Emerging Markets Lead the Way in Grassroots Cryptocurrency Adoption, Despite Global Downturn

The latest Global Crypto Adoption Index from 2022, published by Chainalysis, unveils an intriguing picture of cryptocurrency usage around the globe, particularly highlighting the prominence of emerging markets. A surge in grassroots-level involvement in cryptocurrency is shaping the global financial landscape, with developing countries leading this wave. In this scenario, platforms like NOAH are seizing the opportunity to streamline cross-border transactions, making them faster, more secure, and cost-effective. Now in its third year, the report dives deep into country-level adoption metrics. The following summarizes the key findings from the latest Global Crypto Adoption Index.

Understanding Grassroots Cryptocurrency Adoption

The report describes “grassroots cryptocurrency adoption” as the widespread investment by individuals into digital assets. It emphasizes the activity of non-professional individual investors, moving beyond mere transaction volumes.

The ranking of countries is based on their utilization of a variety of cryptocurrency services, which are normalized on a 0 to 1 scale to determine each country's overall position.

Ranking Criteria Explained

Five sub-indexes based on web traffic patterns of various services and protocols related to cryptocurrency are used to determine the rankings. All are weighted by purchasing power (PPP) per capita. They are:

1. On-chain cryptocurrency value received at centralized exchanges
2. On-chain retail value received at centralized exchanges
3. Peer-to-peer (P2P) exchange trade volume
4. On-chain cryptocurrency value received from DeFi protocols
5. On-chain retail value received from DeFi protocols

Emerging Markets Take the Lead, U.S. Advances

The report indicates emerging economies are leading the pack. Most of the top 20 countries, classified by the World Bank into lower and upper middle-income categories, are predominantly from these brackets. These countries typically use cryptocurrencies for remittances, protecting their savings against local currency fluctuations and other specific financial needs.

Vietnam Holds Firm, U.S. Climbs, and China Makes a Comeback

Vietnam continues its dominance in cryptocurrency for the second year, owing to its significant purchasing power and widespread adoption of centralized, DeFi, and P2P cryptocurrency tools. The U.S., despite a low ranking in P2P exchange usage adjusted for population and purchasing power, has made a significant jump from the eighth position in 2021 to fifth last year. Despite stringent government regulations, China has made a solid comeback to the top ten due to the continued use of centralized services.

Bear Market Fails to Hinder Adoption

Despite fluctuations in the adoption rate owing to the recent bear market, global crypto adoption remains notably higher than pre-2020 bull market levels. This suggests that many new users who invested during periods of price growth have remained active, contributing to consistent growth across market cycles.

DeFi Adoption Soars in North America

North America has seen significant adoption of DeFi, causing Bitcoin's dominance to wane in 2022. The region has witnessed considerable activity in Decentralized Exchanges (DEXes) and Non-Fungible Tokens (NFTs), attracting different user demographics.

Cryptocurrency Activity Skyrockets in Latin America

Cryptocurrency usage has surged in Latin America, with the region now ranked as the seventh-largest cryptocurrency market. Cryptocurrencies in these regions are primarily used for value storage, remittances, and speculative investments. With this increased adoption and diverse use-cases, digital assets transforming traditional financial systems continue to gain momentum globally.

Central & Southern Asia: Strong Growth Amid Regulatory Challenges

In Central & Southern Asia and Oceania, India, Vietnam, and the Philippines are experiencing strong growth in crypto adoption, driven by the popularity of NFTs and crypto-based remittances. However, regulatory challenges in countries like India and Pakistan have affected the region's growth trajectory.

Eastern Asia: Slower Growth but Significant Activity

Despite a slowdown in growth, Eastern Asia maintains a significant share of global crypto transactions. Despite government-imposed restrictions, China continues to be the largest market in the region.

Middle East & North Africa: New Hubs for Cryptocurrency

The Middle East & North Africa region is emerging as a new hub for cryptocurrency, led by countries like Turkey, Morocco, and Egypt. Crypto adoption in these regions is driven by uses for savings preservation and remittance payments, combined with increasingly crypto-friendly regulations.

Sub-Saharan Africa: Small Volume, Huge Potential

Despite accounting for the smallest volume of cryptocurrency transactions globally, Sub-Saharan Africa hosts well-developed cryptocurrency markets. Countries like Nigeria and Kenya have high adoption rates, especially on P2P exchanges, driven by remittances and commerce.

