I’m excited to share Chainalysis’ 2022 World Crypto Adoption Index. For the third consecutive 12 months, we ranked all international locations by grassroots cryptocurrency adoption. The purpose of our index is to measure the place the most individuals are placing the largest share of their cash into cryptocurrency. Whereas institutional exercise is essential to that, we additionally wish to spotlight the international locations the place particular person, non-professional traders embrace digital property essentially the most.
Our methodology
With the intention to calculate our sub-indexes, we estimate international locations’ cryptocurrency transaction volumes for various companies and protocols based mostly on the net visitors patterns of these companies’ and protocols’ web sites.
Counting on internet visitors knowledge means the utilization of VPNs and different merchandise that masks on-line exercise, however on condition that our index takes under consideration a whole bunch of tens of millions of transactions, VPN utilization would have to be extraordinarily widespread to meaningfully skew our knowledge. Consultants we interviewed for the report usually agreed that our index matches their perceptions of the markets they function in, giving us extra confidence within the methodology.
Sub-indexes and the way they’re calculated
On-chain cryptocurrency worth obtained at centralised exchanges, weighted by buying energy parity (PPP) per capita
The purpose of this sub-index is to rank every nation by whole cryptocurrency exercise occurring on centralised companies and to then weight the rankings to favour international locations the place that quantity is extra important based mostly on the wealth of the typical particular person and the worth of cash usually inside the nation.
We calculate the metric by estimating the entire cryptocurrency obtained by customers of centralised companies in every nation and weighting the on-chain worth based mostly on PPP per capita, which measures the nation’s wealth per resident.
The upper the ratio of on-chain worth obtained to PPP per capita, the upper the rating, that means that if two international locations had equal cryptocurrency worth obtained, the nation with the decrease PPP per capita would rank forward.
On-chain retail worth obtained at centralised exchanges, weighted by PPP per capita
The purpose of this metric is to measure the exercise of non-professional, particular person cryptocurrency customers at centralised companies based mostly on how a lot cryptocurrency they’re transacting in comparison with the wealth of the typical particular person.
We approximate people’ cryptocurrency exercise by measuring the quantity of cryptocurrency moved in retail transactions, which we designate as any transaction for beneath US$10,000 value of cryptocurrency. We then rank every nation in response to this metric however weight it to favour international locations with a decrease PPP per capita.
Peer-to-peer (P2P) change commerce quantity, weighted by PPP per capita and variety of web customers
P2P commerce quantity makes up a big share of all cryptocurrencies in rising markets. For this sub-index, we rank international locations by their P2P commerce quantity and weight it to favour international locations with decrease PPP per capita and fewer web customers, the purpose being to spotlight international locations the place extra residents are placing a bigger share of their total wealth into P2P cryptocurrency transactions.
On-chain cryptocurrency worth obtained from DeFi protocols, weighted by PPP per capita
DeFi has been one of many fastest-growing areas of a cryptocurrency over the past two years. In reality, as we see within the case of DEXs vs CEXs, decentralised cryptocurrency protocols, which primarily use Ether versus Bitcoin, have now overtaken centralised companies in on-chain transaction quantity.
Given the significance of DeFi to innovation in cryptocurrency, we needed our adoption index to spotlight international locations the place customers are concentrating a disproportionately excessive share of their monetary exercise in DeFi protocols.
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For this sub-index, we rank international locations by their DeFi transaction quantity, with weighting to favour international locations with decrease PPP per capita.
On-chain retail worth obtained from DeFi protocols, weighted by PPP per capita
Simply as we wish our index to include the exercise of non-professional, particular person cryptocurrency customers on centralised companies, we wish to do the identical with DeFi. So, this sub-index ranks every nation by DeFi transaction quantity carried out in retail-sized transfers, weighted to favour international locations with decrease PPP per capita.
How our methodology modified this 12 months
The most important change to our index methodology this 12 months is the addition of two sub-indexes based mostly on DeFi transaction quantity and modifying two different sub-indexes to incorporate solely transaction quantity related to centralised companies.
We did this for 2 causes: First, as we clarify above, highlighting international locations main the best way in DeFi given its significance to the general cryptocurrency ecosystem. Second, we needed to deal with the difficulty of DeFi-driven inflation of transaction quantity.
