25 Aug 2021 Global Crypto Adoption Index

Global Crypto Adoption Index

Context:

In Chainalysis’ 2021 Global Crypto Adoption Index, India is ranked second.

The Findings:

According to crypto analysis firm Chainalysis, India was rated second in a list of 20 nations with the greatest cryptocurrency usage rate. Vietnam took first place, with Pakistan coming in third.

The Method

1. Between July 2020 and June 2021, Chainalysis’ 2021 Global Crypto Acceptance Index assessed 20 nations to determine the amount of cryptocurrency adoption and usage by individuals.
2. When adjusted for purchasing power parity per capita and internet-using population, emerging market nations took the top ranks, according to Chainalysis. This is due to large transaction volumes on peer-to-peer networks (P2P).

The Analysis

1. According to Chainalysis, global cryptocurrency adoption increased by over 800% in the last year, particularly in emerging regions. This suggests that people use virtual money to protect their savings from currency depreciation, send and receive remittances, and conduct business transactions.
2. Many of these markets have restrictions on how much national currency citizens can take out of the country. According to Chainalysis, cryptocurrency allows consumers to get over these limitations and meet their financial needs.

Methodology for Ranking

1. Chainalysis ranks countries by their peer-to-peer (P2P) trade volume, weighting it to favour countries with lower purchasing power parity (PPP) per capita and fewer internet users, highlighting countries where residents are investing a larger portion of their overall wealth in P2P cryptocurrency transactions.
2. As a result, both China and the United States saw their P2P trade volume weighted for internet-using population drop drastically over the year, causing them to drop in the global adoption index ranks. 
3. It also reflects the growing ‘professionalisation’ and ‘institutionalisation’ of cryptocurrency trading in the United States, as well as continuous government crackdowns on cryptocurrency trading in China.

Source: The Hindu
Syllabus: Prelims; GS 3 (Economy)

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Yojna IAS Current Affairs Team