How does technology usually spread?
Cutting-edge technologies generally emerge in the wealthier world and then disseminate to less wealthy countries. A prime example of this is internet connectivity or smartphones, where in many developing countries are at sub 50% adoption, whereas almost everybody is connected in a country like Singapore. This happens because the companies that have the most money and the most advanced research usually set their operations in wealthier areas.
Financial technology is no exception. Things like loans, credit cards, tap to pay, and more started in wealthier places and are now finding their way to the rest of the world.
So does crypto follow this trend? Unlike other technologies, crypto requires only an internet connection and doesn’t offer any advantages to users based on their geography. It also has more utility if an individual’s purchasing power is lower or their economy is weaker or more authoritarian. This means that crypto, unlike most, is spread more evenly around the world (more on this in a bit).
Which countries use the most cryptocurrency?
Tracking crypto in every country is challenging, but blockchain analytics firms like Chanalysis have developed ways to gauge Web3 adoption in diverse regions. In its annual Global Crypto Adoption Index, Chainalysis uses the following five metrics to track crypto in hundreds of countries:
- Total cryptocurrency value on centralized crypto exchanges (CEXs): First, Chainalysis analyzes the number of money holders in cryptocurrency legal countries used in crypto CEXs like Coinbase and Binance.
- Retail trading on CEXs: This second metric focuses on the trading activity of non-institutional CEX users who transfer less than $10,000.
- Peer-to-peer crypto transaction volume: Next, Chainalysis monitors how often citizens in different countries use crypto in day-to-day transactions.
- Crypto value used in DeFi protocols: Analysts concentrate on the total amount of crypto that goes into the DeFi space by region.
- Retail activity in DeFi: Lastly, Chainalysis focus on how much crypto going into dApps (decentralized applications) came from retail traders in different nations.
It's essential to note that Chainalysis weighs all its findings using the "purchasing power parity" (PPP) standard, which takes into account the average purchasing power of citizens in each country. The lower a PPP score is for a nation, the less disposable income average residents have.
Chainalysis emphasized countries with lower PPP scores to better assess who’s placing most of their income into crypto. Although these residents may not put as much into crypto in pure dollar terms, they put a higher amount of their net worth into cryptocurrency.
Chainalysis found the following 10 countries to have the most substantial rates of crypto adoption in 2022 (In descending order):
- United States
This isn't the first time Vietnam has emerged as the most dominant nation in terms of crypto adoption. In fact, Vietnam also captured the top spot in Chainalysis’ 2021 Global Crypto Adoption Index. Study authors suggested the significant reasons behind Vietnam's interest in crypto may be related to play-to-earn (P2E) gaming and NFTs (non-fungible tokens).
Vietnam is home to the company Sky Mavis, which is behind the NFT-based P2E game "Axie Infinity." The game’s success seems to have inspired more crypto start-ups in Vietnam. Also, recent data suggests roughly 2.1 million Vietnamese citizens hold an NFT, resulting in the country securing a position in the top five countries for NFT ownership.
The Philippines is another Southeast Asian country that has seen a surge in demand for crypto, again thanks to P2E games and NFTs. Many estimates suggest that 35-40% of the traffic on Axie Infinity comes from the Philippines. The game is so widespread in the Philippines that the Philippine Bureau of Internal Revenue introduced new crypto tax laws for Axie players in 2021.
In the case of Ukraine, the Russian invasion of 2022 forced many residents and policymakers to embrace cryptocurrency payments. Shortly after the war broke out, Ukrainian personnel created official crypto wallets to accept donations. At the start of 2022, Ukraine had already received $100 million in crypto donations. The Eastern European nation has also experimented with using NFTs to raise donations.
Which countries have the most crypto owners?
Without adjusting the PPP, the U.S. has the most crypto owners at roughly 13% of the population (or 46 million). Many 2021 surveys suggest at least 16% of Americans traded crypto. Plus, the U.S. was the only industrialized country in the top 10 of Chainalysis' 2022 Global Crypto Adoption Index.
However, when analyzing the most crypto users by country per capita, Thailand appears to have the highest number of crypto holders. A 2021 report from Finbold found that 20% of Thai residents now hold some form of crypto. Nigeria, the Philippines, and South Africa were all tied for second place, with 19.4% crypto owners.