Deposits to and withdrawals from centralised companies present up in on-chain transaction quantity, however transactions inside these companies, comparable to trades on a centralised change, don’t. Centralised companies observe that transaction quantity internally, comparable to so as books for exchanges, that means we don’t have entry to it.
This isn’t the case with DeFi protocols. As a result of DeFi protocols are non-custodial and easily route cryptocurrency between personal wallets, all DeFi transactions seem on-chain. That implies that in the event you’re utilizing on-chain knowledge, DeFi protocol transaction volumes will obtain a bump that volumes related to centralised companies don’t obtain.
Within the context of this index, that would result in us artificially favouring international locations with increased DeFi adoption over ones with extra exercise on centralised companies, even when the quantity of actual transaction exercise is identical.
With the intention to handle this, we determined to measure every nation’s CeFi and DeFi transaction volumes individually, each in whole and on the retail stage, and use them as equal elements of the general index. This fashion, each nation’s transaction quantity is in contrast extra precisely, and we may be clear about which international locations see comparatively extra transaction quantity within the DeFi ecosystem.
The 2022 international crypto adoption index prime 20
Nation | General index rating | General index rating | Centralised service worth obtained rating | Retail centralised service worth obtained rating | P2P change commerce quantity rating | DeFi worth obtained rating | Retail DeFi worth obtained rating |
Vietnam | 1 | 1.000 | 5 | 5 | 2 | 7 | 6 |
Philippines | 2 | 0.753 | 4 | 4 | 66 | 13 | 5 |
Ukraine | 3 | 0.694 | 6 | 6 | 39 | 10 | 14 |
India | 4 | 0.663 | 1 | 1 | 82 | 1 | 1 |
United States | 5 | 0.653 | 3 | 3 | 111 | 3 | 2 |
Pakistan | 6 | 0.609 | 10 | 10 | 50 | 22 | 16 |
Brazil | 7 | 0.562 | 7 | 7 | 113 | 8 | 7 |
Thailand | 8 | 0.560 | 12 | 12 | 61 | 5 | 3 |
Russia | 9 | 0.541 | 8 | 8 | 109 | 11 | 12 |
China | 10 | 0.535 | 2 | 2 | 144 | 6 | 4 |
Nigeria | 11 | 0.521 | 18 | 18 | 17 | 20 | 17 |
Turkey | 12 | 0.519 | 9 | 9 | 121 | 19 | 15 |
Argentina | 13 | 0.510 | 13 | 13 | 26 | 21 | 25 |
Morocco | 14 | 0.507 | 19 | 19 | 21 | 33 | 18 |
Colombia | 15 | 0.496 | 23 | 23 | 10 | 27 | 29 |
Nepal | 16 | 0.478 | 17 | 17 | 19 | 34 | 41 |
United Kingdom | 17 | 0.473 | 14 | 14 | 71 | 12 | 11 |
Ecuador | 18 | 0.409 | 37 | 37 | 6 | 45 | 56 |
Kenya | 19 | 0.397 | 43 | 43 | 5 | 9 | 34 |
Indonesia | 20 | 0.396 | 16 | 16 | 129 | 18 |
Key takeaways from the 2022 crypto adoption index
General adoption slows worldwide in a bear market however stays above pre-bull market ranges
Our knowledge reveals that international adoption has levelled off within the final 12 months after rising persistently since mid-2019. We have a look at this development within the chart beneath, the place we apply our index methodology globally by summing all 154 international locations’ index scores quarterly, from Q2 2019 to the current, and re-index that quantity once more to indicate adoption progress over time the world over.
World adoption of cryptocurrency reached its present all-time excessive in Q2 2021. Since then, adoption has moved in waves, it fell in Q3, which noticed crypto worth declines, rebounded in This fall after we noticed costs rebound to new all-time highs, and has fallen in every of the final two quarters as we’ve entered a bear market. Nonetheless, it’s essential to notice that international adoption stays effectively above its pre-bull market 2019 ranges.
The information means that a lot of these attracted by rising costs in 2020 and 2021 caught round and proceed to take a position a big chunk of their property in digital property. That additionally aligns with our previous research exhibiting that cryptocurrency markets have been surprisingly resilient by current declines.
