Today, three countries, the U.S., South Korea, and Japan account for more than half of the world's turnover of the cryptocurrency market. To some extent, the authorities in these states either support the cryptocurrency industry or at least do not prevent it from developing. At the same time, according to the research of the banking group ING, these countries are not leaders in the extent of the distribution of cryptocurrencies. In the U.S., only eight percent of the population own cryptos, although, among students, this figure is higher at 18 percent. In Japan, according to Dalia Research, this figure is 11 percent, and in South Korea, it is slightly less. Thus, all three leaders lost to Turkey, which has a penetration rate of 18 percent.
Turkey: Best Bet on Cryptos, Not on Gold
Why is this happening? The answer to the question of why cryptocurrencies are popular in Turkey will help explain the attitude of investors towards crypto assets. Annual inflation in this country is 96 percent, and by the end of August, it reached 29 percent per month. Over the last month of summer, the Turkish lira has lost 28 percent of its value relative to the dollar. At the same time, the price of gold, expressed in local currency, increased more than twice as fast as the lira’s devaluation, that is, by 60 percent. This suggests that the local population has been buying up gold in search of a means to hedge against the risks of further devaluation.
At the same time, demand for cryptocurrencies also increased sharply. It is noteworthy that hopes for gold are unlikely to be justified. As DeCenter previously wrote with reference to the data of economic statistics, over the past seven years, investments in this precious metal showed a loss of 18 percent. It is curious that such disappointing dynamics are much more reflected in ETFs, which are focused on shares of gold producers. Compared with the peak value seven years ago, their estimate decreased by 71 percent, and at the moment, it was at a 30-month low. By the way, the valuation was conducted on the ETF from VanEck, whose application for such a fund will be considered on September 30. If a Bitcoin ETF were to be approved now, then it would prove the unreliability of keeping savings in gold. Sooner or later, it will be obvious, and then we should expect that the second wave of the distribution of cryptocurrencies will begin in Turkey as the population will be shifting from gold to crypto assets.
Points of Growth in Demand for Cryptocurrencies Due to the Devaluation of Fiat
The countries of South America are also in the zone of potential growth of the distribution of cryptocurrencies. Following Venezuela, the Argentine peso fell to the historical low against the U.S. dollar, and the rise in demand for Bitcoin led to the fact that in Buenos Aires they are asking $200 more than the average world price for this cryptocurrency.
Which new countries will become the leaders in the growth of purchases of cryptocurrencies and will advocate the opening of new crypto exchange sites on their territories? If we talk about the rate of depreciation, then as a measure, we can consider the situation with Bitcoin, which, since the beginning of the year has fallen in price by 46.7 percent. Within this value, the Argentine peso has fallen in price since the beginning of the year (50.5 percent) just like the Turkish lira (44 percent).
The challenger for becoming a new center for the distribution of cryptocurrency is Sudan, whose national pound has lost 61.1 percent since the beginning of the year. As the head of the Ripple Foundation, Brad Garlinghouse, says, "If you were a consumer experiencing hyperinflation, would you rather hold a cryptocurrency or would you rather hold your fiat currency?" In addition, not all cryptocurrencies have fallen drastically in price, even Bitcoin, which showed only a moderate decline. EOS fell in value only by 15.7 percent from the beginning of the year, and VeChain by 27 percent. Based on such dynamics, South Africa, Swaziland, Namibia, Lesotho, Brazil, and Angola have the growing chances of spreading cryptocurrencies, where local national currencies have lost more in value since the beginning of the year than EOS.
African countries will become significant drivers of the distribution of cryptocurrencies, since the experience, for example, of Zimbabwe and Kenya shows that payment by crypto coins began with simple mobile phones that do not have access to the internet. Strong horizontal democracy in African communities makes it possible to make meetups an effective means of spreading cryptocurrencies and creating startups that begin to accept them for payment. This is due to the great success of Bitcoin Cash in this region. Similar reasons lead to the massive distribution of cryptocurrencies in South America, allowing Dash and NEO to yield some success.
