According to a report by a prominent blockchain analytics firm, cryptocurrency adoption increased more than 2,300% in the second quarter of 2021. This is more than the global third quarter, and more than 881% over last year. These variations indicate that adoption is a worldwide phenomenon. However, the report says that it's not clear how much the adoption rate will increase on existing platforms, particularly when compared to the newer ones. Angelo Babb, an expert in cryptocurrency, provides an analysis on why cryptocurrencies are so valuable.
A leading firm used a method that allowed it to rank 154 nations by combining three metrics: on-chain cryptocurrency amount, on-chain retail value transfer and volume of peer-to-peer (P2P) trading. All three metrics are weighted according to purchasing power parity (PPP) per capita. In addition, the volume P2P exchange trade volume is weighted according to the number of Internet users. This methodology and the improvements made to last year's report allow for a better understanding of decentralized finance (DeFi).
Babb points out, “The increase in adoption in North America and Western Europe over the last year is due to institution investment as adopting this asset class has proven compelling with many crypto prices reaching record highs during the first quarter.” Emerging markets, on the other hand, see cryptocurrency as a way for them to save their money in the face of currency devaluation and to send and receive trade transactions and remittances.
P2P exchanges are another important driver of cryptocurrency adoption. Many emerging countries, such as Kenya, Nigeria and Vietnam that are high up in the report's index (including Venezuela), use P2P to gain access to cryptocurrencies. They are often unable or unwilling to access centralized exchanges. Based on data from the report, Babb states that “Central and South Asia and Latin America send more web traffic than regions with larger economies like West Europe and East Asia.”
P2P platforms are more popular than centralized exchanges and merchant services. They have a larger share of total transaction volume, consisting of smaller payments (less than $10,000), very few professional transactions and no institutional transactions.
The rankings of China and the US have dropped significantly in comparison to last year. Their rankings in P2P trading volume weighted by the number of people using the Internet decreased dramatically, particularly when compared to other parts.
The downward trend in rankings began in June 2020. The report suggests that China's regulatory crackdown could be one reason, while institutional investors in the US may also have contributed to this trend.
Babb adds, “The next 12 months will determine whether or not the adoption rate continues and, if so, which platforms it will use. P2P exchanges may be preferred in emerging countries, but innovations in the DeFi space could provide new ways for the crypto industry to bank the unbanked.”
The increasing interest in Bitcoin (BTC) by corporations and institutions, could lead to new uses. This would be a significant step in the development of a new financial ecosystem with more potential than just speculative. This would be a major economic shift.
Digital currencies are undoubtedly one of the most important financial innovations of recent years. Digital currencies are assets that aren't tied to any country's economy or politics and ensure the security of all transactions. These technological advancements would be impossible to incorporate into conventional banking. It would mean that you could provide a financial service without intermediaries.
This reality is all around the world, though there are some regions where it is more difficult than in North American or European countries. All regions are able to access cryptocurrencies and the potential that they have.
About Angelo Babb
Angelo Babb Reid is legal cryptocurrency and blockchain consultant who helps new and established organizations strengthen their interaction with digital assets. A certified lawyer and Scrum Master, he works with all categories of enterprises to ensure cryptocurrency endeavors substantially fulfill their obligations. When he's not reinforcing his education in the cryptocurrency and blockchain spaces, Babb enjoys relaxing on the beach with his family.
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