A few other nations with more than 10% of the population owning crypto as of 2021 include:
What are the most traded cryptocurrencies around the world?
Bitcoin remains the largest cryptocurrency by market cap and is the only digital asset that's accepted as legal tender in two nations (El Salvador and the Central African Republic). Given Bitcoin's size and history, it still tends to be the most popular choice for investors, businesses, and traders worldwide. Innovations like the Bitcoin Lightning Network and Bitcoin ATMs make BTC more accessible to citizens in various regions.
Although Bitcoin remains the world's top-performing cryptocurrency, stablecoin adoption has been on the rise in many countries. Chainalysis found that countries that use crypto for P2P transactions tend to rely on either Bitcoin or stablecoins. In 2021, the global market cap for USD-pegged stablecoins like USDC surpassed $100 billion, a growth rate of more than 500% from the previous year.
Despite the rise of competing smart contract blockchains, Ethereum's ether remains the top-performing altcoin (or non-Bitcoin cryptos). Currently, about half of the total cryptocurrency in DeFi is on the Ethereum blockchain. Ethereum also has many of the most active metaverses, P2E games, and NFT markets in Web3. Following the Ethereum Merge and further integration with layer-2 solutions like Polygon, many crypto analysts believe ETH will remain a prevalent part of the Web3 ecosystem.
Is crypto more common in the developing world?
According to reports like Chainalysis' Global Crypto Adoption Index, crypto is more common in emerging markets. The only two developed nations in Chainalysis' top 20 were the U.S. and the U.K. These results suggest crypto is most influential in developing nations.
The United Nations also noted that the largest share of the global population that holds crypto is in developing regions. Two reasons the UN gave for crypto adoption in the developing world include remittance payments and a hedge against fiat inflation.
Chainalysis also found that many developing nations are becoming more active in DeFi. Countries like Vietnam, Thailand, India, and Ukraine frequently appear in Chainalysis' reports on global DeFi adoption. However, more industrialized nations in North America and Western Europe ranked higher in Chainalysis' DeFi Index than the Global Crypto Adoption Index.
Why trade crypto?
The reasons citizens choose to purchase cryptocurrency are often influenced by their home country's economic situation. While residents in developed nations may trade crypto for price speculation, those in developing regions could use crypto as a P2P payment method.
Here are five common reasons cryptocurrency users buy digital assets:
- Price speculation and portfolio diversification: Many crypto traders view digital assets as volatile "risk-on" assets similar to a new tech company. Often, crypto investors in developed nations will buy crypto to take advantage of its volatility for short-term trading or as an alternative investment.
- Inflation resistance: Bitcoin's halving schedule ensures a gradually decreasing inflation rate until the digital currency reaches a circulating supply of 21 million coins. People who believe BTC will grow to become a globally recognized currency often buy Bitcoin as a long-term inflation hedge. In many developing countries, citizens also turn to USD-pegged stablecoins to preserve their purchasing power relative to their nation's fiat currency.
- Remittance payments: Data from the Stellar Development Foundation and the news site PYMNTS suggest that 25% of remittance payments from the U.S. to other countries are in crypto. Another survey from the crypto project Stellar suggested more than 50% of respondents view crypto as a valid form of remittance payment.
- DeFi: Although DeFi activity fell in the 2022 bear market, there are billions locked in many decentralized cryptocurrency exchanges (DEXs) and crypto lending platforms. Ethereum still holds about 50% of the total crypto in DeFi, but other chains like the BNB Smart Chain, Solana, and Avalanche have begun introducing more DeFi dApps for Web3 users.
- Entertainment: Some people gravitate toward crypto for new entertainment opportunities, including P2E games, NFT collecting, and metaverse events. Research from Crypto.com suggests P2E games already have a $55 billion market cap, and banks like Citi value the metaverse at $10 trillion by 2030. As for NFTs, the market grew more than 20,000% from 2020 to 2021 to reach a peak of $17 billion.
Whether in a country that is developed or developing, at WorldCoin, we aim to put a share of our crypto in the hands of every individual for free. We want to ensure everyone has an equal opportunity to participate in the crypto economy. To help more people become familiar with using technologies like DeFi and crypto wallets, we're also airdropping free DAI stablecoins if you sign up for our app. Subscribe to our blog to learn more about the cryptocurrency market.