Recently, Chainalysis released the Global Crypto Adoption Index, a report that examines data from on-chain transactions and real-world data to reveal the countries that stand out in cryptocurrency adoption globally. See below for full details.
Summary
Countries leading the way in embracing crypto: the results of Chainalysis’ Global Crypto Adoption Index
As anticipated, Chainalysis recently unveiled its fourth annual Global Cryptocurrency Adoption Index.
The goal of the index is to, through analysis of both on-chain and real-world data, identify countries that emerge as leaders in cryptocurrency adoption at the common level.
This assessment is not simply based on raw transaction volumes, as it is clear that larger and more prosperous countries will often have higher figures in this aspect.
Instead, Chainalysis wants to highlight the countries where the average population shows greater interest and involvement in cryptocurrencies.
To this end, it developed the Global Crypto Adoption Index to identify the nations where most people invest the majority of their wealth in crypto.Â
We see that a key point to note is the dominance of the CSAO region in the Cryptocurrency Adoption Index, with six of the top 10 countries located in this area.
The report also examines the different circumstances driving adoption in each CSAO country, leading to usage trends and differentiations in popular services.
However, it is important to note that global adoption of cryptocurrencies is declining.Â
Chainalysis, using its global indexing methodology, has combined adoption scores for all 154 countries in each quarter since the third quarter of 2020, showing adoption trends over time globally.
Despite a significant recovery starting in late 2022, after the period of instability associated with the FTX implosion, adoption from the bottom still remains below historical highs.
However, this situation is not uniform across regions. In particular, lower-middle-income (LMI) countries emerge that have experienced more sustained adoption growth than other areas.
The LMI classification is one of four categories used by the world bank to classify countries according to their level of wealth, based on gross national income (GNI) per capita.
Cryptocurrencies: middle-income countries leading adoption
Several of the top countries in the Global Crypto Adoption Index fall into the category of Middle Income Countries, and collectively, these same countries have experienced a significant increase in cryptocurrency adoption since last year.
In fact, Middle Income Countries represent the only category in which total cryptocurrency adoption remains above the levels seen in the third quarter of 2020, right before the last market surge.
As a result, this trend could point to an extremely promising future for cryptocurrencies. Indeed, Middle Income countries are often those in the growth phase, with ever-expanding economies and populations.
Many of these nations have experienced significant economic growth in recent decades, moving out of the group of Low Income countries. And, perhaps even more significant is the fact that 40% of the world’s population resides in Middle Income countries, a greater percentage than in any other income category.
If the future is represented by Middle Income Countries, then the data suggest that cryptocurrencies will be an essential component of that future.
This, combined with the fact that institutional adoption, predominantly driven by organizations located in High Income Countries, is continuing to gain traction even at this critical stage of the cryptocurrency market, is painting a promising picture for the future.
Convergence from bottom-up cryptocurrency adoption is possible, and if these trends persist, they could see an increase in top-down cryptocurrency adoption in the near future, as digital assets will meet the specific needs of both segments.
A chain of legal events around Chainalysis and Bitcoin
Recently, Chainalysis found itself defending itself against a request for access to the source code of its software in the context of the US legal case against Sterlingov. The latter is one of the first Bitcoin users to face trial pending charges for alleged activities related to the use of the Bitcoin mixer known as Bitcoin Fog.Â
Sterlingov’s defense has urged access to Chainalysis’ source code with the goal of reproducing the software’s results, given the lack of solid evidence to support the charges.
According to the defense, access to the source code is crucial to ensuring Sterlingov’s due process rights because neither the government nor Chainalysis is able to present conclusive evidence regarding the accuracy of Chainalysis Reactor’s measurements, including error rates, false positives or false negatives.
Furthermore, neither the government nor Chainalysis can provide peer-reviewed scientific papers attesting to the effectiveness of their software, nor have they conducted independent audits or validations of the Chainalysis Reactor model.
Not only that, the testimony of defense expert, Jonelle Still of Ciphertrace, also highlighted a number of issues with the Chainalysis Reactor software and concluded that it should not be used in federal criminal proceedings.
Chainalysis Now challenges the qualification of Bryan Bishop, a Bitcoin Core contributor and expert witness presented by Sterlingov’s defense to verify the source code of Chainalysis, arguing that he is ineligible for the job due to the absence of a computer science degree.
However, it was noted that Bishop was deemed sufficiently qualified and trustworthy by the Bitcoin developer community to be one of the moderators of the bitcoin-dev mailing list since 2015.
Hence, all that remains is to wait and see what will happen in this intricate matter.
