P2P platforms driving cryptocurrency usage in emerging markets

By Gaia Lamperti

As cryptocurrency adoption continues to grow globally, banks, institutional investors and everyday consumers are taking notice and incorporating digital assets into their financial strategy. But patterns of cryptocurrency usage vary widely around the world.

The recently released 2021 Global Crypto Adoption Index, a study by blockchain data platform Chainalysis, measures grassroots regional cryptocurrency adoption and provides insights on the methodology behind it around the world.

The goal was to provide an objective measure of which countries have the highest levels of cryptocurrency adoption, after a year of huge growth for crypto markets and increased attention for the industry. Considering 154 countries and focusing on use cases related to transactions and individual saving, rather than trading and speculation, the index ranked the top 20 countries in cryptocurrency adoption.

Each country was ranked in 3 component metrics (on-chain value received, on-chain retail value received, P2P exchange trade volume) that made up the overall ranking. Vietnam is in first position, followed by India and Pakistan, Ukraine, Kenya and Nigeria, showing that emerging markets are leading the way in individual cryptocurrency adoption.

That has been favoured in large part by huge transaction volumes on peer-to-peer (P2P) platforms when adjusted for PPP per capita and internet-using population. Many residents of these regions use P2P cryptocurrency exchanges often because they do not have access to centralised exchanges.

Other three key trends included in the report’s findings are:

• Global cryptocurrency adoption is skyrocketing – Chainalysis’s data shows that residents of more and more countries around the world are taking the dive into cryptocurrency or seeing existing adoption increase.  At the end of Q2 2021, that total score stands at 24, suggesting that global adoption has grown by over 2300% since Q3 2019 and over 881% in the last year.
• Global adoption has grown by over 880% in the last year – At the end of Q2 2020, following a period of little growth, total global adoption stood at 2.5 based on our summed up country index scores. At the end of Q2 2021, that total score stands at 24, suggesting that global adoption has grown by over 2300% since Q3 2019, suggesting that the global adoption has grown significantly.
• China and the U.S. dip in rankings – Last year, China ranked fourth on Chainalysis’s global adoption index while the U.S. ranked sixth. This year, the U.S. ranks eighth while China ranks thirteenth.

The data showed that growing transaction volume for centralized services and the explosive growth of DeFi are driving cryptocurrency usage in emerging markest as well as in countries that already had substantial adoption, while P2P platforms are driving new adoption specifically in emerging markets.

Such variation reinforces the belief that cryptocurrency adoption is truly becoming a global phenomenon, and the focus in the next months will be on how long adoption can possibly continue on those platform categories compared to new and emerging models.