The rate of cryptocurrency adoption grew by 880% across the world over the past year, with Vietnam, India, Pakistan, and other emerging economies leading the charge, according to blockchain analytics firm Chainalysis.
The company's preview of its 2021 Global Crypto Adoption Index, titled “Geography of Cryptocurrency,” compares crypto adoption rates across the world, based on three main metrics: on-chain cryptocurrency value received, on-chain retail value transferred, and peer-to-peer exchange trade volume between June 2020 and June 2021.
According to the post, Vietnam led the field by far, achieving an overall index score of 1. Some distance behind were India (0.37), Pakistan (0.36), Ukraine (0.29), and Kenya (0.28).
That's a substantial change from last year's Global Crypto Adoption Index, which placed Ukraine in the lead with a score of 1. Vietnam came at a distant tenth place last year, scoring 0.443. While Kenya placed fifth in last year's index with a score of 0.645, India and Pakistan are new entrants to the top 10.
Emerging economies lead crypto adoption
The researchers at Chainalysis pointed out that while cryptocurrency adoption has skyrocketed across the world over the past year, it was especially evident in emerging economies. In large part, this can be explained by large transaction volumes on local peer-to-peer platforms when purchasing power parity per capita and the total number of Internet users are taken into account.
“Our interviews with experts in these countries revealed that many residents use P2P cryptocurrency exchanges as their primary on-ramp into cryptocurrency, often because they don’t have access to centralized exchanges,” the researchers noted. “Knowing that, it’s no surprise that regions with many emergent markets account for a huge portion of web traffic to P2P services’ websites.”
We're excited to share our 2021 Global Crypto Adoption Index. By our measure, worldwide grassroots cryptocurrency adoption has grown nearly 10x, with Vietnam, India, and Pakistan leading the way. Learn more here! https://t.co/aZ1nQCn8uL
— Chainalysis (@chainalysis) August 18, 2021
The report pointed out that many emerging economies are subject to massive devaluation of their native currencies, prompting people to look for alternative means to store their funds. Additionally, digital assets are easier to transact internationally, which is especially important since local governments may limit the amount of national currency that can be sent abroad.
Meanwhile, economic powerhouses such as the U.S. and China have slipped to lower positions in the index compared to 2020. Namely, the U.S. is currently ranked 8th (was 6th in 2020) while China comes in at 13th position (was 4th).
The researchers pointed out that the biggest reason for both countries' fall down the Index was that that their "rankings in P2P trade volume weighted for Internet-using population declined dramatically." China fell from 53rd place in this ranking to 155th, while the U.S. fell from 16th to 109th.
In China’s case, this is hardly surprising, especially considering the country’s massive crackdown on Bitcoin over the past few months. Still, the global rate of crypto adoption and its geographic spread over the past year have demonstrated that “cryptocurrency is a truly global phenomenon,” Chainalysis concluded.