Crypto has come a long way from its humble beginnings in 2009. Today, Crypto has influence in fields from finance to supply chain management. The worldwide crypto market is also valued at around $1 trillion. Driving this growth has been the rapid adoption of crypto by individuals and businesses alike. However, many governments are also sceptical about the impact of crypto on countries. Amid such regulatory hurdles, which countries have the highest use of crypto?
Why Finding Crypto Users is Hard
Many might think it is easy to determine which countries use the most crypto tokens. However, the main benefits of crypto – anonymity and freedom of transactions – mean it is difficult to determine who is making a transaction and where it comes from. There are no IP addresses or geographic information on the blockchain.
To solve this problem, blockchain data firms use complex tracking and tracing methods. These involve finding other information you may share on public platforms along with your wallet address.
For example, if you post your wallet address on social media like Twitter, then it is easy to link that address to your identity. Similarly, most users buy their crypto tokens from centralised crypto exchanges. These exchanges typically provide wallets from a range of addresses. If your address is within this range, it becomes possible to see where you purchase your tokens from.
This article is based on the findings of Chainalysis, a blockchain analysis firm. The list is ranked based on usage rates, rather than total usage. Therefore, countries with a higher percentage of people using crypto are ranked higher.
Which Countries are Using The Most Crypto
- United States
What Does The Data Tell Us?
The list mentioned above may come as a surprise to many of us. It is important to note that while more popular destinations for crypto like Japan, Russia and China have higher total usage of crypto tokens, the percentage of people using them is a small part of the population.
There are three important findings from the data collected.
Emerging Markets Have Higher Adoption Rates
Most of the countries in the top 10 list above are developing or emerging economies. Emerging economies usually do not have many centralised exchanges where large values of crypto can be traded every day. They also have high remittances from relatives abroad.
Crypto can be useful in such cases to avoid problems like currency depreciation and international payments. Users invest in crypto tokens to ensure their savings do not lose value. They also use them for international payments to avoid any restrictions the government may place on such transactions.
Bigger Countries Reducing Their P2P Trades
Developed countries have much larger markets that can handle more money. This makes them an attractive option for large traders and investment firms, rather than individuals. As the value of the market rises, more centralised exchanges have entered markets like the US and Japan.
If you buy a token on a centralised exchange, it is usually added to your account. You must manually withdraw your tokens into a crypto wallet to be able to transact with them. This means trades are not transactions from one wallet to another. Rather, they are only reflected in the order book of the exchange.
Retail Individuals Are Largest Segment
Since most transactions in crypto seem to take place through P2P exchanges in emerging economies, it is clear that small retail investors make up the bulk of the users. Businesses continue to transact in fiat money rather than crypto tokens.
While there may be more traded volume in developed countries, this is not between crypto wallets. Most of the trades occur between accounts on the same centralised exchange without altering the blockchain.
Read more: Cefi vs Defi – Comparing the features
What Does The Future Hold for Crypto Adoption?
Regardless of whether small individuals transact in crypto or whether institutions trade in it, the future looks bright. Year after year, crypto adoption rises exponentially. With the introduction of decentralised finance (Defi), NFTs and the metaverse, the crypto industry is constantly innovating. This growth brings it further into the mainstream and motivates more businesses and individuals to use crypto.
Finally, some governments are also looking to use crypto. Many countries around the world are working on Central Bank Digital Currencies, which are crypto tokens issued by the government. With more regulation and government support in the coming years, the crypto industry will find great success.