Cryptocurrency is one of the most significant innovations of our time. It’s changing how people and businesses worldwide think about money, and it’s connected everyone, from billionaires to average consumers.
However, despite the potential for crypto to be an integral part of the future, many individuals and organizations are still hesitant to adopt this new kind of currency. In fact, many believe that crypto won’t have enough legitimacy or acceptance to succeed truly.
The validity or acceptance of cryptocurrencies: is crypto here to stay?
Crypto is growing in popularity as more and more people adopt the coins for various uses. Crypto is used to pay for goods and services and can also be converted into other currencies. The most crucial part of crypto’s growth and use is that it is decentralized, making it difficult to track and easier to use. In fact, anyone can invest in crypto quickly and easily by crypto copy trading or even using automated crypto trading bots.
As of 2021, according to The Tripple A crypto platform, global crypto ownership rates were estimated at an average of 3.9%, with over 300 million crypto users worldwide.
Over 18,000 businesses are already accepting cryptocurrency payments. The Bitcoin market cap reached US$1 trillion in February 2021. Top countries include India, the USA, Nigeria, Vietnam, and the United Kingdom. The figures indicate the adoption of cryptocurrency worldwide, and the numbers speak for themselves.
While it might seem that crypto is on a massive uptick with widespread adoption, there are still countries where the use of crypto is banned. For many other countries that haven’t banned it outrightly, heavy restrictions have been put in place to prevent its use.
Some of the recurrent reasons for the restrictions/ban on cryptocurrency include:
- It is not regulated by a central body and so falls beyond the grasp of government control.
- The crypto market is volatile. Crypto values rise and fall unpredictably when compared to traditional currencies.
- Inadequate knowledge of what cryptocurrency entails.
- The menace of crypto scams, a prime example of which is when digital wallets are cloned as a disguise to steal the private keys of an unsuspecting public.
Dubious trading platforms are also springing up to scam people of their crypto holdings. One has to be vigilant to trade safely and when dealing in cryptocurrency.
One thing has been constant despite all the issues affecting the acceptance of cryptocurrencies by governments and individuals alike. Cryptocurrencies continue to grow in popularity as more businesses adopt them. This is due to their many benefits, including security and transparency. They also have the potential to revolutionize many industries, including finance and real estate.
Africa as a case study for developing countries
The adoption of cryptocurrency has grown in Africa over the years. For a continent with developing nations, cryptocurrency has helped Africans level up with other counties in terms of finance. Crypto is a level playing field for all and sundry, and participation is not limited to a chosen few.
What are some of the factors hindering crypto’s growth in Africa?
Chief among the factors affecting the acceptance of crypto in Africa are the governments of countries in Africa. Despite the continent being populated mainly by young people, the reverse is the case for people in government in Africa. The age gap is responsible for the pushback of crypto.
Crypto scams and crypto malware are another reason why adoption is discouraged in Africa. In many cases, scammers promise people high returns on their investments but never deliver on their promises. This leaves people struggling to get their money back, which dissuades others from participating in the cryptocurrency market.
Additionally, many Africans don’t have the technical expertise to store and use cryptocurrencies safely. The government of Nigeria, for example, capitalizes on this, among other factors, to prevent crypto adoption.
Have these factors affected the legitimacy and acceptance of cryptocurrency by the population?
Let’s examine some of the reasons for the widespread adoption of crypto in Africa despite the factors hindering its growth.
Purchasing Power of fiat currencies
Many Africans are interested in cryptocurrencies because it is believed that they have greater potential than traditional currencies. Many African countries have weak economies and high inflation rates. Cryptocurrencies offer a way for Africans to protect their money from devaluation.
For example, Bitcoin has grown in value by more than 1,000% since it was first introduced in 2009. Many people would instead save in crypto than their local currency despite the volatility of crypto.
A large percentage of young people
According to Wikipedia, 60% of Africa’s population is under 25, and cryptocurrencies are becoming more popular with young people. This is likely due to their potential for financial independence and the ability to avoid government regulation. Many young people see cryptocurrencies as a way to escape the traditional banking system and its limitations. They also see them as a way to make transactions without worrying about the middleman.
Chainanalysis shows that Africa has the highest P2P crypto trading platform users. The ban on crypto in some countries has also fueled this increase.
Remittances also play a significant role in crypto adoption in Africa. People in the diaspora can send money home and vice versa through cryptocurrency.
Africa is one of the regions where cryptocurrencies are not well-accepted. Nevertheless, crypto use has increased in the region. This is likely because crypto is viewed as a way to escape from the economic instability that affects many countries in Africa. Cryptocurrencies also offer an alternative investment opportunity that any government or institution does not control.
A closer look at the U.S, Asia, and Europe
According to Pew Research, most Americans have heard at least a bit about cryptocurrencies like Bitcoin or Ether, and 16% have personally invested in, traded, or utilized one.
Cryptocurrencies are slowly gaining traction in the United States. However, adoption is still low compared to other countries. This may be due to a lack of understanding of the technology or security concerns. Despite these challenges, there is potential for crypto to grow in popularity in the U.S. if people become more aware of its benefits.
According to Chainanalysis, Asia is leading in the global adoption of cryptocurrency, with countries like Vietnam, Pakistan, and India. According to Market Insider, international crypto adoption rose to 881% as of 2021 and continues to grow.
Compared with other global regions, the adoption of cryptocurrency in Europe is low except in Ireland. Even while the adoption of cryptocurrency by Europeans is 17%, it still lags in the global average of about 23%.
What are some of the factors affecting the adoption of cryptocurrency in the U.S. and Asia?
Cryptocurrencies are becoming more popular worldwide, but there are some barriers to adoption in America. Some of the factors affecting crypto adoption in America include the widespread use of traditional payment methods, lack of knowledge by most people, and consumer interest.
There are also regulatory hurdles to overcome. In America, cryptocurrencies are still considered property rather than currencies, making it difficult for them to be used in transactions.
However, things are starting to change as president Biden recently signed an executive order to address a regulatory framework for digital assets. This means that cryptocurrencies are recognized as financial assets, which can massively improve their adoption.
While some countries in Asia are still vehemently against cryptocurrencies, others have embraced them with open arms. In China, for example, the government has banned all cryptocurrency trading and Initial Coin Offerings (ICOs), while in the Philippines officials are more welcoming of digital currencies.
Japan has been at the forefront of cryptocurrency adoption, with over 50% of global Bitcoin trading. However, there has been some controversy surrounding the country’s stance on digital currencies. In December 2017, Japan’s Financial Services Agency (FSA) issued a warning to individuals about the risks associated with investing in virtual currencies. Later that year, it announced plans to create its cryptocurrency.
In South Korea and Thailand, the government tightly regulates cryptocurrencies, and there is a ban on using them for financial transactions. However, a growing number of businesses accept Bitcoin as payment, and some individual users can purchase cryptocurrencies through anonymous exchanges.
With cryptocurrencies like Bitcoin and Ethereum garnering massive attention in finance and technology, there is no doubt that they hold great potential. However, their legitimacy as a form of currency and investment is still being questioned by many.
While some see cryptocurrencies as the future of global transactions, others are hesitant to invest due to the lack of regulation. It will be interesting to see how long it takes for cryptocurrencies to gain widespread acceptance and become mainstream investments.