Adoption of Crypto from a Global Perspective Exploring Financial Freedom in Turbulent Economies

Global Adoption of Crypto Exploring Financial Freedom in Volatile Economies

Author: @ivyfanshao

Crypto presents two different faces in different regions. It is the subject of speculation in developed areas, and the financial savior in emerging regions. When a country’s economy is on the verge of collapse, Bitcoin and stablecoins will take the opportunity to popularize among the public. This is true for countries like Ukraine, Turkey, and Argentina. In the past 10 years, the Turkish lira, the Argentine peso, and the South African rand have been among the top three weakest currencies in the world.

In regions where fiat currencies are weak, there are foreign exchange controls, and mainstream currencies such as the US dollar and the euro have insufficient liquidity, Crypto has a fertile ground – providing tools for local residents to store value and achieve financial freedom.

I once heard an Argentine friend talk about using Crypto to pay for his clinic fees, renew Spotify, and go shopping at the supermarket. This is a scene I can’t imagine. In order to understand the world from different perspectives, during my time at ZuConnect, I interviewed residents from 7 countries and regions, trying to explore the role of Crypto from the perspective of payment and finance, and how the adoption of crypto affects local life.

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Image: Crypto adoption rate in 2023, Nigeria, Vietnam, Turkey, and Argentina ranked 2nd, 3rd, 12th, and 15th respectively. Source: chainalysis

1. Turkey – 52% of Turkish adults invest in Crypto, financial freedom, lenient regulations

Overview

Inflation reaches as high as 80%, no foreign exchange controls, Turkish lira freely traded against the US dollar and the euro, highly developed banking system with easy account opening, low KYC requirements, these are the financial conditions and regulatory situation in Turkey.

Low barriers to crypto investment: Local licensed exchanges in Turkey (binance tr & coin tr) can directly deposit and withdraw funds to/from bank accounts, and even cash transactions can be done offline (USD/TRY/EUR). There are many exchange stores for fiat-to-crypto transactions in the bustling market, with real-time prices flashing like barrage. These stores operate legally and pay taxes to the government. However, crypto payment is illegal, as business owners need to report income taxes annually, which is a core source of fiscal revenue.

Free flow of foreign exchange: There is no limit on individuals’ foreign exchange transactions, while corporates have an upper limit set at 800,000 USD. Exchange stores are everywhere, and no KYC is required. Therefore, it is easy for Turks to hold US dollars and euros for savings.

Image: Trading volume of USDT/TRY far exceeds that of other emerging market currencies.

In 2021, the exchange rate of the lira against the dollar collapsed, and the trading volume of USDT/TRY even exceeded that of USDT/USD at one point.

Image: The collapse of the lira against the dollar in November 2021, with daily crypto trading volume close to half of the daily Turkish foreign exchange trading volume

Cross-border remittances: Local LianGuaiyLianGuail has been unavailable since 2016 due to failure to meet local regulatory requirements, generally using Wise or Western Union.

Cards as the mainstream payment method: The use of debit cards and credit cards in Turkey is very popular. According to data from the Interbank Card Center (BKM) of Turkey’s banks, the total number of credit cards and bank debit cards in Turkey in 2021 was 291 million, including 150 million debit cards and 83.8 million credit cards. In terms of total number of bank cards, Turkey ranked first in Europe in 2021. The total amount of transactions made with credit cards and bank debit cards in 2021 reached 1.71 trillion Turkish lira.

Turkey’s banking industry is well-developed, far surpassing Europe. With over 50 commercial banks, most of them can provide an Alipay-level experience.

Relaxed regulation on financial technology:

Despite having a developed banking system, Turkey still has a high ratio of 26% of its population without a bank account. LianGuaiLianGuaira, a payment product outside the banking system, has 17 million users. It only requires a local Turkish phone number and email, no need for ID verification (KYC), and offers zero transfer fees. It also collaborates with Mastercard to issue physical cards. In addition to being regulated by the Central Bank of Turkey, it combines the unique financial freedom of decentralized wallets with the convenience of card payments.

Case Study: LianGuaiLianGuaira, a payment product outside the banking system

Image: LianGuaiLianGuaira exists outside the banking system, and LianGuaiLianGuaira Card provides a banking card experience

Image: LianGuaiLianGuaira product features, including currency exchange, bill payment, and subscription fees. Source: https://www.paLianGuaira.com/en

High degree of population information/residence registration/government digitalization: Residents can handle all government affairs, pay fines, file taxes, apply for passports, and students can obtain proof of enrollment from home.

Image: Turkey’s public government platform. Source: https://www.turkiye.gov.tr/

Smooth deposit and withdrawal channels: Licensed exchanges Binance TR and coinTR can directly withdraw funds to various bank accounts with a fee of only 3 TL.

