Analysts at venture-capital firm Jump Capital, based on a range of macroeconomic indicators, identified a list of countries with the greatest potential for adoption of Bitcoin and other cryptocurrencies. The top of the list was dominated by Southeast Asian, Latin American, Turkish, and Indian countries.
In the study, distributed by The Block, experts highlighted the development of crypto-fiat gateways as a cornerstone for further adoption of digital assets.
Jump Capital believes such “transfer points” are often associated with exchange platforms that demonstrate a noticeable network effect. The latter arises from the need for liquidity and the positive feedback loop it generates.
They believe the cryptocurrency industry will follow the same path as traditional finance. Over the years, a large share of trading volumes across asset classes ended up concentrated on a limited number of venues. They expect the creation of new platforms in many countries to precede this, driven by the high degree of regulatory variation and the opportunities for firms to operate internationally.
According to the study, cryptocurrency exchanges will be able to form competitive advantages based on the following four factors:
- the presence of permissions and licenses from local regulators;
- the level of cooperation with local banks to enable fiat-to-crypto transfers;
- the degree of liquidity in pairs involving the respective currency;
- brand, customer base and its growth potential.
The opportunities to create crypto-fiat gateways are most attractive in developing economies, Jump Capital believes. They argue that residents here may show greater loyalty to cryptocurrencies and that established players could face expansion challenges due to local particularities.
Analysts compiled a list of the most promising countries for building such a business based on the following factors:
- risk of high inflation / currency instability;
- large remittance flows;
- underdeveloped financial infrastructure / lack of trust in banks;
- population size;
- GDP-to-national-wealth ratio;
- gold reserves;
- regulatory and banking environment;
- tendency toward speculation (stock trading, gambling, etc.).
Leading is India with the largest population, the fourth-largest economy, high inflation and strong demand for gold. Indonesia and Mexico also show significant potential, with a notable share of remittances in the country’s balance of payments.
As Arcane Research noted, Africa is the most promising region for crypto development. Analysts backed their view with economic and demographic trends, as well as high public trust in cryptocurrencies.
Subscribe to ForkLog news on Twitter!