New Chainalysis Report Reveals Who’s Leading the World in Crypto Adoption

The blockchain data firm changed its methodology this year for ranking countries on their level of adoption, with Vietnam and India topping the list.

AccessTimeIconOct 7, 2021 at 9:19 p.m. UTC
Updated May 11, 2023 at 4:10 p.m. UTC
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Blockchain analytics firm Chainalysis’s forthcoming 2021 “Geography of Cryptocurrency” report examines crypto adoption in countries and regions across the world, placing the focus on dynamic trends in emerging markets.

Starting last year, cryptocurrency use around the world grew dramatically, thanks to a crypto-asset price run partly fueled by large inflows of institutional investments into the space. Between January 2020 and January 2021, the number of crypto wallets in use worldwide increased 45% to an estimated 66 million.

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  • In August, Chainalysis published its second-ever global cryptocurrency adoption index, which reported an 880% rise in global crypto adoption, driven by peer-to-peer (P2P) trading and usage in emerging markets such as Africa. The Chainalysis team tracked data across 7,000 crypto service providers and found “meaningful crypto activity” in 158 countries.

    Despite the big moves made by institutional investors such as MicroStrategy and Twitter founder Jack Dorsey’s Square in the U.S., Vietnam topped the Chainalysis adoption index, followed by India and Pakistan. Six out of the top 20 countries in the index are African nations.

    According to Kim Grauer, head of research at Chainalysis, the research firm took a more targeted approach this year to quantifying the extent of grassroots adoption of cryptocurrencies. Chainalysis used new methodology and metrics to capture this activity.

    “There are a lot of extremely large institutional size transfers that really bias our data upward. And so, really, all the things that we did in terms of weights and metrics introduced was to try to capture that day-to-day grassroots activity among your everyday shop owner, or your everyday person who’s accepting a remittance payment rather than capturing those really large transfers,” Grauer said during an explanatory webinar on Thursday.

    The report looks to provide more insight into crypto usage in particular regions, noting some interesting trends. For instance, the report shows that Africa is the smallest crypto market in the world, accounting for only 3% of the total market size across regions, but peer-to-peer trading, remittances and savings needs are powering Africa’s grassroots cryptocurrency adoption.

    Between June 2020 and July 2021, incoming transfers originating outside Africa accounted for 96% of the total crypto transaction volume in the continent, the report said. It also shows that Africa has the largest proportion of P2P transaction volume (as a percentage of the total regional crypto transaction volume), ahead of other emerging crypto markets such as Latin America and central and southern Asia. Africa also has the largest retail crypto trading market, accounting for 7% of its total market, the report reveals.

    Grauer said the estimates provided in the report are probably the best in terms of country-specific cryptocurrency data, but they come with a number of caveats.

    “It’s really important to understand the limitations to this methodology,” Grauer said.

    The methodology

    Chainalysis used three metrics to score countries for the adoption index this year: the total value of crypto received by a country, crypto exchanged by non-professional crypto investors (counting only transactions less than $10,000) and P2P exchange-traded volume.

    But all three metrics were weighted by purchasing power parity (PPP) per capita, which measures the ability of an individual in a given country to purchase a set “basket” of goods.

    “The higher the ratio of on-chain value received to PPP per capita the higher the ranking, meaning that if two countries had equal cryptocurrency value received, the country with the lower PPP per capita would rank ahead,” according to a Chainalysis blog post on the adoption index.

    This brought countries like Vietnam and Kenya, which have significant on-chain crypto activity when compared to their wealth and purchasing power, to the top of the list.

    “Vietnam is strong across the board. India is strong in total value received, Pakistan is strong in P2P marketplaces and they’re at the top three of our index,” Grauer said.

    According to Grauer, if the team hadn’t weighted each country by PPP per capita, the list would have looked drastically different.

    “It would be China and the U.S. at the top of the index, and simply because they have large populations and really high purchasing power,” Grauer said.

    It is unclear why crypto activity is seen to be more impressive if the country in question has less individual wealth, considering that crypto can be used for a range of purposes including speculative trading, remittance processing, payments and savings. In Grauer’s own words, Vietnam has a very large professional market while India has an extremely large institutional market.

    Meanwhile, to measure P2P activity, Chainalysis monitors all funds going to about 15 different P2P platforms, including LocalBitcoins and Paxful, Grauer said.

    “Then we apply our web traffic methodology,” Grauer said, adding that Chainalysis is watching the core wallets – which contain the entire blockchain – of these platforms.

    But the web traffic methodology comes with its own caveats, including the fact that web traffic data does not account for Virtual Private Network (VPN) use, which can mask a person’s true location, and that crypto web searches don’t always translate to crypto use, Grauer explained.

    She added that not all activity of interest takes place on the blockchain and that you cannot see buy and sell orders on most P2P exchanges, with both these factors being challenges to data collection and analysis.


    Grauer said Chainalysis also attempted to measure the relationship between crypto adoption and hyperinflation, looking at Venezuela as an example. The inflation rate in Venezuela hit 10 million% at one point during 2019, signaling economic turmoil. Last year, CoinDesk reported that crypto adoption in Venezuela, particularly P2P trading, soared, while the value of the Venezuelan bolivar plunged against the dollar as people looked for ways to safeguard their wealth.

    Chainalysis data shows that as the bolivar went down against the U.S. dollar between May 2019 and June 2021, the trading volume on P2P platform LocalBitcoins rose steadily. Grauer acknowledged, however, that this could just be indicating the fact that as the value of the bolivar goes down, it becomes more expensive to buy bitcoin.

    “We’re aware of that,” Grauer said.

    Grauer added that the team then brought crypto web traffic to the picture and saw that visits to Binance, Binance P2P and LocalBitcoin platforms also rose steadily as the bolivar fell.

    Grauer said the researchers also spoke to local Venezuelans.

    “They talked about how people in Venezuela are not interested in speculating on cryptocurrency right now. They’re interested in living and surviving, and so they are seeing more people turning to this pretty much out of desperation,” Grauer said.

    But 2020 and 2021 have, overall, been a story of crypto adoption in emerging markets and in developing countries, Grauer said, and the Chainalysis index is proof of this.

    The full report on the geography of cryptocurrency is due to be released later this month.


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    Sandali Handagama

    Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She does not own any crypto.

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