China, the second largest economy in the world, has returned to the top 10 countries in terms of crypto adoption according to The 2022 Geography of Cryptocurrency Report, a report done by Chainalysis. The Red Dragon dropped to 13th place in 2021 mainly due to cryptocurrency crackdowns within the country.
The study was done in such a way that it considered the purchasing power of the residents of each country in relation to how much was spent on crypto, instead of relying on sheer transaction volume. This is the reason why developing countries like Vietnam topped the list.
The study also categorized each country into four income groups by gross national income (GNI) per capita, a classification created by the World Bank. China is classified as upper-middle income with a GNI of $4,256 TO $13,205
China was one of the first countries to embrace cryptocurrency. BTCChina, the country’s first crypto exchange, opened in 2011. Bitmain, one of the first crypto mining hardware manufacturers and mining pool operators, opened up its doors for business in 2014. (Sharma, 2021)
The visual below shows China’s cryptocurrency history.
Because of cheap electricity, China became the biggest crypto-mining hub, producing 65%-75% of the total Bitcoin (BTC) hash rate. But the hash rate dropped to zero in July 2021 due to tightening regulations.
In September 2021. the government made all crypto transactions illegal and it didn’t matter if it was done on a local or foreign platform.
2021 proved to be a tumultuous year for crypto in China. With the country’s crypto market size, the news pushed down digital assets’ prices. Crypto miners were also forced to relocate to friendlier jurisdictions, which included Kazakhstan and The US.
China’s Attitude Towards Cryptocurrency has a Worldwide Effect
China’s population is currently at 1.4 billion, making it the most populous country. Combined with a net worth of $120 Trillion, that makes China an economic powerhouse.
According to Forbes, China has 539 billionaires with a combined net worth of nearly 2 trillion. It is the 2nd country with the most billionaires, next to the US.
With these numbers, we can begin to realize why prices of cryptocurrencies fall every time China announces stricter crypto rules. China simply has a large number of people who are either active or potential investors in digital assets. Chinese Billionaires alone can raise crypto’s market cap by 10% by just investing 5% of their worth into the space.
With the launch of the Digital Yuan, it is feared that China will continue its crackdown against other digital assets that might compete with its own Central Bank Digital Currency (CBDC). But the Chainalysis index showed that crypto adoption is still happening within the country, which suggests that the ban is ineffective or not strictly enforced.
China being in the Top 10 for Crypto adoption is good news, though the future is still uncertain. Next year’s report will surely be interesting. One can only wonder if the country will drop or go up in ranking.
We can only guess what China will do next, but we cannot ignore the Red Dragon’s next action. A behemoth’s move will always make waves and will affect everyone near it. We cannot stop it, but we can always ride the waves.
Source: https://blog.chainalysis.com/reports/2022-global-crypto-adoption-index/
Image: Pixabay
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