Which countries are most prepared, and why you should get ready
Growth of cryptocurrencies
Cryptocurrency was once a cutting-edge trend for technophiles, a mysterious and complex secure currency that existed outside of standard finance. But it’s seen steady growth as more currencies materialise – and dramatic gains in the last few years, as the value of Bitcoin and related currencies has skyrocketed. In 2021, cryptocurrency as a whole reached a market cap of $2 trillion.
Bitcoin was the earliest form of public cryptocurrency, created by an unknown person or group known only as Satoshi Nakamoto. Created initially in 2008 and released in 2009 as open-source software, it was the first case of a decentralised digital currency without a central bank or administrator, or any need for intermediaries. And now, in 2021, Bitcoin is far from the only currency available. Other options, like Ethereum, Dogecoin, Litecoin, Ripple, and more are all readily available through accessible marketplaces, often integrated with society as mobile apps.
In 2017, we saw the first real boom of cryptocurrencies, and is known as the year of the ICO, or ‘initial coin offering’, as the number of ICOs launched jumped by over 90%. And 2020, we saw the second season of significant growth, with the introduction of decentralised finance, better known as ‘DeFi’.
Along with the ‘Summer of DeFi’, 2020 public interest in cryptocurrencies increased significantly in a variety of countries, with search interest across a few newer currencies jumping 87% in Turkey from the previous year, 74% in Greece, and similar figures in Argentina – all of whom have been seeing relatively steady growth since the start of 2018. And while the US saw something of a downward trend over this time, 2020 still caused a 6% spike in search interest. The same applies to the UK, where despite a downward trend from 2018 to 2021, 2020 provided an uptick in interest of 5%.
These shifting levels of interest aside, massive gains in value in 2017 and again in 2020 have shown that cryptocurrency is only a growing industry – and accordingly one to monitor as it begins to impact more directly on traditional retail.
2020: the year of cryptocurrencies
While 2017 saw an initial massive spike in the value of Bitcoin, 2020 is where both Bitcoin and additional currencies really started to gain traction outside of cryptotrader markets.
This has been a self-fulfilling prophecy: the more the value expanded, the more consumer-facing companies have worked to integrate it, and in turn, the more the value has increased.
As well as the launch of a crypto Visa card, a range of Wall Street investment firms and similar institutions have begun investigations into cryptocurrency, even if only on a small scale. Big banks, too, like Goldman Sachs, have begun exploring the possibilities of the currencies, by expanding their internal teams which deal with crypto transactions.
The value also benefited from the third “halving” of Bitcoin. Every four years, the reward that Bitcoin “miners” (who effectively “create” the currency) receive in return for their provision of resources reduces by half, to slow the creation of new Bitcoins and limit the supply.
This artificial restriction on demand hasn’t immediately ever shown a dramatic change in the value of the currency, but has shown that there’s often an upward trend after the event.
Even social culture is impacting the crypto market
It’s not just Bitcoin and its technology that has prompted higher interest in cryptocurrencies, however. The “joke” currency Dogecoin (DOGE), created in 2013 as a way to parody the wild speculation in cryptocurrencies that was evolving, has long since solidified into a real market force. Part of this has been driven by Elon Musk’s support: his promotion of the coin both on Twitter, in person, and through its recent use by SpaceX in funding a rideshare mission to the Moon, have all driven the value of the currency up and down.
As other currencies become more mainstream, trends will become increasingly affected in this way by more consumer-focused discussion rather than that of financial experts and institutions.
We asked cryptocurrency expert Caroline Brown of cryptocurrency exchange company Bisto, why 2020 was so pivotal:
“From the beginning of 2020 to the middle of Sept. 2020, over 100 DeFi projects launched. The “Summer of DeFi” took the failings of the ICO period and focused on building out a powerful decentralized finance system. Decentralized companies that experienced hypergrowth in 2020 like COMPOUND focused on leading and borrowing cryptocurrencies. And large centralized exchanges, like Coinbase and Gemini, not wanting to miss out on the DeFi craze, created their own products that allow users to take out a crypto loan or earn interest on cryptocurrency they hold on their exchanges. All this technological boom in the space created a buying frenzy and now Bitcoin is worth over $1. And as of April 2021, over $100 Billion worth of assets is held in DeFi.”
