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On this page
  • Crypto Adoption on the Rise
  • The African Story
  • Nigeria: A Crypto Powerhouse
  • South East Asia: A Hub for Crypto Adoption
  • The Indian story
  • The socio-economic impact of crypto adoption
  1. Guides
  2. Crypto
  3. Advanced

Global Crypto Adoption and Its Potential Socio-Economic Impact

PreviousWhat is Byzantine fault tolerance?NextHow ZK-Rollups are Supercharging Blockchain Transactions?

Last updated 1 year ago

In a recent by Chainalysis, a revelation that developing countries leading in cryptocurrency adoption left many astounded. Surprisingly, India emerged as the front-runner, even though the country is often perceived as skeptical toward cryptocurrencies because of its stringent taxation policies.. Of the 154 countries analyzed, India stood out as the leader in grassroots crypto adoption. Followed by Nigeria and Vietnam.

But what is driving these emerging economies to embrace cryptocurrencies, and what could this mean for the future of global finance?

Crypto Adoption on the Rise

Rising global crypto adoption establishes that cryptocurrencies are seen as a financial equalizer for the unbanked and underbanked in these countries. Crypto scams and fraud indeed persist, and the expected improvements in living conditions tied to cryptocurrencies have not materialized significantly. However, crypto does serve as a means to circumvent government restrictions. Even countries like China and Russia, which have imposed bans on crypto payments and trading, rank 11th and 13th, respectively, ahead of countries like the United Kingdom.

The African Story

Nigeria: A Crypto Powerhouse

Nigeria, the most populous country in Sub-Saharan Africa, boasts the region's largest cryptocurrency economy. Cryptocurrency adoption is seeing a boom in Nigeria, witBetween July 2022 and June 2023, Nigeria witnessed an impressive 9% year-over-year increase in cryptocurrency transactions, totaling $56.7 billion. Notably, this growth persists even in the face of turbulent market conditions, underlining the resilience and potential of Nigeria's crypto economy.

This remarkable growth can be attributed to a convergence of factors. Nigeria's political landscape remains unstable, exacerbated by the tumultuous impact of the COVID-19 pandemic and the sharp decline in oil prices, a lifeline for the nation's economy. These challenges have prompted Nigerian citizens to actively seek financial alternatives, thereby significantly enhancing the allure of cryptocurrencies.

Moyo Sodipo, the co-founder of the Nigerian cryptocurrency exchange Busha, aptly captures the sentiment prevailing in the country. He states, "People are constantly looking for opportunities to hedge against the devaluation of the naira and the persistent economic decline since COVID."

South East Asia: A Hub for Crypto Adoption

Crypto evangelist Sharat Chandra argues that cryptos are seen as a tool for greater financial inclusion in developing countries. "Web3-based games, especially ones with clear play-to-earn models and decentralized finance products, have gained adoption in developing countries," Chandra adds.

For example, in the Philippines, a significant portion of internet traffic related to cryptocurrency is directed towards gaming and gambling websites, driven by the popularity of the NFT-based game Axie Infinity. In contrast, Pakistan and Vietnam have observed increased crypto activity on peer-to-peer exchanges.

The Indian story

Despite a global drop in crypto adoption from its peak levels, India has displayed remarkable resilience. The Global Crypto Adoption Index highlights India's strong performance across various categories, including centralized and decentralized exchanges, lending protocols, and token smart contracts.

India has now ascended to the world's second-largest cryptocurrency market in terms of estimated transaction volume, surpassing wealthier nations. This achievement is particularly significant given India's imposition of a higher capital gains tax on crypto earnings, surpassing the tax rate of other investments such as equities.

The socio-economic impact of crypto adoption

The rising adoption of cryptocurrency holds significant socio-economic potential. It can provide financial inclusion for the unbanked, act as a hedge against currency devaluation and inflation, and offer economic alternatives in countries facing economic challenges. Additionally, it can promote innovation and provide opportunities for economic growth. However, it also raises concerns about scams, fraud, and the need for effective regulations to ensure responsible usage.

The data suggests that crypto adoption has been growing in developing economies, classified as Lower Middle Income (LMI) countries, by the World Bank. Notably, 40% of the world's population resides in LMI countries, making them a pivotal player in the future of crypto adoption.

Sub-Saharan Africa (SSA), despite having the smallest crypto economy globally, accounted for of the global transaction volume between July 2022 and June 2023, receiving an estimated $117.1 billion in on-chain value. This region is turning to cryptocurrencies as an alternative store of value due to rising inflation and debt issues. Countries like Ghana, Nigeria, Kenya, and South Africa have faced economic challenges, prompting their residents to seek refuge in cryptocurrencies as a means of preserving savings and attaining greater financial freedom.

The Central & Southern Asia and Oceania (CSAO) region hosts one of the world's most dynamic cryptocurrency markets. India, Vietnam, the Philippines, Indonesia, Pakistan, and Thailand rank among the top ten countries in the Global Crypto Adoption Index. CSAO's crypto market is the third-largest in terms of transaction volume, accounting for nearly activity.

Over the past year, Decentralised Finance (DeFi) has gained significant traction in the CSAO region. It constituted approximately 56% of all cryptocurrency transactions from July 2022 to June 2023, a notable increase from the 35.2% it represented in the previous year. Furthermore, nearly 70% of these DeFi transactions involve $1 million or more, underscoring the growing institutional adoption of cryptocurrencies in this area. (source: Chainlysis’ )

Scallop is creating a user friendly and secure blockchain financial ecosystem that provides access to services for millions of people who don't have access at the moment. It is based on the assumption that cryptocurrencies will become widely accepted. This non-traditional approach to banking is greatly beneficial, especially for those who are unbanked or underserved. Join us in making banking more accessible and secure. for our waitlist!

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2023 Geography of Cryptocurrency Report
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