This study intends to highlight the largest and most crucial Bitcoin markets regarding adoption and merchants’ availability while understanding the inherent struggle in tying virtual data to a geographical position.
For a clearer image of the current situation, it is worth noticing the different reasons why people might enter the bitcoin world, no matter if, in most cases, bag holders value the currency for all its features or not:
- Freedom – Probably the most common reason for the evangelists. It is the case for those looking for a different option to perplexing banking infrastructure, expansionary monetary policy, and a hedge against inflation. Another parameter to be added in this segment is the importance of privacy regarding personal financial information, not for illegal purposes but financial freedom against strict governmental regulation. As global financial markets become more regulated, it is expected that it will affect cryptocurrencies’ demand.
- According to recent reports, investing & trading is the most influential segment in terms of volume. No matter if it was based on the fundamental value of the technology or only for speculation, current and future potential return of investment has mostly been the biggest driver of adoption in recent years, especially for high-risk investors.
- Illegal activities – Every few months, US authorities auction large amounts of BTC and other cryptocurrencies from usually drug-related busts. There is an excellent reason for that, the bitcoin blockchain is public, and transactions can be followed. Something is widely known in the crypto-community but not to the public.
Negative Aspects
It is no secret that cryptocurrencies are being used for all sorts of criminal activities around the world. Nevertheless, FIAT currencies held in banks like HSBC and other major corporations are still the favorite choice for money laundering despite what is usually mentioned in the news.
Main Markets
It’s exceptionally complicated and difficult to estimate how many crypto owners are in a country without having access to private data from centralized exchanges or individual tax reports.
Many researchers have tried to acquire an estimate of crypto adoption based on publicly available data on the number of Bitcoin merchants per country.
This strategy is improper since the availability of bitcoin ATMs in a country is not an indicator of an increased adoption but evidence of a lack of a more convenient and regulated infrastructure to purchase cryptocurrencies in the first place.
Such reports forget why many people purchase cryptocurrencies, which were mentioned earlier, financial freedom. Therefore their conclusions can only be used as indications and not proved knowledge.
There are, though, some key elements that can share light on the issue:
Investment Vehicle
“According to the CEO of Binance, the number of accounts from a country on Binance correlates positively with the GDP per capita (high GDP – more accounts)”
This statement doesn´t merely highlight that prosperous nations have a significantly higher disposable income to be invested in cryptocurrencies. It highlights the fact that there is usually a better banking infrastructure in such countries to be able to access crypto services.
Hedge on Inflation
Additionally, countries with high inflation or volatile currencies that don’t possess such well-organized infrastructure have a much higher incentive in seeking alternative currencies to preserve their purchasing power over time.
Countries like Argentina, Venezuela, Iran, and Lebanon, which all have seen at least on one occasion the effects of sanctions, inflation, bank runs, and subsequent withdrawal restrictions “Corralitos” on their bank accounts, are highly active in crypto mining and holding.
Financial recessions and harsh banking measures are not exclusive to developing economies, as evidenced by the recent Cyprus seizing of bank account funds in the last decade. It is precisely why Satoshi Nakamoto created BTC in the first place, to empower regular people by getting back financial independence.
Up until now, the evidence suggests that Bitcoin and other coins are adopted as an investment vehicle in affluent countries and more as a hedge on inflation and restrictions on less wealthy countries. However, there is still an essential requirement that is lagging adoption in the more impoverished regions of the globe:
Internet Availability
According to Internetworldstats.com, the average World Internet penetration in 2019 stood at 55.3%. On a regional scale through the percentage can vary significantly:
- 87.7% in Europe
- 77% in the Americas
- 70% in the Middle East
- 68% in Oceania
- 55% in Asia and
- 39.3% in Africa
Keeping in mind the hedge on the inflation use case for cryptocurrency adoption, Africa should have widely adopted cryptocurrencies, at least at the levels similar to some South American countries, but it hasn’t.
The reason can be easily deducted if we look into the statistics regarding internet availability and country infrastructure. 15 of the 58 countries (such as Nigeria and South Africa) have a penetration equal or higher to 50%, which profoundly impacts its citizens’ capacity to access their hot wallets and use cryptocurrencies.
It’s not by accident that Nigeria and South Africa are the countries with the highest number of cryptocurrency owners in Africa.
Conclusion
While it is complicated to estimate the numbers of crypto holders accurately in a selected country with publicly available data, we can have a fairly straightforward impression of the mixture needed to brew crypto adoption: Financial and monetary uncertainty, investment mindset, commercial literacy, or access to it through the internet.
The question for the next two years is what COVID and its different aftermath in each country will do for the economy and how it will drive crypto adoption.
