “Without Taiwan, the world economy would grind to a halt,” 

The 10 ASEAN Nation States

Likewise, if we move to the south, we encounter one of the most progressive blocs in the world: ASEAN, comprising 10 dynamic economies as littoral states of the Pacific.

The Philippines has an extremely young population of approximately 119 million people, with a median age of just 25. This youthful demography gives the country a competitive advantage in labor-intensive businesses, such as business process outsourcing (BPO) and manufacturing.

Indonesia is the world’s largest archipelagic country, with a population of more than 280 million. Its vast size and abundant natural resources make it an important player in areas like energy, agriculture, and industry. Indonesia is also expected to become one of the top ten global economies by 2030.

Vietnam has experienced unprecedented economic expansion, by becoming an  important industrial hub. With a population of more than 100 million, Vietnam is known for its strong export sectors, particularly in electronics, textiles and footwear, making it a key part of global supply chains.

Malaysia, with a 34 million populace, remains a regional leader in electronics, petroleum, and palm oil production.

Singapore, the tiny city-state, stands out as another economic powerhouse in the region. Despite its small size, Singapore’s GDP in 2024 is projected to be around $550 billion, making it one of the wealthiest countries in the world in terms of GDP per capita.

The ASEAN region, with its combined population of over 680 million people, represents one of the most vibrant economic areas globally. The bloc’s total GDP is projected to exceed $4 trillion in 2024, positioning it as a critical player along the Pacific region.

Australia & New Zealand

Moving further south, we encounter Australia and New Zealand, two highly developed Pacific nations with significant global influence. Australia, with over 26 million people, boasts a strong economy driven by vast natural resources like iron ore, coal, and natural gas, positioning it as a global leader in mining, agriculture, and energy exports. Its strategic ties with both Asia and the West make it a key player in Indo-Pacific trade and security. New Zealand, with a population of over 5.2 million, excels in agricultural exports, particularly dairy and meat, and is recognized for its leadership in environmental sustainability and renewable energy.

Economical, Political & Demographic Significance

In the 21st century, the Pacific Ocean holds immense economic, political, and demographic significance, serving as a vital hub for international trade, geopolitical competition, and environmental sustainability. More than 60% of global shipping passes through its waters, connecting major economic powers such as the United States, China, Japan, and Southeast Asia, making it a critical artery for global supply chains. The Pacific has also become a central stage for geopolitical tensions, particularly between the U.S. and China, as both seek dominance in the region through military and economic influence. With its rapidly growing and diverse population, particularly in East and Southeast Asia, the Pacific region is driving global economic growth and innovation, while its cultural diversity shapes global trends.

Discussing Geo-Politics and GeoStrategy in the Pacific Ocean

The Pacific region is rapidly becoming a geopolitical hotbed, with rising tensions involving major global powers, particularly the U.S. and China. Conflicts in the area extend across economic, military, and strategic lines, making the Pacific a crucial theater for 21st-century power struggles.

US Vs China: The New Cold War

The U.S.-China rivalry is at the center of Pacific tensions, with both nations vying for dominance in the region. The U.S. seeks to maintain its influence through alliances like AUKUS (with Australia and the UK) and QUAD (with Japan, India, and Australia), while China pushes back with its Belt and Road Initiative (BRI) and military buildup in the South China Sea. China’s military budget has surged to around $230 billion, making it the second-largest defense spender in the world after the U.S., which spends $886 billion. The two powers are locked in a struggle for control over sea routes, technology, and influence over regional allies.

“The U.S. is now in a de facto Cold War with China,” says Richard Fontaine, CEO of the Center for a New American Security.

China Vs Philippines: The South China Sea Flashpoint

The South China Sea remains one of the most contentious locations, with China claiming practically the whole region under its “Nine-Dash Line” policy, which conflicts with the territorial waters of numerous Southeast Asian countries, most notably the Philippines. Recently, the Philippines has taken a more proactive position, increasing military ties with the United States and hosting enlarged military sites under the Enhanced Defense Cooperation Agreement (EDCA). The region sees frequent confrontations between Chinese and Filipino ships, with tensions escalating as China tries to push its claims.

