The rate of cryptocurrency adoption has jumped by 880 percent in the last year as Vietnam, India and Pakistan have become the fastest crypto adopters.
Worldwide adoption of cryptocurrency has skyrocketed by 880 percent over the past year, especially in Vietnam, India, Pakistan and other emerging economies, according to blockchain analytics firm Chinalysis.
The company’s 2021 Global Crypto Adoption Index, titled “Geography of Cryptocurrency,” compared the countries’ cryptocurrency adoption based on three main parameters: on-chain retail value transferred, on-chain cryptocurrency value received, and peer-to-peer(P2P) exchange trade volume between June 2020 and June 2021.
By taking geometric mean of three metrics, the index ranked 154 countries then normalised that final number on a scale of 0 to 1 to give every country a score that determines the overall rankings. The closer the country’s final score is to 1, the higher the rank.
Vietnam is the most adopted country to crypto achieving an overall index score of 1. And India(0.37), Pakistan (0.36), Ukraine (0.29), and Kenya (0.28) followed it.
Compared to last year’s report, Ukraine slipped down from the lead to fourth rank while Vietnam reached the first rank from tenth place. India and Pakistan entered the top 10 list this year.
The circumstances that lead to the boom of cryptocurrency adoption depends on economic activities in emerging economies.
“Several countries in emerging markets, including Kenya, Nigeria, Vietnam, and Venezuela rank high on our index in large part because they have huge transaction volumes on peer-to-peer (P2P) platforms when adjusted for PPP per capita and internet-using population,” the report wrote.
The experts from these countries told Chinalysis that many residents use P2P cryptocurrency exchanges as their primary on-ramp into cryptocurrency, often because they don’t have access to centralized exchanges.
It is no surprise that “regions with many emergent markets account for a huge portion of web traffic to P2P services websites.”
Central and Southern Asia, Latin America, and Africa use P2P platforms than regions whose countries have big economies such as Western Europe and Eastern Asia.
Significant currency devaluation in many emerging markets drives people to purchase cryptocurrency on P2P platforms in order to preserve their savings.
International transactions, either for individual remittances or for commercial use cases, such as purchasing goods to import and sell, are also common in these regions. There are limits for the amount of the national currency that residents can transfer out of the country.
Although China was fourth and the US was sixth on last year's index, their ranks downed 13th and eighth respectively.
“The biggest reason both countries dropped is that their rankings in P2P trade volume weighted for internet-using population declined dramatically — China fell from 53rd in this component to 155th, while the US fell from 16th to 109th.”