Chainalysis’ latest research on Bitcoin (BTC) and cryptocurrency adoption in 154 countries shows a strong domination of emerging markets in the top 20 ranking.
Previewing a report: a methodology to understand
On August 18, 2021, the Chainalysis team published a preview of its research report on cryptocurrency adoption in 154 countries in 2021 on its blog. The full report will be released in September 2021.
The study focuses on cryptocurrency savings and transactions rather than trading and speculation. The researchers do not focus solely on transaction volume per country, as this criterion would favor countries with a relatively large number of institutional and professional cryptocurrency investors, whose average transaction amounts are far greater than those of individuals.
To rank countries according to the adoption of cryptocurrencies by their population, Chainalysis designed a global index ranging from 0 to 1 based on the geometric mean of 3 parameters. The country at the top of the ranking is the one with the score closest to 1. The analysis period runs from July 2020 to June 2021.
- The first metric at the base of the index calculates the total volume of cryptocurrencies received on chain by a country in relation to purchasing power parity (PPP) per capita.
- The second indicator looks at on-chain transactions of less than $10,000 – and thus likely by an individual – received by a country relative to PPP per capita.
- The last indicator looks at the volume of off-chain P2P transfers relative to PPP per capita and the number of internet users. The data on transactions comes from 2 P2P platforms: LocalBitcoins and Paxful.
Emerging countries on the rise, China and the U.S. fall
The research revealed 3 key trends.
The first is the acceleration of cryptocurrency adoption globally with growth of approximately 2,300% since Q3 2019 and over 881% in the previous reporting period. Emerging markets are increasingly turning to cryptocurrencies as a hedge against the devaluation of their fiat currencies, as well as to send or receive money and to conduct business transactions. In North America, Western Europe, and East Asia, it was more institutional investors who leveraged cryptocurrency adoption in 2020.
The second trend to emerge from the study is that emerging markets, including Kenya, Nigeria, Vietnam, and Venezuela, are leading the way in terms of transactions on P2P platforms relative to PPP per capita. Many cryptophiles in emerging markets actually use P2P platforms to buy or sell cryptocurrencies, as they typically do not have access to centralized exchanges.
Chainalysis’ research finally showed a drop of China and the US in the ranking, from fourth and sixth place in 2020, to 13th and 8th place in 2021, respectively. These results can be explained by a decrease in the volume of transactions on P2P platforms adjusted to the PPP and the number of Internet users in these countries.
This Chainalysis report aligns with the 2020 report, showing already then a growing adoption of cryptocurrencies in emerging countries, especially in Eastern European countries.