Cryptocurrency adoption has been growing steadily across the globe, according to Chainalysis’ Global Crypto Adoption Index.
As mentioned in a report from the blockchain security firm, the majority of cryptocurrency volume reflects trading and speculation that was conducted by professional or institutional investors that were transferring large amounts of funds.
Although crypto trading and speculation can be an important factor contributing to the growth of the digital asset market, Chainalysis noted that they wanted their index to reflect or emphasize “grassroots adoption by everyday users.”
The blockchain analysis firm explained that they weighted their index formula to assess or measure digital currency activity while accounting for each country’s population and economy or GDP size. The Crypto Index aims to highlight the countries where “the most residents have moved the biggest share of their financial activity to cryptocurrency.”
Some of the key findings from the report were that cryptocurrency has now become “truly global,” Chainalysis claims. The report revealed:
“Of the 154 countries … analyzed, only 12 had so little cryptocurrency activity that we gave them an index score of zero. That’s a testament both to the excitement around cryptocurrency as an investment and, especially in the developing world, as a means of value storage and medium of exchange.”
Chainalysis’ report further noted:
“Developing countries have high grassroots cryptocurrency activity. Venezuela represents an excellent example of what drives cryptocurrency adoption in developing countries and how citizens use it to mitigate economic instability.”
The report also mentioned that Venezuelan residents have been using Bitcoin (BTC) and other virtual currencies more when the nation’s fiat currency, the Bolivar, continues to lose value due to hyperinflation. According to Chainalysis, this trend indicates that Venezuelan citizens turn to cryptocurrency “to preserve savings they may otherwise lose.”
The report added that peer to peer (P2P) platforms, like Paxful which recently added support for stablecoin Tether (USDT) along with Bitcoin trading, are “essential” to cryptocurrency adoption in developing nations.
Data scientist Matt Ahlborg explains that P2P virtual currency platforms don’t custody users’ cryptocurrency or fiat traded on their platforms. This makes trading more accessible and convenient for everyone because the platforms need not connect to the traditional banking system in different jurisdictions, which means they don’t have to deal with too many regulatory requirements.
This allows for easier onboarding of customers based in developing nations like India and Pakistan, many of whom are unbanked or financially underserved.