Crypto adoption rate

As of October 2022, there are approximately 8 million people actively investing in cryptocurrency. If immediate family members are included, the number is estimated to be around 14 million.

Source: https://www.kucoin.com/blog/more-than-half-of-Turkish-adults-invest-in-crypto

Turkish cryptocurrency exchanges:

• Licensed exchanges in Turkey, supporting bank card deposits and withdrawals

• Binance TR

• coinTR

• Local popular exchanges in Turkey: Local exchanges LianGuairibu and Btctürk have over 6 million registered local users

• https://www.btcturk.com/

• https://www.paribu.com/https://ventures.paribu.com/

• https://www.bilira.co/

Image: BtcTurk logo seen everywhere at Istanbul Airport. Source: Taken by the author

It is worth mentioning the state-owned enterprise in the exchange – CoinTR. CoinTR has cooperated with two Turkish national banks, Zirrat Bank and Vakif Bank, to open fiat currency deposit and withdrawal channels. It is more like a company jointly established by regulatory authorities, traditional banks, and international technology teams, aiming to solve Turkey’s exchange rate and US dollar reserve problems since its inception.

2. Argentina – 25% of Argentinian adults frequently trade Crypto and use it as a daily payment currency

Overview

Latin American people need solutions for inflation, remittance, value protection, and savings, and they enjoy the benefits of Crypto, becoming the most enthusiastic supporters of crypto. In Argentina, it has already become mainstream, with approximately 5 million people (out of a total population of 45.8 million) using it.

Image: Crypto trading volume surges when the Argentine peso faces inflation. Source: chainalysis

Inflation: Argentina’s inflation rate soared to 121% in October 2023, and such inflation has been going on for years.

Foreign exchange controls: The Central Bank of Argentina faces a shortage of foreign exchange and implements foreign exchange controls to prevent capital flight. The Central Bank of Argentina requires exporters to repatriate profits from overseas sales within 5 days. Institutions and banks need authorization to purchase US dollars in the foreign exchange market, with Argentine citizens limited to a monthly purchase quota of no more than $10,000.

The desire for US dollars and foreign exchange controls have given rise to the black market. In 2023, the desire for US dollars in Argentina drove the black market exchange rate up by nearly 600 times. When unable to buy US dollars, people seek alternative solutions, namely crypto. In such a financial environment, the demand for investment, inflation resistance, and financial freedom has emerged among Argentinians – about 25% of adults in Argentina hold crypto.

Crypto adoption rate: According to data from America’s Market Intelligence, cryptocurrency adoption rate in Argentina is growing at a fast pace. At the end of 2021, only 12% of Argentine smartphone users purchased cryptocurrencies, but by April 2022, this number had grown to 51%. Additionally, as high as 27% of Argentine consumers claim to be regularly buying cryptocurrencies.

Local exchanges in Argentina:

• Binance
• Bybit
• eToro
• OKX
• Gate.io

Image: Binance advertisement – Argentine entrepreneurs contribute to financial freedom in Latin America through Binance P2P

Economic Structure and Geographic Factors

Argentina has about 50% gig economy, with a high demand for cross-border payments. Being in the same time zone as North America and ranking high in education in Latin America, Argentinians have the perfect conditions to provide research and development services to North American companies.

Crypto in the Daily Lives of Argentinians

According to AMI statistics, 71% of Argentinians hold crypto for investment purposes, 67% to hedge against inflation, and 46% to achieve financial freedom.

• Everyday Life: 25% of Argentinians frequently use crypto for daily expenses and storage. Even regular housewives are adept at using cryptocurrencies for everyday shopping and paying fees to clinics, among other things.

• AMI data shows that Argentina is an important market for crypto debit and credit cards. For example, Mastercard and Binance crypto exchange have decided to jointly launch prepaid crypto debit cards nationwide. At least 51% of Latin Americans use cryptocurrencies for shopping, according to Mastercard’s statistics. Moreover, the total cryptocurrency inflow in Latin America exceeded $562 billion in 2021-2022, a 40% growth compared to 2020.

Image: The number of debit cards issued by local exchanges like Lemon, Buenbit, and Belo has grown rapidly in the past year and a half.

• Investment Storage: According to AMI’s survey data, over 50% of Argentinians purchase cryptocurrencies as an “inflation hedge” similar to assets like gold.

• Remittances: World Bank data shows that Argentina receives approximately $650 million in remittances each year. Chainalysis has found that an increasing number of Latin American immigrants use Bitcoin remittances to send money to their home countries. Now, Argentina can access the Bitcoin Lightning Network on applications like Strike, and more Argentine immigrants are enjoying the benefits of cross-border crypto transactions.

