While many people consider Bitcoin a great innovation and invest in it for fun or to be in line with the latest trends, others regard it as a safe haven that can be used to hedge against devaluing national currencies. This is the reason why Bitcoin is often more expensive in countries hit by a crisis than in the rest of the world.
However, the interest in Bitcoin is increasing in developed countries as well, so it would be wrong to say that there is a direct correlation between the cryptocurrency’s adoption level and the degree of a country’s crisis.
Today, the whole world is dealing with the global economic crisis caused by the coronavirus outbreak. Notably, the interest in Bitcoin is increasing, but it’s also driven by developing countries. At the end of April, BTC’s peer to peer trading volume reportedly hit all-time highs in countries like Chile, Argentina, Venezuela, and Morocco.
Thus, we have a worldwide crisis that has an impact on all countries, given the globalization of the economy. Does this suggest that Bitcoin is adopted everywhere to the same extent? Not at all – developing countries are still more reliant on cryptocurrency than the developed ones. This is probably because the latter can benefit from more alternatives for hedging against inflation and decline in confidence.
Bitcoin itself was designed as a result of the previous global crisis in 2008. Despite its wild volatility, scarcity allows it to preserve value in the long run.
Bitcoin Interest in Some Regions Hit by Crises Is Increasing
In many countries whose economies are on the brink of collapse, the popularity of Bitcoin is skyrocketing regarding French crypto media Cryptoast.
Last month, Coinmarketcap said in a report that Nigeria saw the largest increase in website visits in the first three months of the year. The growth of interest among users aged between 18 and 24 surged over 210% in the first quarter of 2020, followed by Australia (158%), Spain (120%), Canada (112%), Mexico (97%), the UK (91%), Colombia (85%), India (81%), and Pakistan (80%).
Nigeria is also the country with the most Bitcoin-related online searches, according to Google (NASDAQ:GOOGL) Trends.
Nigeria is a classic case when Bitcoin is indeed popular thanks to its ability to preserve value versus the national currency. The purchasing power of the Nigerian Naira has crashed by almost 50% since 2016. Nigerian citizens are worried that the trend might continue, which is why they’re looking for better ways to store their savings. Bitcoin is probably regarded as the best option because it’s governed by no single entity and has a deflationary model.
In India, many people use the cryptocurrency as a channel to convert their national currency to the US dollar, as the direct exchange is more difficult due to limitations. Many people would exchange their rupees to BTC and then to USD through peer to peer platforms like LocalBitcoins. Bitcoin adoption is booming after the government green-lighted its use.
However, besides Nigeria or India, Bitcoin is also increasing in popularity in countries like Australia, Canada, the UK, and Switzerland, among others. All of the mentioned countries used to enjoy economic stability despite temporary challenges like Brexit or the dramatic fire season in Australia.
Thus, while it is fair to say that Bitcoin adoption is surging in some countries that struggle with economic or political crises, it is not accurate to claim that potential crises constitute the single major driver of the cryptocurrency’s expansion.
Usually, the truth is always somewhere in the middle, but at this time Bitcoin is indeed very popular in many challenged countries.