Cryptocurrencies, leap forward by 880%: Vietnam, India and Pakistan lead the top 20
This was revealed by the second edition of the Chainalysis Global Crypto Adoption Index, according to which in particular in emerging countries the use of digital currencies is increasingly driven by the devaluation of local currencies. Meanwhile, in China it is the stampede of miners: this is what is happening
23 Aug 2021
Global adoption of cryptocurrencies has taken off in the last year, with an 881% increase, with Vietnam, India and Pakistan firmly in the lead. This is confirmed by the new data from Chainalysis, collected in the second edition of the Global Crypto Adoption Index, which classifies 154 countries based on metrics such as the volume of peer-to-peer exchanges, rather than the gross volume of transactions, which generally favors developed nations with high levels of professional and institutional cryptocurrency.
Chainalysis said the purpose of the index is to photograph the adoption of cryptocurrencies by “ordinary people” and “focus on use cases related to transactions and individual savings, rather than trading and speculation”. The metrics are weighted to incorporate the wealth of the average person and the value of money in general within certain countries.
According to the analysis, most of the top 20 countries by adoption of cryptocurrencies are emerging economies, including Togo, Colombia and Afghanistan. Meanwhile, the United States slipped from sixth to eighth and China, which cracked down on cryptocurrencies this spring, dropped from fourth to thirteenth.
• P2P as an alternative to hard-to-access centralized exchanges
• Miners fleeing China
P2P as an alternative to hard-to-access centralized exchanges
Chainalysis attributes the rising levels of adoption in emerging markets to some key factors.
First, countries such as Kenya, Nigeria, Vietnam and Venezuela have huge volumes of transactions on peer-to-peer platforms, or P2P, if adjusted to per capita purchasing power parity and to the population using the internet.
Chainalysis reports that many residents use P2P cryptocurrency exchanges as their primary access ramp to cryptocurrency, often because they don’t have access to centralized exchanges. The report also states that many residents in these countries are turning to cryptocurrency to preserve their savings in the face of currency devaluation, as well as to send and receive remittances and carry out business transactions.
Vietnam, in particular, would be one of the main markets for Bitrefill, a company that helps customers make a living off cryptocurrency by purchasing gift cards using bitcoin. In Nigeria, on the other hand, there is a huge trading market for cryptocurrencies.
The countries at the top of the adoption rankings also have another thing in common. According to Boaz Sobrado, a London-based fintech data analyst, “many have capital controls or a large immigrant and immigrant population.” Afghanistan, for example, currently in turmoil due to the recent overthrow of the government by the Taliban, is high on the list due to “capital controls, as it is difficult to move money in and out,” he says. Sobrado.
Miners fleeing China
After Beijing’s crackdown on cryptocurrency miners in the early summer, many bitcoin mining companies are trying to leave China. The Wall Street Journal recounts the example of Bit DIGital and other companies active in the sector that are having many difficulties in leaving the country which until a few weeks ago was consuming about two thirds of the global energy used to create cryptocurrencies. Bit DIGital has about 20,000 computers in Sichuan province, and is forced to face very high packaging and shipping costs in recent weeks, while a single computer to mine bitcoins has cost over 12,000 dollars.
Companies, explains the American newspaper, are still grappling with the decision on the best way to move computers from China. Some try by land, some by sea, some by air. But DIgital said it still has 9,484 “mining machines” in the Chinese province. To move them, the company has turned to logistics multinationals and hopes that all the hardware will arrive in North America by September, explained Samir Tabar, the head of strategy at Bit DIGital. The company is sending the machines to Nebraska,
Georgia, Texas and Alberta, Canada.
The whole process can cost millions of dollars. Also because oil prices have risen in recent months and the bottlenecks created by the coronavirus pandemic have caused transport costs to skyrocket. Computers entering the United States from China are also subject to duties of 25%. In addition to trying to devise a way to pack and ship the very delicate extractive machines, companies must find large structures with suitable characteristics to be able to move them.
“It’s a pretty big financial cost for anyone who wants to move mining out of China,” said Fred Thiel, CEO of the Las Vegas-based cryptocurrency mining firm Marathon Digital Holdings Inc.. “It’s a bit like GM should
shut down a plant and build a new one elsewhere, “he said, making an analogy with Detroit automaker General Motors Co.
Bitcoin mining has become very profitable for these companies. Miners earn commissions, yes, from processing bitcoin transactions
as their main activity but also generate revenues from the computing capacity of their machines which, by solving the calculations that “encrypt” the bitcoins hidden in the blockchain,
they manage to “extract” new digital currency by obtaining it as a reward. It is one of the most profitable businesses in the world of cryptocurrencies at the moment, especially since the price of bitcoin stood at $ 50,000 each.
The blockchain, the engine of bitcoin, was designed in such a way that the Bitcoin network itself releases new digital money every 10 minutes, after solving the calculations that protect them. To solve the calculations you need more and more powerful and increasingly energy-intensive computers. But the competition in the sector has increased enormously and today the factories that mine bitcoins are entire warehouses of interconnected computers intent on solving calculations. And this is what makes their transfer so complex.