The worldwide cryptocurrency adoption has shot up by 880% over the last year, particularly in emerging economies like Vietnam, India, and Pakistan. 

Chainalysis, a blockchain analytics firm, took a geometric mean of three key metrics (on-chain value received, on-chain retail value received, and P2P exchange trade volume), and then normalized that average to create a ranking of 154 countries.  The closer a country’s score is to 1, the higher its ranking will be. Below are the countries ranked 1-20, along with each country’s overall index ranking and the ranking for each of the three metrics mentioned above:

Countries that Embrace Crypto:

Compared to last year’s report, Ukraine has lost its place at the top of the chart and slipped down to fourth. Vietnam has managed to take a giant leap from tenth to first, while both India and Pakistan only made it to the top ten during this year. 

First Country to Embrace Crypto:

El Salvador one of the worlds Fastest Crypto Adopting Countries

In September 2021, El Salvador became the world’s first (and, so far, the only) country to adopt cryptocurrency (Bitcoin) as its legal tender. This means that El Salvador consumers can now use Bitcoin, alongside the US dollar, to conduct any legal sales and purchases. The country took this unprecedented step to reduce its dependence on the US dollar, lower the costs of transfers, boost foreign consumption, and attract foreign investment.

Emerging Economies Lead Crypto Adoption:

Several emerging market economies, such as Venezuela, Kenya, Vietnam, and Nigeria have ranked high on the list because of their massive P2P transactional volumes in relation to their internet-using population and PPP per capita. Many residents in these countries turn to P2P platforms to trade cryptocurrencies, especially since they do not have excess to centralized crypto exchanges. 

For this reason, it is unsurprising that countries with a large number of emergent markets make up a large portion of P2P website traffic. 

Africa, Latin America, and Southern and Central Asia provide more P2P web traffic than regions with larger economies, such as Eastern Asia and Western Europe. 

Numerous emerging markets endure considerable currency valuation, prompting residents to invest in cryptos through P2P platforms in order to salvage their savings. Other than that, residents of emerging economies also use P2P to conduct international transactions, either for commercial reasons (buying goods to sell or import) or for personal remittances. 

Often, emerging markets place limits on the amount of local currency that a resident can send internationally. Thanks to cryptocurrencies, these residents can circumvent such limits and effectively meet their financial requirements. 

This creates an interesting dynamic in which P2P platforms, consisting of smaller retail payments, make up a more significant portion (almost 90%) of the overall crypto transactional volume. This does make sense since commercial transactions or personal remittances in emerging economies are likely to be considerably smaller than transactions executed by institutional investors or professional traders. 

Final Word:

This analysis shows that the DeFi (Decentralized Finance) growth and increase in transaction volumes for decentralized services are the main drivers of cryptocurrency growth in developed economies and countries that already had significant crypto adoption. 

P2P platforms, meanwhile, are propelling the crypto adoption throughout the emerging world. Over the next 10-12 months, it will be interesting to see how much these platforms will be responsible for cryptocurrency adoption in relation to new models that are yet to fully emerge. 

The primary takeaway, however, is that adoption has definitely skyrocketed over the last year, and even more phenomenal is the large variation in the countries that have contributed to this increase. It is safe to say that cryptocurrency has truly become a worldwide phenomenon.