Blockchain analysis firm Chainalysis has published its annual TOP 20 countries with the strongest bitcoin adoption. Vietnam is on the rise and China is back in the top 10.
The Chainalysis Ranking Method
It would be easy to rank countries based on bitcoin transaction volume and that’s it. Chainalysis goes further by weighting these volumes according to purchasing power parity (PPP).
The reason being that it is obvious that the volumes of the rich countries will always be higher than those of a poor country. But that does not say everything, especially with regard to its adoption. It is more interesting to relate these volumes to the total wealth of the country.
Chainalysis therefore compares volumes in purchasing power parity per capita. That is to say, using an exchange rate that equalizes the cost of living from one country to another.
Indeed, a haircut costs much less in China than in New York if you take the official exchange rate into account. But why should we value the same service differently? This distortion of reality is erased thanks to purchasing power parity.
In other words, 0.01 BTC bought by a Vietnamese weighs more than 0.01 BTC bought by a French. If two countries received the same amount of BTC, the country with the lowest PPP per capita would rank first.
The Chainalysis Global Cryptocurrency Adoption Index is a ranking of 146 countries based on five volume types:
- Retail on exchanges
- Retail on DeFi
- Institutional on exchanges
- Institutionals on DeFi
- Volumes of cryptocurrency exchanges in P2P (depending on the PPP, but also depending on the number of internet users)
The two retail sub-indices aggregate BTC transactions worth less than $10,000. All sub-indices are PPP weighted.
“While institutional activity is important, we also want to highlight countries where individual investors [retail] are the most numerous”can we read in the report.
An average of these five sub-indices is then normalized to a scale of 0 to 1. The closer the country’s final score is to 1, the better:
Key takeaways from the 2022 Cryptocurrency Adoption Index
Despite the bear market, Chainalysis believes that “Global adoption has stabilized over the past year after a steady increase since mid-2019.” “Nevertheless, global adoption remains well above what prevailed before the bull market of 2019.”
It also appears that it is the emerging markets that dominate the top of the ranking. Of the top 20 countries ranked:
- Eight are countries with incomes slightly above the world average: Brazil, Thailand, Russia, China, Turkey, Argentina, Colombia and Ecuador.
- Ten are countries with incomes slightly below the world average: Vietnam, Philippines, Ukraine, India, Pakistan, Nigeria, Morocco, Nepal, Kenya and Indonesia.
- Two are high-income: the United States and the United Kingdom.
- No low-income countries
[À noter l’absence du Salvador du top 20. Probablement que le pourquoi du comment se trouve dans le rapport intégral qui sera publié dans quelque temps. Trouvez ici notre article sur le classement de 2021]
Chainalysis explains that cryptocurrencies are used to send small sums abroad (remittances), to protect savings from inflation, but also from exchange rate variations.
These countries also tend to rely more on bitcoin and stablecoins than rich countries. Westerners prefer to speculate on shitcoins. The reason being that inflation or the impossibility of sending funds abroad is not a problem for them.
That said, inflation is beginning to be felt even on the old continent. In this regard, it should be noted that the average inflation rate for the top 20 countries in the ranking is 17%. That is much more than the world average which is 5%.
It should also be noted that China is back in the top 10. This is consistent with the fact that 20% of BTC mining is still carried out in China despite the “ban”. Chainalysis judges this “particularly interesting given the […] the ban on cryptocurrency trading announced in September 2021”. “Our data suggests that this ban has been either ineffective or poorly enforced. »
Ukraine’s third position is less surprising. Banks limit daily withdrawals It is also impossible to convert hryvnias into foreign currencies. In other words, Ukrainian bank cards do not work abroad. Hence the attraction for BTC in this country where inflation also reaches 24% per year…
It is distressing to see that Europe is lagging behind. Nevertheless, Europeans, who thought that inflation only happens to others, may well be more interested in bitcoin this winter…
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