Global cryptocurrency adoption index in 2021: conversion bet
2021 is an extraordinary year for the cryptocurrency industry. In this year, it benefited from the characteristics of cryptocurrency point-to-point and low transaction costs. The cryptocurrency market has experienced huge growth, and the cryptocurrency / blockchain industry has also received extensive attention. The adoption of cryptocurrencies in some emerging market countries is also growing significantly.
According to chainalysis's global encryption adoption index, we can objectively measure which countries (citizens) have the highest adoption rate of cryptocurrency. Which countries have made good progress in introducing cryptocurrencies into mainstream economies? The result may be different from what you think, because it is not necessarily the economic superpower that leads the process.
Global encryption adopts the creation principle of index
The global encryption adoption index consists of three indicators, ranking all 154 countries / regions according to each of the three indicators, taking the average of the ranking of each country / region in all three indicators, and then standardizing the final number to the range of 0 to 1 to provide each country / region with a score that determines the overall ranking. The closer the country's final score is to 1, the higher the ranking.
The value of cryptocurrency received in the chain, weighted by purchasing power parity (PPP) per capita
The goal of this indicator is to rank each country / region by overall cryptocurrency activity, but the ranking is weighted to favor the countries / regions with more important amount according to the wealth of ordinary people and the general monetary value of the country.
The indicator is calculated by estimating the total amount of cryptocurrency received by the country / region, and the value on the chain is weighted according to the per capita purchasing power. The per capita purchasing power parity is an indicator to measure the wealth of each resident of the country. The higher the ratio of the value received in the chain to the PPP per capita, the higher the ranking, which means that if the cryptocurrency values received by two countries are equal, the countries with lower PPP per capita will rank first.
The retail value of the transferred chain is weighted by purchasing power parity per capita
The goal of this indicator is to measure the activities of non professional personal cryptocurrency users, based on the ratio of the cryptocurrency they trade to the wealth of ordinary people. An individual's cryptocurrency activity is estimated by measuring the amount of cryptocurrency moved in retail transactions and designated as any transaction of cryptocurrency with a value of less than $10000. Each country is then ranked according to this indicator, but weighted in favor of countries with low per capita purchasing power parity.
The trading volume of peer-to-peer (P2P) exchanges is weighted by per capita purchasing power parity and the number of Internet users
Unlike the other two indicators, P2P transactions are not represented on the blockchain, but still account for a large proportion of all cryptocurrency activities, especially in emerging markets. Countries are ranked according to P2P trade volume and weighted to favor countries with low per capita purchasing power parity and fewer Internet users. The goal is to highlight countries where more residents use a greater share of their overall wealth for P2P cryptocurrency transactions.
Chainalysis's tool cannot capture P2P transaction volume because it is not recorded on the blockchain - we can only see the funds entering or leaving the P2P platform. Instead, they rely on the data provided by the two largest P2P platforms - local bitcoins and paxful - to calculate the P2P transaction volume of each country. Although this means that not all P2P values are captured, the two exchanges are popular enough that their indicators can be used as an overall approximation. This part of the formula may need to be updated in the future to consider the rise of other P2P platforms, such as the platform provided by coin security, whose popularity is growing.
How will the methodology of this indicator change in 2021
The biggest change in the methodology of this indicator this year is the elimination of the fourth indicator that contributes to the overall ranking of each country in 2020: the number of deposits by country / region is weighted by the number of Internet users.
It was initially used as a measure to determine which countries have the most cryptocurrency transactions by residents, as this will capture the number of individuals using cryptocurrency and promote the countries in which their residents conduct more transactions per user. However, although centralized services such as cryptocurrency deposit in the exchange will appear on the chain, any transactions in these services (such as transactions in the exchange) will not be captured on the chain, but will only appear in the order book of these services. In some cases, our access rights are limited or even inaccessible.
However, this is not the case with defi. Transactions made by users of the defi protocol are displayed on the chain, because there is no centralized service to keep users' assets. This tilts our ranking towards countries with relatively more defi users. So the team decided to eliminate it.