Analysis firm Chainalysis has disclosed its 2021 Global Crypto Adoption Index part of a more detailed report to be released in September, it claims Bitcoin and cryptocurrencies are seen high levels of adoption. The Index follows a methodology that digs deeper, beyond metrics such as transaction volumes, to determine those territories embracing the digital crypto economy.
Therefore, Chainalysis claims that its results on Bitcoin and crypto adoption include those countries that have professionals and institutions driving it, but also those where “ordinary people” rely on them. Thus, the Index attempts to measure real use cases, and not just “trading and speculation”.
Chainalysis studied data from 154 countries and measures their Bitcoin and crypto adoption by three metrics: on-chain cryptocurrency value received and transferred, measuring crypto activity. In addition to peer-to-peer (P2P) exchange trade volume, measuring activity especially on emerging markets.
The closes a country’s Index score is to 1, the highest its adoption. As seen below, according to the 2021 Global Crypto Adoption Index, Vietnam occupies the first position with a 1 score on the index. The rest of the countries in the top 10 by cryptocurrency adoption have emerging economies and their Index scores are far from that obtained by the one occupying the main position.
India (0.37), Pakistan (0.36), Ukraine (0.29), Kenya (0.28), Nigeria (0.26), and Venezuela (0.25), follow Vietnam on the ranking. Only the United States (0.22) has a position in the top 10 at number 8 with a high level of on-chain value received and on-chain retail value, but a low P2P exchange trade volume, as illustrated hereunder.
Many more countries with emerging economies, such as Argentina and Togo, occupy high positions in the ranking even above superpowers, such as China and the Russian Federation. Chainalysis claims that people in those regions use cryptocurrencies to preserve their wealth and fight the devaluation of their local currencies, which they use to send and receive remittances, and for business transactions.
Bitcoin And Crypto Adoption Skyrocketed In 2020 And Continue In 2021
In developed countries, crypto adoption has been powered by institutions. This has translated into the crypto market, with Bitcoin and most of the cryptocurrencies in the top 10 by market cap (ETH, ADA, XRP, and more), experiencing a rally to new all-time highs. Chainalysis said:
At the end of Q2 2020, following a period of little growth, total global adoption stood at 2.5 based on our summed up country index scores. At the end of Q2 2021, that total score stands at 24, suggesting that global adoption has grown by over 2300% since Q3 2019 and over 881% in the last year.
The upwards trend in crypto adoption has managed to stay at high levels, despite the recent crashes in the price of Bitcoin and other major cryptocurrencies. As seen below, the exponential increase in Q4, 2020, stopped by mid-Q1 2021 and has remained flat since then.
The report also pointed out that P2P platforms are gaining more importance in developing countries. Transaction volumes on these platforms, adjusted to the country’s PPP per capita and the percentage of internet users, have been on the rise.
Latin America, Central, and Southern Asia, and North America are the main sources of web traffic from P2P platforms. Only the latter has seen an important declined in this metric during 2021. This goes to shows the importance of Bitcoin and cryptocurrencies for those with less access to the financial system and strong currencies. Chainalysis concluded:
Cryptocurrency gives those residents a way to circumvent those limits so that they can meet their financial needs. (…) the variation in the countries contributing to that (crypto adoption) show that cryptocurrency is a truly global phenomenon.
At the time of writing, BTC trades at $45,889 with sideways movement in the past day.