Case Study: Crypto Payment App Belo – Empowering Argentine Residents with Storage and Financial Freedom

Belo is a local payment app in Argentina that combines the advantages of web2 and web3 and integrates banking systems, fintech, and crypto payments. The receiving end allows for cross-border payments without the need for audits, enabling quick and secure fund transfers. The paying end allows users to spend crypto directly while the receiver gets the equivalent in fiat currency, similar to a debit card experience. However, opening a Belo account requires an Argentine ID/passport.

Image: Belo – Empowering Argentine residents with storage and financial freedom. Source: belo.app

Payment Side:

1. Card Payments: Users can spend any crypto (BTC, ETH, USDT), and the receiver gets the fiat currency experience. C-end users can spend any crypto and then pay in fiat currency (Argentine Pesos) in the form of a debit card, enjoying the same experience as Mastercard and receiving a 2% cashback on every purchase.

2. The payment functionality for daily expenses is diverse and highly localized. It includes features such as telephone top-up, utility bill payments, insurance payments, basic service payments, shopping services, dining services, telecom services (supporting 4 telecom operators), and more. Users can also create an unlimited number of virtual cards, similar to Wise, with each virtual card having a daily spending limit, which can be used for various subscription services.

Payment/Recharge:

1. Transfer to LianGuaiyoneer Balance

Transfer the balance from LianGuaiyoneer (Latin American online payment company) to belo with no delay. The funds will be automatically converted to USDC at the current exchange rate for storage, conversion to other cryptocurrencies, or use with Belo Mastercard. A commission of 4% will be charged for depositing funds, with a minimum amount of $5 and a maximum of 5 withdrawals per day, up to $5,000.

2. Cross-border Euro Receipt

belo supports cross-border Euro receipt through SELianGuai transfer. In the future, it will also support receiving USD payments through SWIFT and ACH transfers.

Payments received from overseas will incur a commission of 1.5% and take 1 to 4 working days to be credited. The balance will be automatically converted to USDC at the current exchange rate and can be exchanged for other cryptocurrencies. By creating an account using the Argentine issued DNI, it can be used with Belo Mastercard.

3. Direct Coin Deposit through Address

Image: belo supports cross-border Euro receipt through SELianGuai transfer, transfer to LianGuaiyoneer balance, and direct coin deposit Source: help.belo.app

Key Success Factors: belo products are created by Argentine founders, and the local team has several advantages:

1. Deep insight into users’ daily needs, with a high level of refinement. Just like what PG said, what appears smooth has cracks when magnified by ten thousand times, and these cracks are where product optimization lies, for example, automatically converting Pesos balance to stablecoin, with optional conversion periods (daily, weekly, monthly).

2. Integration of web2 + web3 account systems: Transfer funds between local banks, financial technology (LianGuaiyoneer), crypto, and other types of accounts, and achieve seamless connection between fiat and crypto. This requires strong local relationships and resource integration.

3. Africa – Large regional disparities, fragmented markets, vague crypto regulations, limited infrastructure solutions

Overview

Africa’s situation is complex, with significant regional differences among its 54 sovereign countries and a population of over 900 million. Geographically, Africa is commonly divided into five regions: North Africa, East Africa, West Africa, Central Africa, and South Africa. Africans and Latin Americans are eager to share their country’s economic and financial infrastructure with the world.

Africa’s payment and account systems:

Mobile money is a key driver of inclusive finance in the Sub-Saharan region. It promotes account penetration through mobile payments, savings, and loans.

Mobile money account penetration. Mobile money account owners are not just using their accounts for P2P payments as originally designed. In 2021, about three-quarters of mobile account owners in Sub-Saharan Africa used their mobile money accounts for at least one non-person-to-person payment.

Mobile money accounts have also become an important savings method in sub-Saharan Africa, with 15% of adults in the region (and 39% of mobile money account holders) using mobile money accounts for savings, the same proportion as those using formal accounts with banks or other institutions.

Mobile money serves as the infrastructure for financial institutions. 7% of adults in sub-Saharan Africa also use mobile money accounts for borrowing.

Image: The World Bank’s 2021 Global Findex Database found that 55% of adults in sub-Saharan Africa have accounts, with 33% of adults having mobile money accounts.

Source: The Global Findex Database 2021

Mobile money technology implementation: USSD

USSD has very low infrastructure requirements, making mobile money a very powerful payment method in Africa. USSD technology allows users to create a mobile wallet using their phone numbers, electronically store funds, and directly transfer funds, pay bills, top up airtime, and pay merchants using their mobile phones. It is accessible and usable globally, without the need for internet connectivity, meeting the needs of all types of consumers.

