LMICs lead crypto adoption, but not volume: Chainalysis

By: Dickson Arinze

LMICs lead crypto adoption, but not volume: Chainalysis

October 24, 2023 3:46 AM

Chainalysis claims that the future of cryptocurrency is bright due to its use in developing economies, despite the fact that its current usage is on the decline.

India, Nigeria, and Vietnam are the countries with the highest rates of cryptocurrency usage worldwide, according to a recent analysis by Chainalysis. Despite this, the United States is by far the largest contributor to the value that bitcoin exchanges in North America have acquired.

Chainalysis tracked 13 billion web visits across five activity categories, weighted by purchasing power parity per population, to arrive at an adoption rate. If two countries both had access to the same amount of cryptocurrency through centralized services, the one with the lowest PPP per capita would be considered the superior of the two. By doing so, we can learn which regions "everyday people are embracing crypto the most."

The survey revealed that crypto use is dropping across the board, with LMI nations like India, Nigeria, and Ukraine (which ranked sixth) being the only exceptions. Since global usage began to drop in the second quarter of 2022, those countries, home to 40% of the world's population, have been the greatest adopters of crypto:

"The implications for the future of cryptocurrency could be enormous. Low-middle-income countries typically have thriving economies and expanding populations. […] If low- and middle-income nations (LMIs) are the future, then crypto is clearly going to play a significant role in that future."

The top regions for generating transaction value are a loose conglomeration of North America, Central and Southern Asia and Oceania, and Central, Northern, and Western Europe.


Distribution of Acquired Crypto Transaction Volume by Region
Source: Chainalysis

Even though North America is home to the largest crypto market, institutional investors have been pulling back on their spending since April. Stablecoin's percentage of that volume dropped sharply as well, from 70.3% in February to 48.8% in June. From August 2022 to July 2023, the percentage of all financial transactions that were DeFi decreased from 75% to less than 50% by weight.

The United Kingdom generated more than twice as much crypto value as the runner-up, Germany, across Central, Northern, and Western Europe. In terms of international adoption rates, the United Kingdom placed fourteenth.

Yet, France's DeFi expansion was the most rapid. In the 12 months ending in June 2023, DeFi observed growth in Central and Southern Asia and Oceania, Eastern Europe, and Central, Northern, and Western Europe.

The value of cryptocurrencies traded on exchanges was 19.3 percent higher in Central and Southern Asia and Oceania. India, in first place, had a 100% lead over Vietnam, in second.

Due to China's bans, Eastern Asian transaction volume dropped beginning in 2020. However, China generated over $75 billion in value for exchanges in the 12 months that ended in June, with centralized exchanges handling about three-quarters of that.

Web traffic from the Middle East and North Africa was heavily concentrated in Turkey, while Saudi Arabia led the globe in transaction growth, up 12%. When compared to other sub-Saharan countries, Nigeria's transaction volume is staggering. The volume in that area is 2.3% of the global total. This area has the highest Bitcoin volume at 9.3 percent, compared to only 4.2 percent in Eastern Asia.

Chainalysis includes Mexico and Puerto Rico as part of Latin America, with Argentina and Brazil as the top two contributors to transaction volume in the region. The importance of crypto in shielding customers from inflation in the region is highlighted in the research.