“The Philippines is at the front line of Chinese aggression,” according to security analyst Richard Heydarian.

US Vs South Korea: Differing Interests

South Korea is a vital ally of the United States. The strengthening economic ties between South Korea and China, its biggest trading partner, are complicating its security relationship with the United States. South Korea is balancing its reliance on China for economic support and the United States for military defense against North Korea by walking a tightrope. This careful balancing job has occasionally resulted in conflict, particularly with regard to matters such as THAAD (Terminal High Altitude Area Defense), an American missile defense system that has infuriated parts of China and the South Korean populace.

“South Korea is caught between two giants, and the pressure is mounting,” says a South Korean foreign policy expert.

US Vs Russia: Increasing Tensions in the Pacific

Although Europe receives the majority of attention when discussing U.S.-Russian relations, there is also a resurgence of antagonism in the Pacific theater. Russia is stepping up its military presence in the Kuril Islands, a region that Japan claims is disputed. Russia has held joint military drills in the Pacific as a means of strengthening its relationship with China despite growing isolation and U.S. sanctions. In response, the United States has increased its military presence in South Korea and Japan.

“Russia’s Pacific ambitions are part of its broader strategy to challenge U.S. dominance in global affairs,” notes an expert from the Council on Foreign Relations.

The Broader Geopolitical Picture

The Pacific region’s importance goes beyond just military conflict. It’s a global economic hub, home to 60% of the world’s population and responsible for over 50% of global GDP. The Pacific’s sea lanes are vital for global trade, carrying trillions of dollars worth of goods annually. This strategic value is one reason why powers like the U.S., China, and Russia are keen to assert influence. With its mix of economic competition, military buildup, and territorial disputes.

As a former U.S. Secretary of Defense James Mattis once put it: “The Pacific is the future, and all the players know it.”

Bottom Line

In the 21st century, the Pacific has emerged as the new center of gravity for world politics, becoming the focal point for global conflicts and strategic maneuvering. This vast and crucial region is where the world’s most significant power struggles are unfolding. The intense rivalry between the U.S. and China over influence, control of key sea routes, and regional dominance highlights the Pacific’s strategic importance. As these superpowers navigate their competing interests, the economic dynamism and military buildup in the Pacific add to its central role on the global stage. The region is not just a hotspot for geopolitical tension; it is shaping the future of international relations, making it the key battleground for 21st-century global power.

From the land of the samurai to the forefront of innovation, Japan’s journey is nothing short of remarkable. After WWII devastation, Japan not only rebuilt—it redefined the future. In the 1980s, they gave us the Walkman, revolutionizing personal tech, and the Shinkansen, the first bullet train, forever changing travel; but that was just the beginning. Today, Japan leads the world in robotics, smart cities, and even space exploration. Picture specialized robots that care for the elderly, cutting edge vending machines that predict your cravings, and magnetic levitating trains that hover on air.

Japan is living in the future through innovations that feel straight out of science fiction. Cities like Fujisawa are designed as smart ecosystems, where energy, transportation, and homes are connected and run by the network of artificial intelligence. From smart cities to space exploration, Japan isn’t just dreaming of the future—it’s already living it. Let’s have a glimpse of the future by pondering the question, “Is Japan really living in the Future?”

AI Integration: Powering Daily Life with Artificial Intelligence

Hold on to your sushi rolls, because Artificial Intelligence isn’t just a distant dream in Japan; it’s a thriving reality. With a predicted 920,000 AI-related jobs by 2030, 52% of Japanese enterprises currently riding the AI wave, and a $4.9 billion market target, Japan is rapidly becoming the Silicon Valley of the East.

