- The worldwide adoption of cryptocurrencies has increased by over 880% in the last year.
- The spike in crypto adoption has been attributed to the growth of P2P trading activity.
- Emerging economies lead the adoption of cryptocurrencies so far in 2021.
- China, the United States, Ukraine, and Russia have been displaced as the countries with the highest crypto adoption.
A long-standing issue in the crypto space has been the mass adoption of digital assets. Since its inception in 2009, we’ve seen cryptocurrencies used as payment mediums in national central banks, institutional investor involvement, banks, social media, and entertainment.
The quest for global adoption is in pursuit of normalizing the use of cryptocurrencies. A new report from Chainalysis suggests that the industry is closer to reaching this goal than it has ever been before.
Cryptocurrency Adoption Skyrockets By 880%
According to the report, 2021’s Global Crypto Adoption Index, the worldwide adoption of cryptocurrencies has increased by over 880% in the last year (July 2020 – July 2021). The paper also suggests that the global adoption of crypto is up by an astonishing 2,300% since the third quarter of 2019.
The research notes that the spike in crypto adoption is mainly due to peer-to-peer (P2P) trading activities, and Bitcoin’s nature as a store of value, free from government control.
The Global Crypto Adoption Index ranks 154 countries by several metrics including; total on-chain activity, the activity of retail and non-professional crypto users, and is weighted by purchasing power parity per capita.
Global adoption of cryptocurrency: Source Chainanalysis
Hands Are Changing
The research revealed that in 2020, China ranked fourth on the crypto adoption list, while the United States came in at sixth. However, things have changed in 2021, with China now at thirteenth, and the United States, eighth.
A comparison of the global crypto adoption index for 2020 and 2021. Source Chainanalysis.
Ukraine, Russia, and Venezuela, which were the leaders of crypto in 2020, have all been displaced. Ukraine has moved down from 1st to 4th, Venezuela, which was ranked 3rd, now ranks 7th, and Russia, which occupied 2nd in 2020, doesn’t feature in the top 10 for 2021 at all.
The reason for China’s drop is quite apparent. The Chinese crackdown on cryptocurrencies, mining activities, and crypto exchanges have all taken their toll on the use and adoption of cryptocurrencies in the country.
On The Flipside
- As the adoption of cryptocurrencies increases, so has interest from regulatory agencies.
- In an audit of all crypto exchanges operating in South Korea, conducted by the Financial Services Commission (FSC), all of the exchanges failed their regulatory audits.
Emerging Economies are Picking up Cryptocurrencies
An interesting piece of information in the report is the increasing adoption of cryptocurrencies in economically “smaller” countries. This is quite unlike previous years in which crypto adoption was dominated by the developed economies of the world.
Asia now leads the adoption of cryptocurrencies, with Vietnam, India, and Pakistan being the three leading countries by use of cryptocurrencies.
Overall, the paper highlights that much poorer countries, which have little access to financial services, have turned to cryptocurrencies to be banked.
In explaining the rise of P2P trading in smaller countries, Chainanalysis notes that;
“P2P transaction volume for the U.S. and China moved roughly in line with the worldwide total until they began to diverge around June 2020. At that point, the U.S. and China see their P2P transaction volume shrink as the rest of the world grows.”
Why You Should Care?
- The widespread use of crypto tells different stories about the dynamics within different countries.
- The increasing rate of adoption shows that digital assets are becoming deeply embedded in the financial systems of the world.