Niger, Vietnam, Philippines… Why are they among the biggest users of cryptocurrencies?

A large number of emerging countries have chosen to link their destiny to that of cryptocurrencies. A way to fight against inflation, devaluation of national currencies or excessive dependence on the dollar.

In October 2021, C#Corner [1] published the ranking of countries with the highest number of cryptocurrency holders.

The Top 5 was as follows:
India: 100 million
USA: 27 million
Russia: 17 million
Niger: 13 million
Brazil: 10 million

The presence of Niger may come as a surprise, especially since the population of this West African country - one of the poorest in the world - has only 24 million inhabitants. Further down in this same table appear other relatively underdeveloped countries such as Indonesia (n° 8 with 7.2 million users) or Vietnam (n° 9 with 5.9 million users) or again the Philippines (No. 11 with 4.3 million users).

Missing from such a table is a country such as El Salvador, which adopted Bitcoin as its official currency at the beginning of September 2021, and therefore shortly before the publication of the C#Corner table.

1.7 billion unbanked people

How to explain such an interest in cryptocurrencies in underdeveloped or emerging countries? The reasons are many. First, on our planet, nearly four out of ten adults are not “banked”. According to figures from the World Bank [2], there are 1.7 billion people who do not have a bank account, and therefore have no access to savings or credit. It is not easy to undertake in such a context.

The specter of devaluations

Those who have access to banking services have sometimes had to complain bitterly. In countries such as Argentina, Cuba or North Korea, the national currency has often suffered a colossal devaluation. Citizens have seen their national currency holdings lose enormous value. For example, Venezuela devalued its currency by 96% in 2018, and more in October 2021. In Niger, the government has introduced rules that make it almost impossible to exchange money with foreign countries. In addition, a large number of Central American countries manage currencies that depend on the dollar, which puts them at risk in the event of American sanctions.

El Salvador, spearhead

Faced with such situations, the populations of some of these countries have turned to cryptocurrencies. A small nation in Central America, El Salvador was the first country to adopt Bitcoin as its national currency and, if we are to believe President Nayib Bukele, after three months of use, the Bitcoin wallet set up by the government already had more users than the entire Salvadoran banking system. This transition was not without a hitch and many Salvadorans complained about issues with the Chivo wallet such as the inexplicable loss of Bitcoins.

The example of El Salvador nevertheless spread. In countries such as Paraguay and Mexico, leading political figures have shown themselves in favor of such a development. Venezuela leads the pack: many Venezuelans have already adopted Bitcoin as a safe haven, but also for international currency exchanges. And, in August 2021, the President of Argentina, Alberto Fernández, announced that he was considering adopting Bitcoin as legal tender. On the African continent, in addition to Niger, citizens of many countries have similarly adopted Bitcoin: Kenya, Togo, Ghana... The Useful Tulips site shows that Bitcoin transactions in sub-Saharan Africa regularly exceed those that have taken place to USA.

Games “play to earn” as a means of subsistence

That's not all. Cryptocurrencies are also a source of income for many people in countries like the Philippines or Indonesia, especially with Axie Infinity, a "play to earn" game. What is the principle? It recalls that of Pokémons: the player acquires Axies then puts them to the test during various fights, but also useful objects for his quests. He can then exchange his tokens for real money.

Independence from the dollar

In Cuba too, cryptocurrencies are considered a bulwark against the depreciation of the local currency. Due to US financial sanctions, the island found itself isolated from the international financial system. Cubans do not have access to credit cards and therefore cannot take advantage of online commerce. However, many islanders rely on remittances from expatriate relatives. With traditional methods, such monetary movements are generally not in their favor -- while it is faster and less expensive through Bitcoin. As of August 2021, the government of Cuba has taken steps to facilitate the acceptance of Bitcoin and other coins such as TRX by merchants.

Humanitarian aid

Bitcoin also appears as a humanitarian solution in particularly poor countries. In Congo, following the destruction due to volcanic lava flows in May 2021, an initiative was born, Kiveclair, to allow the population to use Bitcoin, via a wallet (wallet) on mobile phone using the Lightning Network . And Internet users have been invited to make donations to help the project. Finally, in some of these regions of the world, what is called the “leapfrog” effect occurs. Thus, in Africa as in Asia, many countries without fixed telephone lines have gone directly to mobile telephones. In the same vein, these same countries are now adopting Bitcoin or Ethereum as a very useful life jacket.

Han Zhang