From robots to research institutes, Japan’s AI scene is thriving, with firms garnering over $1 billion in funding in 2020 alone. The country is setting its sights on a massive AI market and wants to train a tiny army of AI engineers by 2025. Japan produces roughly 45% of the world’s industrial robots, which drive efficiency in industries ranging from manufacturing to healthcare. For instance, PARO, a therapy robot, is utilized in more than 30 countries to help dementia patients.

Japan also leads in AI development, with corporations such as SoftBank and Sony. The advent of automated convenience stores, such as FamilyMart’s AI-powered stores, eliminates the need for human employees, while smart toilets outfitted with health sensors and built-in AI health diagnostics are becoming more ubiquitous in homes and public places. The Japanese government’s “Society 5.0” effort embodies the country’s goal for an AI-powered future in which technology solves societal problems. Japan has invested more than $20 billion in AI and robotics innovation, establishing itself as a global leader in automation, digital healthcare, and smart city development.

Japan is paving the way for a tech-driven future, with AI-powered cars, maglev trains reaching speeds of over 600 kilometers per hour, and smart home systems becoming the standard.

Efficient Infrastructure

Japan’s reputation extends beyond its rich culture to its remarkable infrastructure. With a population of 123.3 million in a compact area, Japan’s transport system is a model of efficiency. The Shinkansen (bullet train) is renowned for its speed and punctuality, reaching up to 320 kilometers per hour and covering major routes like the 370 kilometers route between Tokyo and Sendai in just 1 hour and 33 minutes. Adding to this, futuristic maglev trains can zoom at over 600 km/h, showcasing Japan’s cutting-edge transport technology.

Tokyo’s extensive network includes 882 train stations, with 282 subway stations ensuring eco-friendly, efficient travel. Japan’s airports, such as Haneda and Kansai, manage millions of travelers seamlessly. As an island nation, Japan excels in both shipping and air freight, supported by 5,000 ports and a significant merchant fleet, making it a global leader in commerce. The country’s infrastructure includes 1,218,800 kilometers of highways and 27,000 kilometers of railways, excellent for robust connectivity.

Unique Lifestyle and Culture

Japan’s cities are a stunning fusion of tradition and modernity. In Tokyo, futuristic skyscrapers like the Tokyo Skytree rise 634 meters above ancient temples such as Senso-ji, creating a mesmerizing urban landscape. This blend of old and new is not just visual but experiential. Japan is a leader in integrating high-tech gadgets into daily life. Wearable translation devices, such as Pocketalk, can translate 74 languages in real-time, making communication effortless for travelers.

Holographic displays are becoming more common in places like Shibuya, offering interactive experiences in shopping and entertainment. The nation’s innovation extends to its cultural practices. For instance, the Ghibli Museum in Mitaka features interactive exhibits that blend technology with traditional storytelling, captivating millions of visitors. Japanese cities also showcase cutting-edge robotic technology in everyday life, from humanoid receptionists at hotels to robotic baristas in cafes.

“The Japanese way of working is characterized by a relentless pursuit of perfection and a deep respect for discipline and detail.”

(Kenichi Ohmae)

In July 2024, Japan unveiled a new series of banknotes featuring cutting-edge anti-counterfeiting technology, including three-dimensional holographic stripes and tactile markers for the visually impaired. This update to the ¥10,000, ¥5,000, and ¥1,000 notes reflects Japan’s commitment to blending advanced technology with its rich cultural heritage.

Japanese culture is also marked by discipline and social responsibility, as seen in the “Osouji” custom, where people rigorously clean public spaces, such as stadiums, after events. Additionally, Japan’s education system emphasizes innovative teaching and STEM subjects, highlighting its focus on cultivating a forward-thinking society.

Work Ethic and Social Values

Japan’s work ethic is renowned for its emphasis on efficiency, discipline, and continuous improvement. The concept of “kaizen” which means “continuous improvement”, is embedded in every aspect of Japanese business and culture.

Taiichi Ohno, a pioneer of the Toyota Production System, said: “Without standards, there can be no improvement.”