Less Share of Exports in GDP, More Demand for Cryptocurrencies
If we look at the correlation between the level of exports of goods from a country and the degree of dynamics of the development of the distribution of cryptocurrency, we can find that, where this indicator is high, the growth rate is small. This concerns the E.U. as a whole (43 percent share of exports in the GDP of 28 E.U. countries), South Korea (42 percent), and Canada (31 percent). At the same time, a revival in the field of cryptocurrency distribution is observed in Brazil and the U.S.A. (12 percent each), Japan (16 percent), Australia, India, and Indonesia (19 percent each). In India, this process is developing rapidly, despite the existing restrictions from the local central bank, which is being challenged in the Supreme Court by influential cryptocurrency lobbyists. Russia with its indicator of 26 percent is at a crossroads and does not belong to any of the groups of countries.
Women as the Main Stimulus for the Development of Cryptocurrencies in a Number of Countries
The active inclusion of women in the process of buying cryptocurrencies significantly stimulates an increase in demand for these assets. Among the crypto investors in the world, women are noticeably fewer and far between than men (only 9 percent according to available data). In India, however, they buy cryptocurrencies on average twice as much as men, spending an average of more than $2,000. In Africa, Bitclub Advantage notes that 75 percent of its customers are women, who, on average, earn more than $2,000 per month. Both India and the African countries have a great potential for development in this regard, and again, it all leads to further disappointment in gold. India is the world's largest importer of this precious metal, as in this country families have been buying gold jewelry for years as dowries for weddings.
Social Network as a Platform for Future Distribution of Cryptocurrencies
Another factor in the future growth of the distribution of cryptocurrencies will be the involvement of the population of one or another country in one of the most popular social networks in the world, Facebook. Here, a favorable forecast can be made for India. In this country, the number of Facebook users is 270 million versus 240 million in the U.S. Indonesia and Brazil have great potential (140 and 130 million people respectively). This conclusion can be drawn on the basis of studying the evolution of the attitude of the management of the social network toward new financial technologies, as a result of which it is obvious that in the near future, the network will further advance in its interaction with the cryptocurrency world, even in spite of the tough policy on crypto coin advertising.
Dislike for the Euro and the U.S. Dollar—Long Live Cryptocurrencies!
For some E.U. countries, the desire to "escape" from the eurozone may be an additional impetus for the development of the purchase and sale of cryptocurrencies. Thus, Italy looks promising in this respect. The mayor of the key city in the south of the country, Naples, refuses to recognize debts in euros, preparing to open the way to cryptocurrencies and launch their own crypto money. In Veneto and Lombardy, the issue of avoiding the euro and searching for an alternative has been discussed for a long time.
Iran and Russia, caught under the yoke of U.S. sanctions, may also become growth points, but on one condition: in these regions, the distribution of large amounts of cryptocurrency is possible only with the explicit support of the state for such a process. There are also grounds for oil-producing Iran and Russia. If we regard oil and natural gas as investment goods, then for the last five years, they have caused losses of 33.6 percent and 18.6 percent respectively. Even the processing of oil does not look like salvation: diesel fuel caused a loss of 28.5 percent for the same period of time. A similar situation is observed with agricultural products: its products are not too attractive for investors. Wheat has shown 16.6 percent in five years, corn 24.3 percent, and sugar 35.1 percent.
The yield of the standard cryptocurrency portfolio, in which the share of Bitcoins is more than half, demonstrated a plus and a significant increase in invested funds at the same time. In the light of the pension reform under discussion in Russia, the question of investing state resources into cryptocurrencies takes on special significance.
Both Iran and Russia have a marked devaluation of the national currency. The Russian ruble has lost 15.3 percent of its value since the beginning of the year. The Iranian rial fell to a new historical minimum. In Russia, there is also a significant number of billionaires, as only in Moscow, there are 62 of them. As John McAfee correctly noted, cryptocurrencies will get mass distribution when owners of large fortunes buy them.
The peculiarity of U.S. financial sanctions against Iran and Russia is that the wealthy residents of these countries who have fallen into the sanctions lists lose the opportunity to acquire any assets for U.S. dollars. This leads to cryptocurrencies becoming interesting investment objects, as they can be bought for different fiat, except for the unloved U.S. dollar. Again, the key role in the movement in this direction will be played only by official authorities, which can give the go-ahead for such investments. Meanwhile, the Iranian authorities are taking more vigorous steps toward cryptocurrencies than Russia. In Moscow, the prevailing position is that it is worth "watching" the assets, and Tehran is already ready for the practical launch of its own cryptocurrency while recognizing on September 4 that the mining of private cryptocurrencies is a separate branch of the economy, thereby legalizing it. As a result, Iran, India, Indonesia, and Italy form a group of four "I-s" and are becoming new points of distribution for cryptocurrencies.