Chainalysis, a well-known blockchain and cryptocurrency research and analysis company, has published its latest report on worldwide Bitcoin adoption and usage from July 2020 to June 2021.
According to the index created by the famous Chainalysis company, the adoption of Bitcoin and cryptocurrencies in general by consumers around the world has increased by 880% in the last year. Adoption is calculated by estimating the per capita use of cryptocurrencies, contrasted with the trading volumes of traditional currencies within each country.
The index also weights the data according to the degree of development of the various countries, to avoid skewing in favour of developed countries with large volumes of transactions by professional and institutional traders.
The aim of the report is to “highlight countries with the highest adoption of cryptocurrencies by ordinary people and focus on use cases related to transactions and individual savings, rather than trading and speculation”.
Bitcoin adoption in Vietnam
Chainalysis found that Vietnam has the highest cryptocurrency adoption, leading the 154 countries analyzed and rated on a scale of 0 to 1. In second place, India scored 0.37, followed by Pakistan, with a score of 0.36.
At the end of Q2 2020, after a period of low growth, total global adoption stood at 2.5 based on the summarized country index scores.
At the end of Q2 2021, the total score was 24, suggesting that global adoption has grown by over 2300% since Q3 2019 and by over 881% in the last year.
The research suggests that the reasons for this increased adoption are different across the globe: in emerging markets, many are turning to cryptocurrencies to preserve their savings in the face of currency devaluation, send and receive remittances and execute business transactions, whereas adoption in North America, Western Europe and East Asia over the past year has largely been fuelled by institutional investment.
In a year where cryptocurrency prices have risen dramatically, each region’s respective reasons for embracing the asset class appear to have proved compelling
Bitcoin in emerging markets
Several countries in emerging markets, including Kenya, Nigeria, Vietnam and Venezuela, top the index in large part because they have huge transaction volumes on peer-to-peer (P2P) platforms when adjusted for PPP per capita and population using the Internet. The analysis firm’s interviews with experts in these countries revealed that many residents use P2P cryptocurrency exchanges as their main access to crypto, often because they do not have access to centralized exchanges.
Central and South Asia, Latin America and Africa send more web traffic to P2P platforms than regions whose countries tend to have larger economies, such as Western Europe and East Asia.
Many emerging markets limit the amount of domestic currency that residents can move out of the country. This is why cryptocurrency offers residents of these countries a way around those limits so they can meet their financial needs.
Last year, China ranked fourth in the global adoption index, while the US ranked sixth. This year, the US is in eighth place while China is in thirteenth. The main reason both countries dropped is that their rankings in the volume of P2P exchanges weighted by the population using the Internet dropped dramatically: China dropped from 53rd in this component to 155th, while the US dropped from 16th to 109th. Further analysis shows how P2P volumes have declined in both countries compared to global volumes.
The data also clearly shows that growing transaction volumes for centralized services and the explosive growth of DeFi are driving cryptocurrency usage in the developed world and countries that have already had substantial adoption, while P2P platforms are driving new adoption in emerging markets.
“The clear conclusion, however, is this: cryptocurrency adoption has skyrocketed over the past twelve months and the variation in countries contributing to this shows that cryptocurrency is a truly global phenomenon,” the report explains.
