India ranks second in the 2021 Global Crypto Adoption Index.

by mehekkaoberoi

Bасkgrоund:-

  • The cryptocurrency industry is booming. Companies looking to obtain exposure to the crypto sector have increased their interest in 2021. Given the limitations of doing business in a pandemic environment, a number of sectors struggled in FY21.
  • Asian countries are outpacing the rest of the globe in terms of cryptocurrency adoption. While the region’s countries have a vast market in terms of population, most of the others have been overlooked in the crypto world, with the exception of China.
  • With the government working on regulations and investors pouring money into crypto businesses, India’s crypto industry has been buzzing recently. CoinDCX, funded by Coinbase, became the country’s first billion-dollar cryptocurrency firm.
  • Bitcoin is the most popular coin in India, followed by Ripple, Ethereum and Bitcoin Cash, according to the report.

Linkаges:-

  • Many emerging nations are experiencing considerable currency depreciation, prompting residents to purchase cryptocurrency on peer-to-peer marketplaces to protect their money.
  •  Countries like Vietnam, Venezuela, Kenya and Nigeria rank high due to huge transaction volumes on P2P platforms when adjusted for Purchasing Power Parity (PPP) per capita & internet usage population.
  • Others in these fields utilise cryptocurrencies to conduct international transactions, whether for personal remittances or for business purposes like buying and selling things.
  • India’s “huge expatriate population”, the second in the world, with 18 million people from the country living outside their homeland last year, as a January 2021 UN report makes it the world’s number one remittance recipient in the crypto space.
  • The worldwide adoption of cryptocurrency has grown by over 2,300 percent and more people are getting into this sector through referrals as it can make them financially stable and avoid the complications when moving out of the country.

Сurrent  Sсenаriо:-

  • According to the 2021 Global Crypto Adoption Index by block chain data platform Chain analysis, India came in second with a score of 0.37 in the 2nd edition of the global cryptocurrency adoption index.
  • The research, which ranked 154 nations, found that global crypto use increased by more than 881 percent in the previous year, and by more than 2,300 percent since the third quarter of 2019.
  • Vietnam was the top market in terms of adoption while Pakistan was ranked third, as per the study and India outperformed countries like US,UK and China.
  • India improved to 2nd rank from 11th in the 2020 Global Crypto Adoption Index.
  • U.S and China’s ranking was eighth and thirteenth respectively. Both countries dropped in their rankings as the P2P trade volume weighted for internet-using population declined drastically.
  • The index ranks countries based on 3 indicators such as On-chain value received, Onchain retail value received and Peer-to-Peer (P2P) exchange trade volume.
  • The industry is now eagerly waiting for the proposed cryptocurrency bill, which Finance Minister Nirmala Sitharaman said has been tabled before the Cabinet and is awaiting approval.

Imрасt:-

  • Realizing that cryptocurrencies and Block chain technology are here to stay, financial institutions are looking to take advantage of them: banks are slowly adapting to block chain technology, using it to trade derivatives.
  • These could provide a significant benefit by overcoming the lack of social trust and by increasing the access to financial services (Nakamoto, 2008) as they can be considered as a medium to support the growth process in developing countries by increasing financial inclusion, providing a better traceability of funds and to help people to escape poverty.
  • While not 100% immune from theft, Cryptocurrency is generally safe to use and difficult for malicious hackers to break many people are moving to these options.
  • It offers tech companies different ways to transfer funds, execute agreements through smart contracts and track shipments through the Block chain ledger which can help prevent the loss of valuable goods on errant shipments, all without the need for a middleman -such as a bank or other financial institution, saving time and a lot of money for the companies.
  • Cryptocurrencies have many benefits when it comes to frictionless transactions and inflation control, but many investors are adding these currencies as assets to their diversified portfolios. In particular, the non-correlated nature of the market makes cryptocurrencies a potential hedge against risk, similar to precious metals like gold. Many cryptocurrency exchange-traded products (ETFs and ETNs) have arisen for this very reason.

Content contributed by- Meghna. Manoj

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