Companies like Toyota have perfected this philosophy, leading to a 25% increase in productivity over the past decade by refining processes and fostering innovation. This relentless drive for progress is also reflected in Japan’s high employee retention rates and the culture of lifetime employment that remains influential, despite changing global trends. Respect for nature is deeply ingrained in Japanese values, visible in meticulously maintained traditional gardens and the integration of eco-friendly practices in daily life.

,“The ultimate goal of farming is not the growing of crops, but the cultivation and perfection of human beings.”

(Masanobu Fukuoka)

For example, Tokyo’s Eco Tokyo initiative aims to reduce greenhouse gas emissions by 30% by 2030. Additionally, Japan leads in recycling, with a 90% recycling rate for plastic bottles, thanks to rigorous sorting and community participation.  

End point

In essence, Japan’s blend of advanced technology, efficient systems, unique lifestyle, and cultural values not only highlights its remarkable progress but also sets it apart as a nation truly living ahead of its time. With a relentless pursuit of innovation, from the world-renowned Shinkansen to cutting-edge banknotes, and a deep respect for tradition and sustainability, Japan integrates the past with the future. Japan’s ability to harmonize these elements ensures it remains at the forefront of the future, demonstrating how a nation can balance technological advancement with enduring cultural heritage.

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Blockchain technology, first conceptualized by an anonymous entity known as Satoshi Nakamoto in 2008, has revolutionized the way we think about digital transactions and data security. Initially associated primarily with Bitcoin, blockchain has since evolved into a versatile technology underpinning a wide array of cryptocurrencies and decentralized applications. Over the past decade, its usage has surged dramatically, capturing the curiosity and interest of millions worldwide. One region where this growth is particularly pronounced is Southeast Asia.

The origins of blockchain technology can be traced back to 1991 when researchers Stuart Haber and W. Scott Stornetta introduced a system for timestamping digital documents using cryptography to ensure they couldn’t be tampered with or misdated. However, it wasn’t until nearly two decades later that blockchain found its first real-world application with the launch of Bitcoin.

Today, the adoption of cryptocurrencies is skyrocketing globally, with Southeast Asia emerging as a global hotspot for cryptocurrency adoption. This region’s progressive stance towards cryptocurrency markets, burgeoning digital infrastructure, and the relative scarcity of established banking institutions have created a fertile ground for high-growth startups in the cryptocurrency space. Characterized by its diversity and rising incomes, Southeast Asia is attracting investors and entrepreneurs keen on tapping into the dynamic market opportunities.

According to a recent report by venture capital firm White Star Capital, Southeast Asia is home to over 600 cryptocurrency and blockchain companies. The report highlights that a significant portion of the recent surge in venture capital funding in the region has been directed towards web3, blockchain, and cryptocurrency startups. In 2022 alone, these companies collectively raised more than $1 billion in funding. This trend pinpoints the region’s pivotal role in the global cryptocurrency landscape and its potential as a hub for innovation and growth in the blockchain sector.

As global nomads build new businesses straight from their phones, the impact of blockchain technology continues to evolve, transforming not only finance but also sectors like insurance, supply chains, healthcare, and transportation.

Country-Specific Insights

Singapore stands out as a pioneer in establishing clear and forward-thinking blockchain regulations, including those for tokenized securities. This clarity enables businesses to operate without regulatory ambiguity. The country serves as a key hub for the Asian blockchain industry, hosting the headquarters or holding companies of numerous Asian blockchain startups. Alongside other blockchain-forward regions like Dubai, Abu Dhabi, and Luxembourg, Singapore is solidifying its position as a central player in the global blockchain landscape.

Thailand leads Southeast Asia in cryptocurrency trading and investing. The country has a well-established middle class that is making substantial investments in digital assets. This robust investment climate positions Thailand as a significant player in the regional cryptocurrency market.

The Philippines has a vibrant Web3 community, with 20–30% of players of Sky Mavis’s Axie Infinity, a pioneering Web3 game, hailing from the country. This high level of engagement makes the Philippines home to one of the largest proportions of Web3 users globally.

