✔️ Information reviewed and updated in September 2024 by Pedro Martínez González
In the era of financial technology and cryptocurrencies, Bitcoin has emerged as a beacon of hope for those struggling with economic turmoil and instability. Chainalysis' latest adoption index sheds light on a fascinating phenomenon: Bitcoin adoption in low-income countries is leading the way in the world of cryptocurrencies.
Bitcoin: A Hope for Economies in Crisis
In recent years, Bitcoin has seen impressive growth in terms of adoption and valuation. Since its recognition in 2021, when it reached almost USD 70,000, until today, we have witnessed its exponential growth. However, this growth has not been without challenges.
The bear market and the falls of Terra and the FTX exchange impacted Bitcoin adoption, as reflected in the latest Chainalysis adoption ranking for 2023. Despite a decline in global cryptocurrency adoption, an interesting phenomenon is observed: adoption in low- and middle-income countries it is increasing.
Low and Middle Income Countries at the Forefront of Bitcoin Adoption
The ranking of low- and middle-income countries, according to the World Bank, is based on the previous year's gross national income (GNI) per capita. We note that most of these countries are located in Asia and Africa. In this group, three nations stand out in the Bitcoin adoption rate: India, Nigeria and Vietnam.
Interestingly, in these countries, where cryptocurrency adoption has increased significantly, the majority of the population has relatively low incomes, not exceeding USD 4,000. According to Chainalysis, approximately 40% of the world's population falls into this category.
The Indian Experience: Resilience and Mass Adoption
In the case of India, its massive population of over 1,400 billion people has driven Bitcoin adoption. Additionally, approximately 18 million Indians live abroad, and in 2020, the country received $83,000 billion in remittances. Many of these migrants turned to Bitcoin to send money home due to the lower fees.
About 15% of the Indian population is unbanked, which is equivalent to about 200 million people. Inflation and rupee devaluation have also increased interest in cryptocurrencies.
Despite initial government restrictions, Bitcoin adoption in India continued to grow. In 2022, the government lifted the ban and proposed a tax regime for cryptocurrencies. As a result, India has become the world leader in the use of centralized platforms, according to Chainalysis.
Nigeria: Bitcoin as a Refuge in Times of Economic Instability
Nigeria is another prominent example of Bitcoin adoption in an economically troubled country. In 2021, the Central Bank of Nigeria banned banks from providing services to cryptocurrency platforms, citing financial stability concerns.
The decision generated discontent among the population, which was already facing a precarious economic situation due to inflation and poor monetary policy. The high demand for cryptocurrencies persisted, and Nigeria became the world leader in the use of decentralized (peer-to-peer) platforms.
The use of Bitcoin has become a crucial way to deal with the economic crisis in Nigeria, with 32% of the population using BTC daily and an increase in transactions. Despite the lack of clear regulation, adoption continues.
Bitcoin and Financial Inclusion in Developing Countries
India and Nigeria offer valuable lessons on Bitcoin adoption in developing economies. Bitcoin has become a reliable and secure option, especially in regions affected by economic instability.
For those in low-income countries, Bitcoin represents the ability to conduct international transactions and serve as a long-term reserve asset. Furthermore, by being decentralized, Bitcoin offers people excluded from the traditional financial system the opportunity to access financial services.
The Power of Bitcoin in Emerging Economies
Bitcoin is playing a vital role in the economic transformation of low-income countries. India and Nigeria illustrate how Bitcoin has become a haven and tool for financial inclusion amid economic adversity. Follow our social networks to stay informed about the latest trends in Bitcoin and cryptocurrencies.
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