Sometimes dismissed as a fad in advanced economies, crypto is more attractive in countries with a history of financial instability

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In advanced economies, cryptocurrencies are viewed by many in the financial world with suspicion – the realm of zealous “crypto bros” and a speculative and highly volatile fad that can only end badly. Regulators in Europe and the United States have issued stern warnings about the dangers of crypto trading. But in the developing world, there are signs that crypto is quietly taking root deeper. Especially in countries with a history of financial instability or where barriers to accessing traditional financial products such as bank accounts are high, the use of cryptocurrency is quickly becoming a fact of life. Financial Times: “While everyone was paying attention to [Tesla chief executive] Elon Musk’s tweets, and which institutional investor or CEO was saying what he thought about bitcoin, there was this whole story going on in emerging markets around the world that’s really powerful, ”said Kim Grauer, director research at Chainalysis, a leading data company in “There is a massive crypto footprint in many of these countries … [and] a huge amount of entrepreneurial opportunities. “Chainalysis ranks Vietnam first in the world for crypto adoption – one of 19 emerging and frontier markets in its top 20, with only the United States among advanced economies making it eighth in 2021.” It is very striking. This year, [adoption] is a story of emerging markets and frontiers, ”adds Grauer. Separate data from UsefulTulips.org, which tracks bitcoin transactions on the world’s two largest peer-to-peer crypto trading platforms, shows that in recent weeks, sub-Saharan Africa has overtaken North America. North to become the geographic region with the highest volume of this type of crypto activity.

[…] Emerging markets are fertile ground for cryptocurrencies, often because theirs aren’t doing their job. As a store of value, a medium of exchange and a unit of account, the national currencies of certain developing countries are too often insufficient. Unpredictable inflation and rapid exchange rates, clunky and expensive banking systems, financial restrictions and regulatory uncertainty, especially the existence or threat of capital controls, all undermine their appeal. Nigeria, Africa’s most populous country, is a good example. Its young and impatient population faces daily high unemployment, the vagaries of black market currency trading and capital controls. As the price of oil, the country’s main export, fell during the pandemic and further reduced the supply of dollars, many companies were unable to pay foreign suppliers and lenders, which almost led to the failure of a power plant supported by the World Bank which supplies one tenth of Nigeria’s electricity. For people who send or receive remittances or bill customers, lack of money is a constant headache.

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