Vietnam is emerging as a developer powerhouse and a notable leader in the Web3 space. The country has produced significant blockchain gaming startups like Sky Mavis, and its youthful, talented developers are expected to play a crucial role in the global blockchain ecosystem.

Indonesia, considered Southeast Asia’s elder brother and giant, has the fourth-largest population in the world and a rapidly expanding economy. The country’s potential is enormous, and it is garnering increasing attention over time. Additionally, Bali is praised as a crypto oasis in Southeast Asia, further highlighting Indonesia’s growing significance in the blockchain industry.

Malaysia is a true treasure in the blockchain world, home to prominent blockchain infrastructure and analytics companies such as CoinGecko and EtherScan, which are recognized worldwide. Malaysia’s contributions make it an important player in the global blockchain ecosystem.

Investors and demographics

As of 2022, NBC News estimates that 21% of American adults owned cryptocurrency, highlighting a significant interest in digital assets. Globally, India topped Chainalysis’s worldwide crypto adoption index as of September 2023, with Nigeria and Vietnam rounding out the top three, demonstrating the widespread embrace of cryptocurrency in diverse regions. Developing markets such as the Philippines and Indonesia also show a high number of adopters. In the United States, high earners are disproportionately represented among cryptocurrency investors; 25% of all crypto owners make $100,000 or more a year, compared to 15% of the overall population. Furthermore, a Morning Consult survey reveals a gender disparity in cryptocurrency ownership, with men making up over 70% of bitcoin owners despite representing only 48% of the overall population, while women constitute 30% of cryptocurrency owners.

Crypto Adoption Rates in Southeast Asia

The cryptocurrency market in Southeast Asia is anticipated to reach 1.79 billion dollars in 2024, with an annual growth rate (CAGR 2024-2028) estimated at 8.75%. This growth trajectory is expected to result in a total market value of 2.499 billion dollars by 2028. Southeast Asia continues to lead the world in cryptocurrency adoption, with countries such as Vietnam, the Philippines, and Thailand ranking among the top 20 in the 2023 Global Crypto Adoption Index. Singapore remains a standout leader in the Southeast Asian crypto landscape. In 2024, it maintains its position as a hub for crypto enthusiasts, with nearly 10% of its population actively holding cryptocurrencies, highlighting its influential role in the regional market. Vietnam and Thailand have shown significant progress in embracing decentralized finance (DeFi) technology, closely following the United States in adoption rates. This rapid uptake indicates a growing interest in innovative financial solutions within these countries.

Several factors are driving the expansion of the cryptocurrency market in Southeast Asia. Many countries in the region have a significant percentage of unbanked individuals and low levels of financial inclusion, making cryptocurrencies an attractive alternative. Nations like Singapore and Hong Kong have implemented advantageous policies that encourage the growth of the cryptocurrency sector. Additionally, numerous emerging technology funds across the continent are actively supporting and funding various cryptocurrency startups. The region boasts high internet access and smartphone penetration rates, facilitating the use of digital currencies. There is also a general skepticism towards traditional financial systems and fiat money, leading to a greater openness to adopting cryptocurrencies.

In support of this burgeoning ecosystem, the Central Bank of Singapore pledged $112 million last year to assist regional fintech initiatives utilizing cutting-edge Web3 technology. Additionally, through Singapore’s Project Guardian effort, regulators from both countries collaborated to create additional crypto testing activities.

Web3 Startups, Consumer-Facing Services, Decentralized finance (DeFi) platforms and Blockchain games (GameFi)

While a large portion of the deep, basic research and infrastructure development in the blockchain space still occurs in the United States, Southeast Asia is excellent for web3 firms offering consumer-facing services. The demographics of Southeast Asia are very favorable for web3. The populace is young, has an innate understanding of technology, and is more open to trying new things. People are highly motivated to join by the financial side of cryptocurrency because it is primarily a market for developing economies.

