Nigeria and Kenya have dropped out of the top ten countries in the world that have adopted cryptocurrencies, according to the 2022 Global Crypto Adoption Index report published by Chainalysis, a blockchain analysis platform.
Nigeria, the largest crypto market in Africa, fell from 5th position in 2021 to 11th position while Kenya fell from 6th to 19th place. Morocco, which was not in the ranking last year, overtook Kenya, Togo, South Africa and Ghana to currently occupy the 14th position.
Why the decline?
Most industry watchers might be curious as to what triggered Nigeria’s decline. But the report’s analysis showed that this was due to the change in metrics used by Chainalysis for the 2022 Global Crypto Adoption Index.
The 2021 edition of the report used crypto adoption by the average person and transactions, new cases, and individual economies. Conversely, the 2022 index focused on institutional activity, which is where users put most of their money in cryptocurrency.
In Nigeria, let us recall that in January 2017, the The Central Bank of Nigeria (CBN) has banned cryptocurrency transactions or facilitate payment for cryptocurrency exchanges. Although a significant number of P2P transactions take place in the country, there is still a lack of significant institutional activity.
The reason for the decline according to Senator Ihenyenthe president of Stakeholders in Blockchain Association of Nigeria (SiBAN) explains the 2022 metrics which are far from the strong points of Nigeria.
“The main reason why Nigeria is not in the top 10 is that the Chainalysis report looked beyond the areas where Nigeria is known to be very strong. For example, while Nigeria scores high in When it comes to popular adoption with its ever-growing P2P market, Nigeria is not as strong when it comes to other areas such as centralized retail transactions, DeFi and institutional adoption,” he explains. -he.
He reiterated that Nigeria has low purchasing power compared to other countries on the list such as the United States, Indonesia and Brazil. Nigeria therefore relies on crypto to send money, hedge inflation, and pay for cross-border services primarily through the P2P exchange.
“This is where we are the strongest. And that’s why, for example, the US, which is currently ranked 3rd on the Global Crypto Index, ranks 111th when only P2P transactions are taken into account. Nigeria beats even Vietnam, the no. 1 country in crypto adoption, in P2P crypto transactions.
“Institutional adoption in Nigeria, until the CBN changes its stance on crypto, will continue to be hampered. Although with the new SEC rules on digital assets in Nigeria I expect some small gains in institutional adoption but again if the CBN supports the SEC in ensuring licensed operators have access to bank accounts,” he adds.
Learn more about the 2022 Global Crypto Adoption Index
The 2022 Global Crypto Adoption Indexis part of the Chainalysis Cryptocurrency Geography 2022 report to be released later.
The index takes into account the adoption of digital assets in 154 countries and compares them using five different “sub-indices”, including the value of on-chain cryptocurrency received at centralized exchanges, the on-chain retail value received at centralized exchanges, peer-to-peer (P2P) trade volume, on-chain cryptocurrency value received from DeFi protocols, and on-chain retail value received from DeFi protocols.
The five different sub-indices are all weighted by purchasing power parity (PPP) per capita, a metric used by economists to compare living standards between countries. The goal of publishing the report every year, according to the Chainalysis report, is to help countries keep tabs on their cryptocurrency performance from year to year:
“The objective of this sub-index is to rank each country based on the total cryptocurrency activity occurring on centralized services and then weight the ranking to favor countries where this amount is greater based on the wealth of the average person and the value of money in general in the country.”
The report showed that although global cryptocurrency adoption hit an all-time high in the second quarter of 2021. Since then, adoption has moved in waves – it dropped in the third quarter, which saw the decline in crypto prices, rebounded in the fourth quarter when prices rebounded again from all-time highs and fell in each of the past two quarters as we entered a bear market. Nonetheless, it’s important to note that global adoption remains well above pre-2019 bull market levels.
The data also suggests that people who were lured by rising prices in 2020 and 2021 have stayed and continue to invest a significant portion of their assets in digital assets.
Large, long-term cryptocurrency holders continue to hold in the bear market, and so although their wallets have lost value, those losses are not yet locked in as they have not sold off – on-chain data suggests that these holders are optimistic the market will rebound, which keeps market fundamentals relatively healthy.
Vietnam maintained its position last year as the world’s top cryptocurrency country, followed by the Philippines and Ukraine.
Other notable changes on the top 10 lists were India to 4th, the United States to 5th, Thailand to 8th, and China back to 10th (and this despite the Chinese government’s crackdown on the activity of cryptocurrency, which includes a ban on all cryptocurrency exchanges announced in September 2021).
Here is a view of the top 20 countries in the index.
The 2022 index indicates that the rate of crypto adoption has generally slowed globally. This is due to the relentless bear market conditions. Although cryptocurrency prices are still better than they were at the very start of the crash.
Emerging markets dominate the index. The report used World Bank categorization countries into four based on income levels and overall economic development: high income, upper middle income, lower middle income and low income.
- Ten are lower middle income: Vietnam, Philippines, Ukraine, India, Pakistan, Nigeria, Morocco, Nepal, Kenya and Indonesia.
- Eight are upper middle income: Brazil, Thailand, Russia, China, Turkey, Argentina, Colombia and Ecuador.
- Two are high-income: the United States and the United Kingdom.
The report highlighted the goal of cryptocurrency adoption by users in lower and upper middle income countries. “…Users in these countries rely on cryptocurrency to send remittances, preserve their savings in times of fiat currency volatility, and meet other financial needs unique to their economies. These countries also tend to s lean more on bitcoin and stablecoins than other countries.