Why is Crypto So Big in Developing Countries?

It can be clearly seen that the adoption of cryptocurrencies is very successful in many developing countries around the world. As inflation continues to spiral out of control, many citizens lose faith in local currency and economic policy and are often driven to seek alternative ways to make, save and spend money. The cryptocurrency market not only offers the dream of making money and getting rich, it also helps citizens protect their wealth by holding it in cryptocurrencies instead of their local currency.

Some of these countries include El Salvador, for example, which produced bitcoin (BTC-USD) with legal tender in September 2021, and Nigeria, where in April 2022 it was recorded that approximately 33.4 million citizens were trading or holding cryptocurrencies despite restrictions on cryptocurrency transactions by the Central Bank of Nigeria (CBN). It has also been estimated in the Philippines that over 4.3 million people (4.0% of the total population) currently own cryptocurrency.

The state of cryptocurrencies in India

According to a recent survey by KuCoin, The Cryptoverse India Report said that during the first half of 2022, approximately 115 million Indian citizens between the ages of 18 and 60 had exchanged or held cryptocurrencies. While 2022 is extremely difficult for the cryptocurrency market, the survey also showed that young investors remained more interested in cryptocurrencies than older investors in the last quarter. Thus, the number of cryptocurrency investors aged 18-30 has increased by 7% year-over-year.

Furthermore, the KuCoin survey also revealed that 56% of investors think cryptocurrencies may be the future of finance, and 52% have already invested in cryptocurrencies to earn passive income that can help them improve their quality of life.

The Indian government, like other governments around the world that have less control and oversight over crypto transactions and citizens’ capital, is concerned about the amount of money that escapes the local monetary system and ends up in the crypto world. This has led the Indian regulator to impose one of the most stringent crypto regulations in the world and, as of April 2022, there is a 30% tax on unrealized crypto gains, while users are also subject to a tax on cryptographic earnings. 1% per transaction.

China, for example, has gone one step further and gone to the extreme of completely banning the use of cryptocurrencies in investing, trading, mining and other related activities, allowing only the digital Yuan. The Digital Yuan is a Central Bank Digital Currency (CBDC) and is controlled by the government.

The hard hand of the Indian regulator was also felt by local exchanges when Wazrix, the largest cryptocurrency exchange platform in India, with over 10 million users, came under the direction of applying the account freeze. This led to a decrease of more than 54% in trading volume during the first days of August 2022. This decline saw trading volume drop dramatically from $ 4.3 million to $ 2 million. At the end of last year, Wazrix had a trading volume of $ 43 billion.

Despite the government’s tough stance on digital assets, the report says the Indian cryptocurrency market is expected to hit $ 241 million by 2030 and younger investors will recognize the long-term value of cryptocurrencies.

Mohit Kumar, a long-term cryptocurrency investor in Delhi, said: “Honestly, cryptocurrencies have made a backdoor entry into India through [Union] Budget 2022. And now there is no turning back. I don’t care about the 30% slab as I hold the cryptocurrency for a long-term view and, at that point, I expect a lot of changes in the tax slabs, so let’s relax. The good thing is, it’s not off limits. ”“ I’ll continue to invest anyway, ”he said CoinGeek in February.

Additionally, Kumar said that it takes a long time to execute something new in India, and tracking traders appears to be an incredibly difficult task for the government. Kumar also said: “They won’t be able to track them down. Exchanges will be required to report every transaction and exchange rate in a crystal clear fashion, and the government may or may not, time will tell. ”

Conclusion: Cryptocurrencies are on the rise and getting stronger

Despite the government’s efforts to make it more difficult for Indian citizens to trade and hold cryptocurrencies, cryptocurrency enthusiasts seem determined to continue and invest in this new and upcoming market.

Diving a little deeper into the survey, 41% of respondents said the lack of education on the cryptocurrency market has been a barrier to their investments, adding that they don’t know how to choose among the many different cryptocurrency products available. About 37% said they did not know how to manage portfolio risk, while 27% said they lack the knowledge and tools to predict market movements. 21% were not even clear on how encryption works.

2023 is set to be the busiest year in terms of regulations for the cryptocurrency market around the world. I believe these regulations may initially slow the market down, but will ultimately prepare it for its next phase of growth. Looking ahead, in five to ten years, I am very optimistic that the mass adoption of cryptocurrencies will continue and grow globally and in developing countries like India.

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