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Global crypto adoption among retail investors surges 881 percent
The top countries adopting crypto in the past year are Vietnam, India, Pakistan and Ukraine, crypto-analysis firm Chainalysis said.
Global crypto adoption among ordinary investors has surged in the past year, according to crypto-analysis firm Chainalysis.
Using factors like peer-to-peer exchange trading volume and value received, Chainalysis said global crypto adoption has risen by more than 881% in the past year.
While the firm sees professional and institutional markets as crucial, it aimed to highlight the countries with the greatest crypto adoption by retail investors — focusing on use cases related to transactions and individual saving, rather than trading and speculation. The top countries in the ranking are Vietnam, India, Pakistan and Ukraine.
“In emerging markets, many turn to cryptocurrency to preserve their savings in the face of currency devaluation, send and receive remittances, and carry out business transactions,” Chainalysis said in the report, “while adoption in North America, Western Europe, and Eastern Asia over the last year has been powered largely by institutional investment.”
Interest in cryptocurrencies has surged in the past year along with prices. Bitcoin has more than tripled in the past 12 months, while second-biggest crypto Ether is up about sevenfold — and many other top cryptocurrencies have registered strong gains as well.
The firm’s Global Crypto Adoption Index ranked 154 countries by three main metrics. China and the U.S. both dropped in the rankings, primarily because peer-to-peer trading volume declined.
Chainalysis took out one factor it had used in previous analysis: number of deposits by country weighted by number of internet users. However, the firm found that it skewed the rankings toward countries with comparatively more decentralized finance, or DeFi, users. Instead, it’s creating a DeFi Adoption Index that it said will be available in coming weeks.
“Growing transaction volume for centralized services and the explosive growth of DeFi are driving cryptocurrency usage in the developed world and in countries that already had substantial adoption, while P2P platforms are driving new adoption in emerging markets,’ the Chainalysis report said. “Our biggest question for the next 12 months is how much adoption will continue on those platform categories compared to new and emerging models we haven’t seen yet.”
This map shows where cryptocurrency is taking off around the world
Global adoption of cryptocurrency has taken off in the last year, up 881%, with Vietnam, India and Pakistan firmly in the lead, according to new data 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.”