Large, long-term cryptocurrency holders have continued to carry by the bear market. So whereas their portfolios have misplaced worth, these losses aren’t locked in but as a result of they haven’t offered. The on-chain knowledge suggests these holders are optimistic the market will bounce again, which retains market fundamentals comparatively wholesome.
Rising markets dominate the worldwide crypto adoption index
One development we famous final 12 months has solely gotten stronger this 12 months: Rising markets dominate the index. The World Financial institution categorises international locations into one in all 4 classes based mostly on revenue ranges and total financial improvement: excessive revenue, higher center revenue, decrease center revenue, and low revenue.
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Utilizing that framework, we discover that the center two classes dominate the highest of our index. Out of our prime 20 ranked international locations:
- Ten are lower-middle revenue: Vietnam, Philippines, Ukraine, India, Pakistan, Nigeria, Morocco, Nepal, Kenya, and Indonesia
- Eight are upper-middle revenue: Brazil, Thailand, Russia, China, Turkey, Argentina, Colombia, and Ecuador
- Two are high-income: the US and the UK
As we discover later within the report, customers within the decrease center and higher middle-income international locations usually depend on cryptocurrency to ship remittances, protect their financial savings in occasions of fiat forex volatility, and fulfil different monetary wants distinctive to their economies.
These international locations additionally are inclined to lean on Bitcoin and stablecoins greater than different international locations. Over the approaching years, it’ll be attention-grabbing to see what options the cryptocurrency trade can construct to extend adoption in excessive and low-income international locations.
Vietnam holds on to the highest spot, the US jumps to fifth, and China again within the prime ten
There are additionally just a few particular person international locations whose rankings stand out to us.
For the second consecutive 12 months, Vietnam is ranked first in cryptocurrency adoption. A have a look at the sub-rankings reveals that Vietnam reveals extraordinarily excessive buying energy and population-adjusted adoption throughout centralised, DeFi, and P2P cryptocurrency instruments. Different sources have additionally famous Vietnam’s love of cryptocurrency.
Polling performed in 2020 discovered that 21 per cent of Vietnamese shoppers reported utilizing or proudly owning cryptocurrency, second solely to Nigeria at 32 per cent, and the adoption charge has doubtless solely grown since then.
Reviews from native media counsel that cryptocurrency-based gaming, together with video games following the play-to-earn (P2E) and move-to-earn (M2E) fashions, are notably common in Southeast Asian international locations. That goes not only for customers, however builders too, because the top-grossing P2E recreation Axie Infinity is predicated in Ho Chi Minh Metropolis, with its success inspiring extra crypto gaming startups to search out success in Vietnam.
America moved as much as fifth in our index rankings from eighth in 2021 and sixth in 2020. The US ranks within the prime three of every sub-index, aside from inhabitants and buying power-adjusted P2P change utilization, the place it ranks a lot decrease at 111th. This isn’t stunning, as our analysis reveals that P2P change utilization tends to be highest in international locations with low buying energy.
Maybe most attention-grabbing is the truth that the US is by far the highest-ranked developed market nation on our index and one in all solely two to make the highest 20, together with the UK. We’ll discover the explanations for this later within the full report.
Lastly, China re-entered the highest ten of our index this 12 months after inserting thirteenth in 2021. Our sub-indexes present that China is particularly sturdy in utilizing centralised companies, inserting second total for buying power-adjusted transaction quantity at each the general and retail ranges.
That is particularly attention-grabbing given the Chinese language authorities’s crackdown on cryptocurrency exercise, which features a ban on all cryptocurrency buying and selling introduced in September 2021. Our knowledge means that the ban has both been ineffective or loosely enforced.
Bear markets can’t wipe out bull market adoption
As we famous above, whereas progress has turn into extra sporadic with the onset of the most recent bear market, international adoption stays effectively above the degrees that preceded the 2020 bull market.
The information counsel {that a} essential mass of recent customers who put capital into cryptocurrency in periods of worth progress have a tendency to remain even when costs decline, permitting the ecosystem to persistently develop on internet throughout market cycles.
One purpose for this could possibly be the worth that customers in rising markets get from cryptocurrency. These international locations dominate the adoption index, largely as a result of cryptocurrency offers distinctive, tangible advantages to folks dwelling in unstable financial situations. We are going to discover these dynamics extra within the full report.
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Picture credit score: Chainalysis
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