Decentralized finance (DeFi) platforms encompass a collection of financial services and products developed on decentralized blockchain networks without the use of intermediaries like banks or other financial organizations. With DeFi, anyone with an internet connection can access a more transparent and open financial system. Examples of DeFi services and products include decentralized exchanges, asset management, insurance, lending and borrowing platforms, and other financial services that can be accessed and managed via decentralized applications on a blockchain network. In 2024, the DeFi market is expected to generate a billion dollars in revenue, with revenue predicted to increase at a 10.60% annual rate (CAGR 2024–2028).

The DeFi market is experiencing rapid innovation and growth. One trend gaining traction is decentralized exchanges (DEXs), which allow users to trade cryptocurrencies without a central authority. Additionally, the integration of non-fungible tokens (NFTs) in DeFi is becoming more common, opening up new avenues for asset collateralization. The need for more inclusive, transparent, and accessible financial services than traditional finance is a major factor propelling the DeFi industry’s expansion. The DeFi market is expected to continue expanding, driven by the creation of new use cases and applications, growing acceptance of cryptocurrencies by mainstream investors, and the introduction of new DeFi platforms and protocols.

A new area of bitcoin and blockchain technology that combines gaming is called “GameFi,” or blockchain gaming. Through the use of NFTs, GameFi seeks to disrupt established gaming business models by granting players genuine ownership of in-game assets. The swift uptake of GameFi in ASEAN can be attributed to the socio-economic obstacles faced by the region’s populace, in addition to their keen interest in gaming. Numerous ASEAN nations face challenges such as a substantial portion of the populace without access to banking services, about 71% in the Philippines alone. Under these conditions, play-to-earn blockchain games offered an alluring way for consumers to augment their income, fueling GameFi’s rapid uptake.

Axie Infinity, a play-to-earn (P2E) game created by the Vietnamese startup Sky Mavis, is one of the most well-known use cases for GameFi. This game significantly impacted ASEAN society, particularly in the Philippines during its 2020–2021 peak. Even those with no prior gaming or cryptocurrency skills could earn cash through Axie Infinity. Players from across Southeast Asia could earn rewards and points in the game and exchange them for fiat money to meet basic necessities. As Axie Infinity’s popularity grew, the cost of in-game avatars, or Axies, skyrocketed, making it difficult for some to afford playing. However, P2E revenue was sufficient to sustain many people in ASEAN, acting as a helpful addition to their total income. Gaming guilds such as Yield Guild Games (YGG) stepped in to ensure that those with limited funds could still play the game by allowing them to rent gaming equipment at a discounted rate and return a portion of their profits to the guild.

The P2E industry has grown by an astounding 188% since 2021, attracting over 61,000 monthly searches. More developments and expansion are anticipated in the GameFi space in the coming times. A notable change in Southeast Asia’s GameFi scene is the growing interest of popular Web2 gaming businesses in Web3 and blockchain-based game creation. For example, Ampverse, a gaming and esports firm based in Thailand, recently created Ampverse Web3, a business division dedicated to the metaverse. With a significant presence in the local esports scene, Ampverse aims to develop a strong Web3 community by educating players about NFTs, P2E, and other GameFi-related topics.

Challenges and Opportunities

Asia is home to several of the world’s most important financial hubs, including China and India, as well as major economies like Singapore, Hong Kong, United Arab Emirates, and Japan. These distinct legal jurisdictions each have their own cryptocurrency laws. For example, trading and ownership of digital assets are permitted in Singapore, but retail cryptocurrency ads are not. Hong Kong has welcomed bitcoin businesses to maintain its status as a significant global financial center, while Dubai has been aggressively pursuing the adoption of digital assets. Japan has gradually relaxed token listing regulations and is becoming more accepting of cryptocurrencies. Conversely, China outlawed the mining and trading of cryptocurrencies in 2021, and while the government is striving to develop comprehensive crypto legislation, India has implemented strict crypto regulations.

