A recent report by Chainalysis has shed some light on global cryptocurrency adoption and has shown that developing countries are leading the charge in terms of grassroots crypto adoption, while China has reclaimed a spot in the top 10.

How to quantify grassroots adoption

To simply calculate a rough estimate of how much Bitcoin is owned by how many citizens of each individual country wouldn’t be a useful exercise, since small numbers of extremely wealthy people would weight the distribution on one end.

Crypto truly is achieving grassroots adoption throughout the world, however, and the reason for this is that the utility is often borne out of necessity.

Chainalysis have used a series of different metrics in their report to account for different types of adoption and measuring it appropriately. Some countries use centralised exchanges a lot, whereas others are more focused on peer-to-peer trading. Some countries have a very high Bitcoin penetration, whereas DeFi is more popular in others.

Grassroots adoption, and the extent of adoption more generally, can be quantified by weighting for purchasing power parity.

Vietnam leads the charge

For the second year in a row, Vietnam has topped the leaderboards for countries with the most grassroots crypto adoption.

Vietnam has an extremely high rate of adoption across all sorts of things in the world of crypto. On a population-adjusted basis, and when adjusted for purchasing power parity (PPP), the Vietnamese own a lot of Bitcoin, are very active on centralised exchanges and are very active users of DeFi.

crypto adoption index chainalysis

The World Bank has four different tiers for classifying how developed a country is classified, and the two middle tiers (upper middle-income countries and lower middle-income countries) currently have the most adoption of cryptocurrencies.

Vietnam is classified as a lower middle-income country, but this might be changing in the future given the explosion of innovation in the crypto space there, and the overt support of the government. The Prime Minister has declared his support for cryptocurrencies and outlined a very clear legal framework within which businesses can operate.

Play-to-earn gaming is also an extremely popular phenomenon in Vietnam. Some of the most popular P2E games in Vietnam were launched on Kardiachain, a Vietnamese Turing complete blockchain that is focused on speed and interoperability. Kardiachain has gone some way to help make crowdfunding easier for the Vietnamese. For example, the KaiStarter programme allows people to invest in Vietnamese TV shows, in return for a percentage share of the profits that the show makes.

China reclaims top 10 position

Many will be surprised to see that China has reclaimed a position in the top 10 despite the ban on crypto mining and extremely unfavourable conditions for trading and operating crypto companies in China.

Chainalysis speculates that there could be a variety of reasons for this, notably that there are either a lot of people breaking the laws in China and adopting Bitcoin regardless of what the state permits, or it could be that the laws simply aren’t being enforced very strongly.

It is likely to be a combination of the two, but also it shouldn’t be surprising that China, one of the most populous countries in the world and one where property rights have historically been quite weak, should have such strong Bitcoin advocates.

cryptop adoption top 10 chainalysis

Market participants will be pleased to see that the news from China isn’t all bad. In fact, there are clearly many proponents of Bitcoin within the country that once controlled 40% of the hash rate. It seems that the state may have woken up to the reality that no matter how times they try to ban Bitcoin, it is a ban that cannot be effectively enforced.

Today, the Chinese Community Party announced that Bitcoin trading is legal, and it is legal to own Bitcoin, but not to use it for payments. This is a hugely positive sign, since it shows that the Chinese government is changing the way that they are looking at Bitcoin and could potentially change their views on Bitcoin mining.

It has never been illegal for the Chinese to own Bitcoin, but it isn’t surprising that the government has such strict rules on what it is that they are allowed to do with their Bitcoin.

The market outlook remains healthy long term

The report from Chainalysis concluded by stating that the progress made in bull markets, in terms of wider adoption and understanding of the technology, is a phenomenon that cannot be eradicated in bear markets.

With each market cycle, more people become aware of crypto and understand that the volatility isn’t something that should cause them not to be involved – one just has to manage their own personal risk appetite.

The rising levels of cryptocurrency adoption are indicative of an extremely healthy, and global, ecosystem – crypto is here to stay, but those who will benefit from the most from it won’t be the countries that are leading the pack today. For example, the country with the highest degree of Bitcoin ownership is Nigeria at 32% – rising prices will dramatically affect the status quo and lead to an inevitable wealth transfer.

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