Chainalysis, a cryptocurrency, and blockchain analysis firm, released it's latest Global Crypto Adoption Index 2020, showing developing countries are witnessing greater adoption for crypto – Ukraine, Venezuela, and Kenya featured in the top five countries with Russia and China completing the list.
The interim report from Chainalysis focuses on four significant parameters to rank the 154 countries that took part in the survey. The metrics to measure crypto adoption include on-chain cryptocurrency received weighted against the purchasing power parity (PPP) per capita, on-chain crypto sent out (transferred) weighted against the PPP per capita, and several on-chain deposits weighted by the number of internet users.
Finally, the overall p2p exchange activity weighted by both the number of users and PPP per capita. The index ranks the countries using all the metrics with those closest to one with the most incredible crypto adoption.
Ukraine and Russia top crypto adoption rankings
A glance at the top 10 ranked countries shows a disparate difference in the levels of development across all countries except for Russia, which ranked highly in all four sectors. Ukraine, Russia, and Venezuela grab podium positions according to the Global Crypto Adoption Index by Chainalysis.
Despite the three not leading in any of the factors mentioned above, the total index score favors the countries. Ukraine ranked fourth in both the on-chain crypto value received and retail value transfers, while China dominated the two factors. Vietnam (ranking tenth) also ranked highly on these metrics.
Kim Grauer, head of research at Chainalysis, Ukraine, and Russia, top the charts due to their underlying innovativeness and tech native population. The latter country also has a vast network of digital payments and e-payments already, which makes the transition to crypto a bit more seamless, she said.
Notwithstanding, the adoption growth in Ukraine and Russia can both be attributed to the current COVID-19 global pandemic that has shrunk both economies. In a bid to make additional sources of income, citizens in the country are turning to crypto for a solution.
Retail investors are pulling their weight in crypto
According to Michael Chobanyan, founder of Ukraine’s first crypto exchange, Kuna, retail investors (less than $10,000) are pushing the adoption rates in Ukraine in search of better investment tools. A lack of a stable stock market exchange, financial systems failure, and an expensive real estate investment – all collude in growing the retail crypto space, he said.
In a differing tone, Grauer said Venezuela adopted cryptocurrency as a need rather than it being a “cool technology.” The hyperinflation in the country is causing plenty of citizens from South American to turn to Bitcoin (BTC) as “a stable store of value.”
The three states, alongside Kenya, showed strong growth in retail crypto adoption while in China (in fourth) and the U.S. (in sixth), crypto adoption is led by big money players and institutions.
“Looking at the share of the transfers greater than $100,000, we noticed that over the past year, the share of the overall activity in North America that is professional has been growing.”
Kenya leads the P2P volumes metric
Another surprise on the list is East African powerhouse, Kenya, which emerged fifth on the Global Crypto Adoption Index ahead of heavyweight economies such as the U.S., Nigeria, and all of Western Europe. Despite performing poorly in three of the four categories, Kenya leads the world in peer-to-peer crypto exchanges trade volume weighted by its number of internet users and PPP per capita.
The East African state has seen rapid growth in P2P exchanges growth volume in 2020 as Paxful and LocalBitcoins pushed for Bitcoin adoption. P2P exchange volume ranking, however, overlooks the prevalence of regulated, centralized exchanges across other states, unfairly pacing more weight to developing countries. Kenya and Venezuela top the P2P rankings but did not manage to make the top ten on any other ranking metric.
Explaining the rankings, Grauer stated no one ranking metric catapulted any country to the top. The report concludes that cryptocurrency adoption is happening globally – only 12 of the 154 countries scored zero on the index. Additionally, developing countries have high numbers of retail investors as P2P exchanges play a crucial role in enhancing crypto adoption in these countries.