Approximately 500 million individuals in Southeast Asia are anticipated to reach working age by 2030. The ten nations that make up the Association of Southeast Asian Nations (ASEAN)—Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam—already have economies that rank fifth in the world when taken as a whole. These economies are expected to grow at a rate of more than five percent annually over the next decade, which is significantly faster than the global average. A Google study predicts that 3.8 million new users will join the internet each month in Southeast Asia due to these favorable demographics. Based on approximately 50 billion dollars in investment, the internet economy in the region is expected to surpass 200 billion dollars in value by 2025.

While cryptocurrencies have made remarkable strides and holds a lot of promise in Southeast Asia, there are still certain obstacles to consider. Among them are cybersecurity and fraud. As cryptocurrency gains popularity, it attracts the interest of hackers, con artists, and other criminals. The region has seen multiple instances of ransomware attacks, phishing scams, hacking, and cryptocurrency theft. Users need to be more vigilant and cautious about their online security and privacy. Additionally, uncertainty surrounding regulations and compliance poses challenges. While some Southeast Asian nations have adopted a pro-crypto stance, others remain circumspect or antagonistic. The regulations and regulatory frameworks in the region are not uniformly clear or consistent, making it difficult for businesses and consumers of cryptocurrency to understand various requirements across different jurisdictions. Further, there is still a lot of misinformation, misconceptions, and mistrust surrounding cryptocurrency. Many people do not know how to use cryptocurrency properly or safely, or they do not understand its advantages and risks.

Despite these challenges, there are several benefits to cryptocurrency adoption. Protection against inflation is one of them. Many currencies lose value due to inflation, but many people believe that cryptocurrencies provide a buffer against this. For instance, the total quantity of Bitcoin is capped at 21 million coins. As the money supply expands faster than the amount of Bitcoin available, its price is expected to rise. This supply limitation mechanism also serves as a buffer against inflation. Another benefit is the speed of transactions. In the United States, for example, moving assets or funds between accounts or sending money to loved ones can take time but, cryptocurrency transactions can be completed in seconds. Moreover, cryptocurrency transactions can be economical, with negligible or even zero transaction costs for international money transfers, eliminating the need for third parties like VISA to validate transactions.

Cryptocurrencies represent a new decentralized money paradigm, helping to release money from governmental control and combat currency monopolies. This decentralization means no government agency can determine the value of a coin or its flow, making cryptocurrencies safe and secure. Additionally, cryptocurrency investments offer variety and can help diversify portfolios. Cryptocurrencies have shown significant growth over the last decade, and their market pricing activity appears unattached to conventional markets such as equities or bonds. This can result in more consistent returns when combined with assets that have lower price correlation. Cryptocurrencies are also accessible, requiring only an internet-connected computer or smartphone to open a bitcoin wallet, without the need for identity verification, credit checks, or background checks. This ease of use facilitates online transactions and money transfers.

End Note

Southeast Asian nations are making significant strides in adopting blockchain, AI, and cryptocurrency technology, quickly positioning the region as a hub for these advancements. According to Chainalysis’s 2023 global crypto adoption index, countries like Vietnam, the Philippines, and Thailand are poised for a transformative shift in the cryptocurrency industry. Thailand leads the region in applying blockchain technology across various sectors, while Singapore, known for its Web3 leadership, proactively supports financial solutions. In 2023, Singapore’s central bank allocated $112 million to support regional fintech projects leveraging advanced Web3 technologies. Prominent cryptocurrency platforms such as Coinbase, Blockchain.com, Circle, and Crypto.com have applied for licenses to operate in Singapore. As we embrace the Fourth Industrial Revolution, the ASEAN economies are brimming with potential. To fully capitalize on these opportunities, businesses must adopt digital technologies and become more agile, making digital transformation essential to harness the region’s economic power. Preparing for Industry 5.0, ASEAN is poised for a bright future where embracing digital changes will be key to success.