According to the Global Cryptocurrency Adoption Index, India and Nigeria lead the adoption of cryptocurrencies worldwide. This index is compiled by the US blockchain analytics firm Chainalysis. The above index ranks countries by grassroots crypto adoption by combining on-chain data and real-world data. This index does not indicate which countries have the highest raw transaction volumes since high-income countries would be leading the ranking in such a case. Instead, it seeks to identify the countries where the most people are adopting cryptocurrencies.
For this sake, Chainalysis defines five sub-indexes, which measure the usage of different crypto services in a specific country. For 2023, this firm analyzed data from 154 countries. Each sub-index was weighted by each country’s characteristics, such as population and purchasing power. The sub-indexes used to calculate the adoption index are the following:
- On-chain cryptocurrency value received at centralized exchanges,
- On-chain retail value received at centralized exchanges,
- Peer-to-peer (P2P) exchange trade volume,
- On-chain cryptocurrency value received from DeFi protocols,
- On-chain retail value received from DeFi protocols.
As a result, the following ranking was produced for 2023:
- India
- Nigeria
- Vietnam
- United States
- Ukraine
- Philippines
- Indonesia
- Pakistan
- Brazil
- Thailand
- China
- Turkey
- Russia
- United Kingdom
- Argentina
- Mexico
- Bangladesh
- Japan
- Canada
- Morocco
One can immediately notice that the Central and Southern Asia and Oceania (CSAO) region dominates the top index. India, Vietnam, Philippines, Indonesia, Pakistan, and Thailand are all CSAO countries in the top ten countries with the highest level of crypto adoption. Another interesting takeaway is that Nigeria, a country in the Sub-Saharan Africa region, is in second place in the ranking. Moreover, Morocco, a country in the Middle East and North Africa (MENA) region, made it to the top 20.
The case of Nigeria is remarkable if we consider that Sub-Saharan Africa has the smallest crypto economy in the world. From July 2022 to June 2023, the region accounted for only 2.3% of global crypto transaction volume, receiving an estimated $117.1 billion in on-chain value. So, let us take a closer look at the drivers of the increasing crypto adoption in Africa, particularly in the Sub-Saharan region.
Lower-Middle Income (LMI) Countries Dominate Crypto Adoption
At a global scale, crypto adoption is down. The chart below (by Chainalysis) depicts the adoption indexes of the 154 countries after being summed up and normalized from Q3 2020 to Q2 2023.
The crypto winter of 2022 negatively impacted crypto adoption worldwide. However, even though crypto adoption increased in Q1 2023, it is still far from the levels seen in 2021, an excellent year for the crypto market.
However, lower-middle income (LMI) countries have experienced a faster recovery of grassroots adoption. The World Bank classifies countries’ economies based on gross national income (GNI) per capita as follows:
- High income (HI), >$13,205 of GNI (United States, United Kingdom, Saudia Arabia, etc.),
- Upper-middle income (UMI), $4,256- $13,205 of GNI (Argentina, China, Russia, etc.),
- Lower-middle income (LMI), $1,086- $4,255 of GNI (India, Nigeria, Ukraine, etc.),
- Low income (LI), <$1,085 of GNI (Ethiopia, Sudan, Yemen, etc.).
The chart below shows the adoption index by country categories. Nigeria and Morocco are both LMI countries and others on the top-20 list of countries with the highest level of crypto adoption.
A Closer Look at Sub-Saharan Africa
The crypto platforms most commonly used in Sub-Saharan Africa are centralized exchanges, where more than half of all transaction volume occurs. Most transactions are retail-sized, transactions under $1 million in value. Nevertheless, crypto has penetrated key markets in the region. Nigeria ranks number 2 in crypto adoption. Other countries in the region ranking high in crypto adoption are Kenya (21), Ghana (29), and South Africa (31).
Bitcoin is the most dominant cryptocurrency in Sub-Saharan Africa. In no other region of the world is Bitcoin so popular, making up a significant share of transaction volume. This enormous popularity could be caused by the wish of many residents in the region to find an alternative store of value. Inflation and debt have plagued economies in many of these countries, making Bitcoin an attractive way to store value and preserve savings. But in light of the price volatility that Bitcoin has recently exhibited, more and more market participants in Sub-Saharan Africa are turning towards stablecoins. Interest in altcoin is also on the rise.
Throughout the region, there have been significant regulatory developments. Regulatory clarity could provide a big boost to the region’s crypto industry. Most of the new crypto regulations enacted by Africa’s most prominent countries came around early 2023. The effect on the industry is already noticeable. For instance, the chart below compares growth in volume sent by Sub-Saharan Africa to local exchanges versus global exchanges.
Conclusion
Cryptocurrency adoption will likely continue to increase in Sub-Saharan Africa in the coming years. Nigeria, boasting the region's largest population and biggest economy, is also the top crypto economy and one of the global leaders in crypto adoption. Soon, more countries in the region will join its ranks. Increasing regulatory clarity will largely contribute to the growth of local crypto operators.
Moreover, crypto adoption is on the rise in LMI countries. Contrary to what happens in wealthier countries, residents of LMI countries have a greater need to use cryptocurrencies in their daily lives. The crypto industry has a bright future in LMI countries, including several Sub-Saharan and North African countries, which are dynamic with growing industries and populations.
Disclaimer
Please keep in mind that the above information is based exclusively on our observations and is provided for informational purposes only. It doesn’t constitute any kind of financial advice nor represents an official forecast. Cryptocurrency is a highly volatile asset, and you are investing in it at your own risk.