Cryptocurrencies can be difficult to access, but what are their key features? One feature of cryptocurrencies is that they are open source. This means aggregate user data is available online. But because they prioritize privacy, it’s hard to break down that data and understand demographics and how different countries use cryptocurrency.
The problem with looking at crypto adoption by country:
Bitcoin can be used as a new form of money. It is designed to use these vital features:
There is no centralized authority.
Anyone is welcome.
There are no geographical limitations.
Private and anonymous
Defying all forms of censorship
In practice, you don’t have to create an account with bitcoin in the same way you would with a bank or payment provider. With bitcoin, you can send or receive payments without any information about yourself.
The bitcoin transactions are stored in a distributed network of computers so there is no one single person that can control it. Transactions do not contain any personal information, and the IP addresses of senders or recipients are not available.
Bitcoin and other cryptocurrencies use a blockchain to keep track of transaction history. They still maintain anonymity, however, so it can be difficult to know the location of most transactions.
Which countries are the most crypto-crazy?
One of the least known characteristics of cryptocurrencies is pseudonymity. Pseudonyms are constant identities that, through association, may disclose your true identity.
Now, you don’t need to sign up with Bitcoin. You just need a wallet that will generate an address to send and receive funds.
That address has no identifying information. It is just a long string of letters and numbers. But if you, for example, include your Bitcoin address within your Twitter profile (adding a link to your profile) and it identifies you, then you can easily connect the two bits of information, revealing that you are the specific owner of that Bitcoin address in question.
Some exchanges require you create an account and provide your personal information. These exchanges are a central hub for Bitcoin transactions.
Exchanges operate as custodians of funds for their consumers. They own the bitcoin addresses, but clients may access their assets through a website or app and a personal account.
With mainstream crypto exchanges free to share public details about their accounts, it is easy for an exchange to be connected to a range of sub-accounts. This is because the activity on these accounts is available publicly because crypto is open source.
Making connections
Data science is used to make connections between known entities, like exchanges, and how much crypto they hold. These pattern are then used to predict future events.
To assess what country or demographic is driving the market on an exchange, it is necessary to combine data from other sources and make assumptions.’
Within Chainalysis, they create detailed insight by combing known crypto activity and analyzing it with the Web Traffic Methodology.
To create the index, they use three factors: the total market capitalization of an asset based on its price, velocity and volume:
- the total value of cryptocurrency received in each country
- crypto exchanges made by non-professional traders
- P2P exchange-traded volume
The Word, Traffic Methodology utilizes public website monitoring data like Similar Web’s geographic split of web traffic to each exchange with other known criteria:
The crypto activity’s time zone
The fiat trading pairs available
The number of languages available
The location of the exchange’s headquarters
Information contained in crypto address labels
To identify a website’s traffic sources, it’s too difficult to identify the quality. The current approach doesn’t take VPNs into consideration and weights all visitors as equal, when really only
The Chainalysis model has the best guess for an index of global grassroots crypto adoption based on their assumptions.
Top 10 countries where cryptocurrency is used the most
1. Vietnam
2. India
3. Pakistan
4. Ukraine
5. Kenya
6. Nigeria
7. Venezuela
8. United States
9. Togo
10. Argentina