How Does The Global Crypto Adoption Index Work?

Recently, the popular crypto software company called Chainalysis released their 2022 Geography of Cryptocurrency Report. The 2022 Global Crypto Adoption Index was also a part of this report, which ranked India 4th in terms of crypto adoption when compared to countries across the world. So what is this Global Crypto Adoption Index and which parameters did Chainalysis use to rank countries? Let’s try and understand in a little more detail.

As the name implies, the Global Crypto Adoption Index is a type of index that determines the level of grassroots crypto adoption in countries and ranks them on the basis of various factors. As per the company’s official website, the goal of this index is to understand where most people are putting their money into cryptocurrencies across the world. While the index also takes into consideration institutional investors who are involved in cryptocurrencies, they also want to highlight countries where the average non-professional investors and the general public are getting involved in cryptocurrencies the most.

The Global Crypto Adoption Index works on the basis of sub-parameters, and each of them measures the different ways in which countries are adopting cryptocurrencies and digital assets. The average rankings/scores from all the sub-parameters are compiled to come up with the final average score. The following were the sub-parameters used under the Global Crypto Adoption Index:

As per Chainalysis’s official website, the goal of this metric was to measure the activity of non-professional cryptocurrency users at the retail transactional level. The company defines transactions under the value of $10,000 to be retail transactions. The measurement was based on how much a non-professional cryptocurrency user was transacting using cryptocurrencies compared to the wealth of an average person.

The goal of this sub-parameter was to rank countries by the volume of their peer-to-peer (P2P) transactions. Moreover, a special emphasis was given to lower PPP per capita and a lower percentage of internet users. The goal of this metric was to understand in which countries were people putting the most share of their wealth into cryptocurrencies.

DeFi or decentralised finance has been a rapidly growing sector in the cryptocurrency space. The intent of this sub-parameter was to highlight those countries where a large proportion of financial activities were carried out through DeFi compared to the number of activities in the traditional financial sectors. Once again, a higher emphasis was given to countries with a PPP per capita. The volume of DeFi transactions was also an important ranking factor under this sub-parameter.

Similar to how in the first sub-parameter, the number of crypto transactions by non-professional crypto users was measured, this sub-parameter examines the amount of DeFi retail transactions by non-professional crypto users in countries across the world. Once again, an emphasis was placed on countries with lower PPP.

The Global Crypto Adoption Index uses these parameters to score countries based on their level of crypto adoption and creates an average score by combining all of the above parameters. To know more about the process behind the Global Crypto Adoption Index you should take a look at their 2022 annual report.