On Tuesday, September 8, Chainalysis experts published analytics, according to which Ukraine, Russia and Venezuela topped the rating of countries in terms of the popularity of cryptocurrencies among the population.
Although the United States and China are the undisputed leaders in terms of the volume of cryptocurrency transactions, the most active retail users of crypto assets are from Ukraine, Russia and Venezuela, according to Chainalysis.
To interpret the concept of “acceptance of cryptocurrencies,” experts analyzed the on-chain cryptocurrency value received by a country, on-chain value transferred, number of on-chain cryptocurrency deposits and peer-to-peer exchange trade volume. For an objective assessment, the data obtained were weighted by purchasing power parity per capita and the number of Internet users in each country.
The Head of Research at Chainalysis Inc., Kimberly Grauer, believes the results are quite natural. The sphere of electronic payments is very developed in Russia, which makes the transition to cryptocurrencies easier.And the population of Ukraine is “very technologically advanced,” Kim is sure. In addition, the Ukrainian government is actively looking for solutions to the issue of legalizing cryptocurrencies, which has a positive effect on the situation. Thus, a favorable climate for startups, including cryptocurrency ones, has developed in Eastern Europe. On the other hand, the number of cybercriminals in the CIS is also higher, which also affects the volume of the cryptocurrency market.
Areas of use of cryptocurrencies
The use scenarios of crypto assets by the population in these countries also differ significantly. Ukrainians and Russians use cryptocurrency for cross-border and inter-corporate payments, avoiding complicated banking procedures. In Latin America, and in particular in Venezuela, cryptocurrencies are used as a tool to save funds and trade.
“People in Venezuela don’t necessarily want to go to cryptocurrencies because it’s interesting or a cool thing to do, but because they are looking for a stable source of value”Kimberly Grauer
In other words, the population is saving their assets from inflation.
In general, in the third world countries, the bulk of the cryptocurrency turnover belongs to private investors, while in China and the United States, the bulk of the volume belongs to the whales of the crypto market.
Crypto space in Ukraine
Ukraine’s leadership in the ranking is still a bit surprising, since the country is not the center of industry attention. But a weak, unstable economy and technically educated population have played a primary role in the issue of crypto adoption.
According to representatives of the Ministry of Digital Transformation of Ukraine, the main reasons for the popularity of cryptocurrencies among Ukrainians are:
- active community of blockchain developers;
- technically educated population;
- lack of stock market
- inaccessibility of many international payment services;
- complexity of the banking system
These factors are very compelling reasons for the growing popularity of cryptocurrencies, the ministry said.
The founder of the Kuna crypto exchange, Michael Chobanyan, estimates the volume of cryptocurrency received by small businesses at $5 million per week. The entrepreneur believes that most of this volume is payments for the import of Turkish goods. The first place among the cryptocurrencies used for these purposes is Tether (USDT).
In addition, private crypto investors provide a significant portion of transactions. The volume of these transactions on Kuna alone exceeds $ 800,000 per day, and this does not include data from Binance and EXMO, which are more popular in Ukraine.
Cryptocurrencies are an excellent alternative for investment and trading, Chobanyan said. Especially due to the lack of a stock market and the inaccessibility of investments, for example, in real estate, for the majority of the population.
Oleksiy Bornyakov, Deputy Minister of Digital Transformation of Ukraine, has the same opinion. The official is confident that the cryptocurrency attracts more individuals than business, since it is easier to use, has a low entry threshold, and less stringent requirements for investors and traders.
One of the scenarios for the use of crypto assets by Ukrainians is to protect savings from the volatility of the national currency – the hryvnia. This point of view was shared by the developer of Bitcoin Core Gennady Stepanov.
“Our situation is similar to that in Iran and Venezuela. Unlike gold, bitcoin is available for everyone.”Gennady Stepanov
Coronavirus as a factor of crypto activity
Gleb Kostarev, official representative of Binance for Ukraine and the Russian Federation, calls the Ukrainian audience a very important market for the largest cryptocurrency exchange in the world. Binance’s management is working on new opportunities for the hryvnia and is working with the government towards crypto regulation.
Kostarev believes that the COVID-19 pandemic has stimulated the country’s residents to use cryptocurrency more actively as a financial instrument, because the virus has had a detrimental effect on the country’s economy. A similar situation is observed in Russia.
“The macroeconomic situation in Ukraine remains complicated, and during the coronavirus pandemic it got even worse. The government is working on new ways to stimulate the economy, while the young population has to search for new sources of income. This is one of the key reasons for Ukraine’s interest for crypto”Gleb Kostarev, Binance representative for the CIS
Crystal Blockchain Product Manager Kyrylo Chykhradze said that the volume of transactions of Ukrainian crypto companies over the past 5 years does not exceed $ 300 million in fiat equivalent. For comparison, in the United States during the same period, the blockchain asset market exceeded $ 150 billion. But, it should be borne in mind that many Ukrainian companies are registered in the UK and Estonia, since in these countries the policy in relation to cryptocurrencies is more transparent. The work of the Ukrainian government in this direction can improve the situation
Evaluation criteria for crypto acceptance
Assessing cryptocurrency activity in different countries is not an easy task. The first problem is the lack of geo-referencing in many crypto wallets. According to Chainanalisys, tracking transactions is not enough to determine the geography of a wallet, so experts had to turn to LocalBitcoins and Paxful for more information.
Important research tools are: tracking the traffic of trading, crypto-gambling services on the SimilarWeb platform, tracking time zones, fiat currency pairs, language parameters and location of organizations.
The researchers took into account the purchasing power parity of each country in order to include in the ranking the poorer countries, which show very high activity in retail transactions (which do not exceed $ 10,000) with cryptocurrencies. Accordingly, the highest rating does not indicate the largest volumes of cryptocurrency in this country. The TOP ranking mainly includes those countries where people invest the largest part of their income in cryptocurrency.
Countries have different populations and different GDP, so if you’re just doing index without weights it’s all skewed towards China and the U.S.”Kimberly Grauer
“Ukraine and Russia are not number one in any of the submetrics but they are in the top 10 by the [crypto] value received and the number of crypto deposits, and they perform well across the board,”The expert added