Western Europe and North America: Traditional Powers, New Approaches

Despite being traditional economic powerhouses, Western Europe and North America have distinct approaches to cryptocurrency. Western Europe is characterized by cautious optimism toward digital assets. Despite regulatory uncertainties in some countries, there has been a significant increase in adopting DeFi protocols and NFTs, driven primarily by countries like Germany, France, and the United Kingdom.

In contrast, North America has shown a more assertive stance towards cryptocurrency. The United States, in particular, has emerged as a global leader in institutional cryptocurrency investment and is also seeing rapid growth in retail-level adoption. Canada is following a similar trend with increasing retail and institutional investment in digital assets. However, in 2023, American regulators have begun to take a harsh stance against crypto exchanges, accusing them of violating securities laws and mishandling customer funds. This has prompted some crypto firms to seek alternative jurisdictions or exit the U.S. market altogether.

South America: Rising Adoption Amid Economic Uncertainty

South American countries have witnessed a significant rise in cryptocurrency adoption amid economic uncertainties and high inflation rates. Cryptocurrencies, particularly Bitcoin and stablecoins, have become popular as a hedge against inflation and economic instability. Countries like Argentina, Colombia, and Brazil are leading this trend.

Given the pace of change and developments in cryptocurrency, predictions about future trends must be cautiously approached. However, several observations can be made based on the 2022 Global Crypto Adoption Index data:

First, despite regulatory hurdles and market fluctuations, cryptocurrency adoption at the grassroots level will likely continue to grow, especially in emerging economies. This is due to cryptocurrencies' unique benefits, such as the ability to safeguard savings during periods of local currency fluctuation, send remittances, and provide access to global financial markets.

Second, the surge in DeFi adoption in regions like North America suggests a future where decentralized financial systems play a significant role in global finance. This is particularly relevant given the increasing concerns around privacy and control over personal data.

Third, despite regulatory crackdowns, the resilience of the Chinese market suggests that countries may struggle to suppress the use and exchange of cryptocurrencies entirely. This is a testament to the inherent value proposition of digital assets and the robustness of the blockchain technology underpinning them.

Taking a closer look at the data and insights from the 2022 Global Crypto Adoption Index, it is evident that the future of global economic integration with cryptocurrencies appears promising, with platforms like NOAH playing a key role.

Particularly in emerging economies, the trend of grassroots-level cryptocurrency adoption is expected to continue and expand, despite potential regulatory hurdles and market instability. NOAH's mission aligns seamlessly with this trend, as it's geared towards enabling fast, secure, and affordable global transactions, empowering individuals no matter where they are located.

In regions with a surge in DeFi adoption, such as North America, NOAH's use of Bitcoin and the Lightning Network for near-instant transactions with minimal fees could position it as a major player in future decentralized financial systems.

Additionally, even in markets like China that maintain resilience amid regulatory crackdowns, NOAH’s commitment to adhere to all applicable laws and regulations ensures a safe environment for users, while still preserving the benefits of blockchain technology.

As we turn our attention to remittance patterns, it is evident how NOAH could serve as a global solution. For instance, remittances from the African diaspora have become a lifeline for many African nations. With high fees, limited financial infrastructure, political instability, and exchange rate challenges often hindering successful fund transfers, NOAH could provide a secure, cost-effective alternative to traditional remittance channels, irrespective of regional complexities.

The case of Brazil further illustrates NOAH's potential in the remittance landscape. With a diaspora of over 4 million and remittances ranging from $2-4 billion annually, the need for efficient money transfer solutions is high. The country's instant payment system, Pix, does offer a faster alternative to traditional wire transfers, but it has its limitations. NOAH could potentially offer an even more robust solution, offering fast, secure, and low-fee transactions to over 150 countries without needing specific bank accounts.

Given these insights, while the journey to global crypto adoption might be marked by challenges, platforms like NOAH are well-positioned to streamline this journey, fostering a more inclusive global financial ecosystem.

In conclusion, the future of global cryptocurrency adoption looks promising, although the path forward is likely to be punctuated by regulatory challenges, technological advancements, and economic shifts. As cryptocurrencies become increasingly mainstream, the adoption and use patterns are expected to be as diverse as the global community that uses them.

For more information on the report's methodology and findings, refer to the full Chainalysis Global Crypto Adoption Index 2022 report.