The Middle East and North Africa, known as MENA, continues to adopt cryptocurrency. Blockchain researcher Chainanalysis reports that the region saw a 48% increase in cryptocurrency volume for the year ending June 2022. It’s not just the new areas that are accelerating cryptocurrency volume and adoption growth. According to the study, North America saw a 36% growth in cryptocurrency adoption. MENA is one of the smallest crypto markets, so the 566 billion increase in cryptocurrency volume over the 12 months ending June 2022 provides the background as to why it accelerated so quickly. According to the Chainanalysis survey, three different MENA countries ranked in the top 30 in global cryptocurrency adoption.
What is Cryptocurrency Adoption?
Cryptocurrency adoption is the process of accepting or embracing digital currencies. Adopting cryptocurrency would be like adopting any other new technology for some; it is not if cryptocurrencies will be used as a global payment mechanism, it is when. In a recent survey conducted by Finder.com, approx 27 million Americans own cryptocurrency, with nearly 45% of them owning bitcoin. Adoption growth may accelerate when the total number of Americans reaches 10% of the population. Two examples of such growth would be the adoption of the Internet in the 1990s and the adoption of smartphones in 2007. The adoption process takes time, but can snowball and become mainstream as it accelerates.
Adoption is skyrocketing in the Middle East and North Africa
New countries have begun to experience an acceleration in the adoption of cryptocurrency volumes. While MENA saw the most significant growth at 48%, Latin America showed the second most significant growth during the same period. Growth in Latin America increased by 40%, followed by North America, Central America, Southeast Asia and Oceania at 35%. Of the MENA countries, Egypt saw tremendous growth, increasing by 221.7%, followed by Saudi Arabia, Lebanon, Morocco, the UAE and Turkey. In some MENA countries, the rise in cryptocurrency adoption has come in tandem with the volatility of their fiat currencies. For example, the surge in cryptocurrency adoption in Turkey occurred when its currency experienced a severe devaluation.
What are the benefits of adopting cryptocurrency?
There are several benefits to early adoption. As new technologies become available, those who try them can help shape the direction of the technology. Early adopters tend to be trendsetters, influencers and innovators. When you adopt a product or technology early, you see if the processes can increase business flow or efficiency. Your feedback can help shape the development of the product and help generate product progress. Cryptocurrencies also seem to portray a description of trust among their users. The transparency aspect of a decentralized coin makes some people feel that the currency is not being manipulated.
What are the uses of cryptocurrency?
Cryptocurrency is a digital asset formed in a decentralized structure. The nature of the system allows the formulation of the currency to lie outside of poverview of state control or a central regulator, There are several benefits which include cheaper and more efficient money transfers. Disadvantages include a volatile exchange rate relative to fiat currencies.
Many cryptocurrencies run on a blockchain. A blockchain is essentially an online ledger that is not updated. When changes are made to the blockchain, a new block is not updated. Blockchain technology has many uses, including supply chain, crowdfunding and online voting. Blockchain transactions cannot be deleted and are considered immutable.
There are two general types of blockchain verification. There is proof of work and proof of effort, A proof of work mechanism requires blockchain verification to solve a complex problem and then the verifier can earn compensation for verifying a transaction. In a proof of stake environment, the verifier must own a certain amount of the underlying cryptocurrency in order to confirm a transaction.
Why might cryptocurrency be popular in MENA?
Cryptocurrency is likely favored in emerging markets due to remittances. Approximately $700 billion is transferred annually by families in small increments. These small denominations are sent out by families to their families back home. High fees and payout delays make this company perfect for cryptocurrency disruptions. Smaller payments and quick payouts make cryptocurrencies a perfect payment mechanism for individuals sending money home. In MENA, the payment processing arena is ripe for disruption.
Additionally, in countries where the currency is less than stable, individuals are more likely to seek an alternative. In Turkey, for example, there was an increase in the amount of cryptocurrencies as the fiat currency came under pressure and was devalued. Higher currency volatility versus more stable currencies is likely to generate increased demand for cryptocurrencies.
MENA has seen an acceleration in the volume of cryptocurrencies traded in the 12 months ending June 2022. A recent study found that MENA had a 48% increase in volume ahead of other emerging markets and North America. Egypt saw the biggest increase in the amount of cryptocurrencies. Cryptocurrencies may be popular in MENA due to the lower fees related to payment processing. Digital coins may also be less affected by political unrest in the region. Three MENA countries were placed in the top 10 countries that experienced the most significant increase in the amount of crypto trading.
The adoption of cryptocurrencies goes beyond MENA. In the US, 27 million people own cryptocurrencies. Once the adoption of cryptocurrencies reaches 10% of the population, it will likely accelerate further. There are several advantages and disadvantages associated with the adoption of cryptocurrency trading. Those who are the first to adopt cryptocurrency will have a greater influence on how it is used. Ultimately, a less volatile digital currency and lower payment fees could add to the disruption in MENA and the rest of the world.
Disclaimer: The views and opinions expressed in the above article are the independent professional judgment of the experts and The Tribune assumes no responsibility, whatsoever, for the accuracy of their views. Chain Analysis is solely responsible for the accuracy, reliability of the content and/or compliance with applicable laws. The above is sponsored, non-editorial content, and The Tribune does not guarantee, endorse or guarantee any of the above content, nor is it responsible for them in any way. Take all necessary steps to ensure that all information and content is correct, up-to-date and verified.