The adoption of cryptocurrency globally takes off last year,
up 881%, with Vietnam, India and Pakistan firmly in the lead, according to newdata from Chainalysis.
It is the second year the blockchain data firm has released
its Global Crypto Adoption Index, which ranks 154 countries according to
metrics such as peer-to-peer exchange trading volume, rather than gross
transaction volume, which typically favors developed nations with high levels
of professional and institutional crypto buy-in.
Chainalysis said the purpose of the index is to capture
crypto adoption by "ordinary people" and to "focus on use cases
related to transactions and individual saving, rather than trading and
speculation." The metrics are weighted to incorporate the wealth of the
average person and the value of money generally within particular countries.
Most of the top 20 countries are emerging economies,
including Togo, Colombia and Afghanistan.
Meanwhile, the United States slipped from sixth to eighth
place, and China, which cracked down on crypto this spring, dropped from fourth
to 13th.
Chainalysis ascribes the rising adoption levels in emerging markets to a few key factors.
For one, countries such as Kenya, Nigeria, Vietnam and
Venezuela have huge transaction volumes on peer-to-peer, or P2P, platforms when
adjusted for purchasing power parity per capita and the internet-using
population.
Chainalysis reports that many residents use P2P
cryptocurrency exchanges as their primary on-ramp into cryptocurrency, often
because they don't have access to centralized exchanges.
The report also says many residents of these countries turn
to cryptocurrency to preserve their savings in the face of currency
devaluation, as well as to send and receive remittances and carry out business
transactions.
Matt Ahlborg, a peer-to-peer data analyst, told CNBC that
Vietnam is one of the top markets for Bitrefill, a company that helps customers
live on cryptocurrency by buying gift cards using bitcoin.
"Vietnam stood out to me because it dominated the
index," said Chainalysis' director of research, Kim Grauer, who compiled
the report.
"We heard from experts that people in Vietnam have a
history of gambling, and the young, tech-savvy people don't have much to do
with their funds in terms of investing in a traditional ETF, both of which
drive crypto adoption," Grauer said.
Nigeria is a different story, Grauer said. "It has a
huge commercial market for crypto. More and more commerce is done on the rails
of cryptocurrency, including international trade with counter parties in
China."
These top-ranking nations have another thing in common,
according to Boaz Sobrado, a London-based fintech data analyst. "Many have
capital controls or a strong emigrant and immigrant population," he said.
Take Afghanistan, a country currently in turmoil due to the
Taliban's recent overthrow of the government.
"Afghanistan on top makes sense from a capital controls
point of view, given it's hard to move money in and out," Sobrado said.
The correction for purchasing power parity and gross
domestic product may also have boosted its placement, given that Afghanistan is
one of the world's poorest countries.
Analysts note that measuring cryptocurrency adoption at the
grassroots level isn't easy.
"The methodology has a huge blindspot," Sobrado
said. "Unlike many other countries, sanctioned nations don't have good and
clear data on P2P markets."
Because of that, he said, he believes sanctioned nations
such as Cuba will be underestimated, simply because it is harder to track those
transactions.
Ahlborg said there is no perfect way to measure per capita
global crypto adoption but that this index is "one of the best we
have."
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