Crypto is viewed as the “future of money” in countries with high inflation
According to Gemini’s 2022 Global State of Crypto report, last year cryptocurrencies “ transformed from what many considered a niche investment into an established asset class”, passing a “tipping point.”
The report claims that 41% of cryptocurrency owners polled worldwide made their first cryptocurrency purchase in 2021, including more than half of owners in Brazil (51%), Hong Kong (51%), and India (54%).
The report also made a compelling argument that currency devaluation and inflation, particularly in emerging market (EM) countries, are strong drivers of cryptocurrency adoption. Overall, 30,000 adults from 20 nations on six continents took part in the survey. Respondents in countries that have seen their currency devalue by 50% or more against the USD over the last ten years were more than five times more likely to say they plan to buy cryptocurrency in the upcoming year than those in countries that have seen less than 50% currency devaluation.
Between 2011 and 2021, the value of the real, the currency of Brazil, fell by 218 percent, indicating strong inflation, and according to a Gemini study, 45 percent of Brazilians planned to buy cryptocurrencies in the upcoming year.
The rand, the currency of South Africa, saw a 103 percent devaluation during the past ten years, second only to Brazil among the 20 nations surveyed. In the coming year, 32 percent of South Africans are anticipated to possess cryptocurrencies. Mexico and India, which ranked third and fourth in terms of inflation or devaluation, showed a similar tendency.
In contrast, over the previous ten years, there has been no depreciation in the value of the currencies of Hong Kong and the United Kingdom relative to the US dollar. Only 5% and 8% of people surveyed in both nations indicated a desire to buy cryptocurrencies, respectively.
What inferences may be made from this? Chief Operating Officer at Gemini, Noah Perlman, observes many cryptocurrencies use cases, frequently dependent on where one lives. According to him, cryptocurrency is perceived as a “need to have” investment in nations where the local currency has lost value relative to the dollar, whereas in the developed world it is still generally seen as a “good to have.”
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