The general consensus is that cryptocurrency and blockchain will never be adopted or accepted in general society. However, the reality seems to be much more different- with some countries being forced to make adjustments due to political tactics and others unofficially adopting cryptocurrencies due to a collapsing system. The latter can be said for countries such as Venezuela,Turkey and Argentina.
To continue exploring this topic we will introduce a couple of metrics:
· Blockchain/ Cryptocurrency Adoption
· Economic Conditions
· Type of adoption (Private vs. Institutional)
· Effect of price pressure on cryptocurrencies
When an example is mentioned, keep those metrics in my mind as they will be an indicator of a couple of things. It can be indicative of what motivates a country and/or its people to use blockchain and cryptocurrencies, as well as whether adoption affects the price movement of the crypto space.
The case of a weakened currency
In the example of Venezuela; the people of the country are perhaps facing the possibility of their savings being wiped out with inflation as high as 2358% as reported by the Central Bank of Venezuela.Therefore, even as a risk asset, Bitcoin is a safer and wiser option to have your capital invested in. To put this into perspective, Bitcoin’s ROI from the start of the year till now is recorded at 4600%. Thus, leading to several Venezuelans seeking relief in the digital “Gold”.
Turkey has the largest ratio of crypto users out of all countries. In a case similar to Venezuela, the weakening Turkish Lira and distrust in the political system has led to residents resorting to investing in Cryptocurrencies; as it appears to be the safer option.
We can assume that a country’s adoption of cryptocurrencies such as Bitcoin and Ethereum is influenced by these factors based on the aforementioned examples of Turkey and Venezuela:
· Economic Conditions (Inflation,Weak Currency)
· Trust in the Economic System (Hope of recovery)
The Case of Politics
The EU, as well as America, have been making advancements to adjust their regulations in terms of cryptocurrencies. However, what factors can be seen as the major influences for such a move?
Firstly, one of the EU’s financial hubs (France) has been advocating for digitizing assets as well as introducing a digital euro to make financial transactions more fluid. Additionally, China has been in the background slowly making digital advancements with whispers of them creating their own digital currency to match the Yen. Therefore, in fear of being left behind Western powers have to adjust and scale their efforts up at the same time.
These advancements have been accelerated by the Coronavirus pandemic as people fear spreading the Coronavirus and switch to digital payments, as well as the rise in the popularity of cryptocurrencies- the ECB has accelerated their plans for a digital euro in order to serve as a buffer from people moving directly from traditional banking systems to decentralized systems.
On the other sphere, there is Nigeria- with Nigeria and its you fighting against SARS (Special Anti-Robbery Squad) and its accelerating young population- leading to Nigeria being one of the largest crypto adopters in Africa and the world. With some business owners stating that technology such as Bitcoin having protected them against the currency devaluations of the Naira.
On Oct. 9, Yele Bademosi, CEO of Binance-backed payments app Bundle, took to Twitter to share his own brutal encounter with SARS. Youths marched through the streets of Lagos while the hashtag #EndSARS went viral on social media, leading to protests in countries with large Nigerian diaspora populations including the U.K., U.S., Canada and Germany, After that encounter he and his team used their platforms to raise donations for the movement through Cryptocurrency with Twitter CEO Jack Dorsey supporting the campaign. They were able to raise $82,000 in a couple of days.
In the case of Nigeria, again we can see how political instability and an unfavourable economic climate leads to an increase in the adoption of Bitcoin; the question is whether that affects the price. However, what we do see is that there are several uses for Bitcoin and it is not just speculation.