The global adoption of cryptocurrencies last year has caught on more than Elon Musk, who drives a souped-up Tesla in a Dogecoin e-vehicle rally. (That’s a thing, isn’t it?) Regardless, crypto is a thing, and it’s growing rapidly around the world – its adoption has skyrocketed 881% year over year.
In its second annual Global Crypto Adoption Index, Chainalysis found that the top five countries for cryptocurrency adoption were Vietnam, India, Pakistan, Ukraine, and Kenya. The US slipped from sixth to eighth in the rankings, while China fell from fourth to 13th – largely due to its continued crackdown on cryptocurrencies.
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Emerging countries are experiencing a boom
Chainalysis states that the index methodology ranks 154 countries based on three weighted, multivariable metrics. These statistical models were necessary to improve the playing field for emerging economies like Togo (10th) compared to developed countries like the UK – which didn’t even crack the top 20 in crypto adoption. The purpose of the ranking was to “Highlight the countries with the greatest acceptance of cryptocurrencies by ordinary people and focus on use cases related to transactions and individual saving, rather than trading and speculation.
Sixteen of the countries in the top 20 could be classified as emerging markets – worth noting as the reasons and uses that drive their higher rankings are very different from those in established markets like the US
The researchers found that countries like Venezuela, Nigeria, Vietnam and Kenya were ranked person-to-person (P2P) based on their massive number of transactions (after applying wealth per capita and internet usage factors). They also found that many residents in developing countries rely on P2P cryptocurrency exchanges because they do not have access to any type of centralized exchange.
The index also says that many developing markets are experiencing severe devaluation, forcing residents to convert their fiat currencies into crypto in order to preserve value. In addition, many of the emerging markets listed in the report place restrictions on how much national currency can be moved out of the country. Residents of these countries use crypto to bypass borders for cross-border money transfers.
Crypto usage is increasing worldwide
In contrast, North America, Western Europe, and East Asia saw declines in P2P transactions, and the increasing use of crypto in these developed regions was largely driven by institutional investment.
The data shows that the increasing volume of transactions for centralized services and the booming growth of decentralized financing (DeFi) have stimulated the use of cryptocurrencies in countries with already considerable adoption, while emerging economies are growing exponentially thanks to P2P actions.
The global adoption of crypto last year has been explosive, and the factors driving this advancement reinforce that crypto is a global phenomenon that will remain.