Cryptocurrencies and the future
The normalisation of cryptocurrency and its slow entry into wider culture likely heralds the early stages of broader acceptance. As banks and financial institutions begin treating cryptocurrency as just another asset, consumers will begin to follow suit and put aside the risk of the unknown which potentially limited the spread of Bitcoin and its competitors in the past.
As a result, it seems probable that certainly online stores will begin more readily including cryptocurrency as a payment solution alongside traditional card and PayPal (or equivalent) payments. From there, a trickle-down will mean that physical stores begin to accommodate it too – particularly as the number of Bitcoin ATMs spreads and the aforementioned cryptocurrency Visa card adoption rate increases.
Elon Musk’s prominence in both the technology community (as a figure in Tesla and SpaceX) and his advocacy for Dogecoin in particular is also likely to fuel a lot of this market. His hints that Tesla might accept Doge have only been reinforced by the news that SpaceX would use it in a space mission. The parody currency is now the world’s fourth-biggest cryptocurrency.
Countries are also shoring up their resources and preparing for the broader use of cryptocurrency. SmallBusinessPrices has investigated which countries are the best equipped to deal with the uptake of the decentralised currency.
Caroline Brown also shared her thoughts on how and why a fully digital currency could happen:
There are 3 current trends that forecast the adoption of digital currencies around the globe:
- Government and central banks advancing into digital currencies (China and the EU are creating their own government and central bank digital currencies)
- Stablecoins (The popularity of stablecoins with the most popular stablecoin Tether surpassing a market capitalization of $50 B)
- Public faith in governments dwindling and the US printing exorbitant amounts of money during COVID (With public faith in governments dwindling globally and the debasement of fiat currencies, people are turning to cryptocurrencies to create and save wealth)
The greatest example of this is in Argentina. Hyperinflation in Argentina caused the central bank of Argentina to put a limit on how many US dollars citizens could buy. To protect the Argentine peso, citizens can only purchase a maximum of $250 USD per month. Argentine citizens cannot save nor plan for their future and need a currency outside the traditional banking system that is not controlled by a government to store wealth. For this reason, Argentina is one of the epicentres of cryptocurrency.
The countries most prepared for a cryptocurrency takeover
The most prepared country for integrating cryptocurrency is, perhaps unsurprisingly, the United States. Equipped with the most crypto ATMs per person worldwide, and with an above-average rating of their current crypto uptake, it seems the country has already made some headway in making the currency part of their standard financial offerings.
This matches the exploratory moves of Wall Street companies in the direction of crypto, as well as the promotion of Dogecoin by major vehicle company Tesla through Elon Musk.
After the US, however, Hong Kong is actually one of the better-placed locations for adoption of crypto. A moderate increase in interest across 2020, high internet speeds (indicating a good broader level of technological adoption) and an estimated increase in interest in crypto by 2025 all indicate opportunities for the market to grow over time.
On the other end of the scale, countries like Cambodia, Lebanon, and El Salvador have both minimal interest in crypto currently and some of the lowest ratings in terms of adoption Likewise, internet speeds are low, and the numbers of crypto ATMs don’t indicate any likelihood that the cutting edge tech will reach mass-market adoption there anytime soon.
Expert tip: how to get involved in cryptocurrency and prepare for it to be a part of our everyday lives
Learn the basics of how to buy, store and hold cryptocurrencies. An exchange is where you buy and trade your cryptocurrencies for other coins, tokens or fiat currencies. A wallet is where you hold your coins. You can either hold your cryptocurrency on an exchange or use an external wallet. If you want to hold your crypto on an exchange check the security practices of the exchange and read the user reviews. The history of cryptocurrency is flooded with horror stories of users leaving their cryptocurrencies on an exchange (instead of transferring it to an external wallet) and then the centralized exchange getting hacked. There is a popular saying in crypto that is, “not your keys, not your bitcoin.”
Lastly, cryptocurrency is filled with a lot of bump and dump schemes. Before buying a new token or coin, read up on it and ask yourself “is this token solving a problem or is it a solution in search of a problem?”