Image: USSD technology allows users to create a mobile wallet using their phone numbers and store funds electronically, and directly transfer funds, pay bills, top up airtime, and pay merchants using their mobile phones.

Source: Photographer

Image: USSD user flow

Source: https://www.digitalvirgo.com/mobile-payment/ussd/#down

Nigeria – 25% of Nigerians hold Crypto, another solution for accessible financial services

Nigeria’s currency is weak, and there is a significant difference between the black market exchange rate and the official exchange rate. According to the 2021 World Bank statistics, 55% of the population in this region does not have a bank account. All of this greatly stimulates the local residents’ demand for Crypto.

Image: 55% of the Nigerian population does not have a bank account in 2021

Source: The Global Findex Database 2021

Image: Cryptocurrency adoption rate in Nigeria increased by 9% YoY.

Source: Chainanalysis

Regulations are still strict, with most regions prohibiting the use of crypto payments. Binance C2C is the most commonly used channel for deposits and withdrawals.

4. Vietnam – 16M Crypto holders, abundant economic growth, young population structure

Overview

Vietnam’s crypto usage and regulatory situation are similar to China’s, with the majority of people holding crypto for speculative purposes, often trading on centralized exchanges and following influencers’ recommendations. Additionally, Vietnam has a very high crypto adoption rate, which increases the market’s attractiveness to global projects.

Foreign exchange control: Vietnam has strict foreign exchange control

Inflation: The inflation rate of the Vietnamese dong (VND) at 4-7% can be offset by bank deposits with 6-7% interest.

Vietnamese Economy and Geographic Characteristics

Vietnam has shown significant economic growth in the past decade. The average annual GDP growth rate is 6%, making it one of the fastest-growing economies in Southeast Asia.

The vibrant economy, coupled with its strategic geopolitical position, has attracted top technology companies such as Apple, Samsung, and Intel to establish their manufacturing bases in Vietnam. In addition to manufacturing, Vietnam also exports software development services to developed countries and regions.

In terms of population structure, Vietnam is one of the youngest countries in the world, with 30% of its population below the age of 25. Vietnamese youth (10-24 years old) make up 21% of the total population, which is approximately 20.4 million people. This demographic window is expected to continue until 2039.

Image: Vietnam is one of the youngest countries in the world, with 30% of its population below the age of 25.

Source: vietnamplus.vn

Vietnam has over 16.6 million crypto holders, making it the second Southeast Asian country with the most crypto investors. Approximately 31% of these investors hold Bitcoin, accounting for 17% of Vietnam’s total population. The motivation behind holding crypto is mostly speculation, resulting in a large number of local crypto trader KOLs.

There are approximately 200 active blockchain projects in Vietnam, mainly in the DeFi, NFT, infrastructure, and GameFi sectors. Famous projects include Axie Infinity, Kyber Network, and Coin98.

In terms of regulation, in 2020, the State Bank of Vietnam announced that it does not accept cryptocurrencies as legal tender or a means of payment. Crypto payments still exist in a gray area.

Local Payment

• MoMo (digital wallet) – MoMo, the most popular e-wallet in Vietnam with 20 million users, leads the mobile wallet market, followed by Mocan and Zalo LianGuaiy.

• In Vietnam, credit cards are still the main online payment method, holding a 31% market share.

5. Switzerland – Zug, the Experiment Ground for Crypto Valley

Switzerland is known as Crypto Valley, primarily because the Ethereum Foundation is registered in Switzerland. Zug is also a pilot city for crypto payments. However, in wealthy low-tax areas like Zug, crypto is not necessarily needed as a complement to the financial infrastructure. The establishment of crypto payment special zones is more experimental in nature.

In addition, Switzerland ranked 9th in the 2021 Democracy Index by The Economist, making it a suitable region for DAO practices.

Conclusion: Crypto’s Two Extremes – Speculative Target in Developed Regions vs Financial Liberation Tool in Emerging Regions

In regions where the mainstream currency (such as the US dollar and euro) is scarce (due to foreign exchange controls and insufficient liquidity), crypto finds fertile ground as a tool for local residents to store value and achieve financial freedom.

In the above four countries and regions, Argentina has the best crypto payment environment;

• Turkey has a developed banking system and a higher degree of financial freedom, but there is a ban on crypto payments looming, which is not conducive to the development of crypto payments;

• Vietnam has a good crypto ecosystem, but there is a greater speculative purpose behind holding crypto;

• Africa lacks financial infrastructure, making it difficult to open bank accounts. The currency is weak, and there is a strong demand for stable currencies and cross-border remittances. However, the lack of infrastructure and regulation have caused many crypto wallet projects to fail;

• In affluent regions like Zug, Switzerland, there is no need for crypto as a supplement to financial infrastructure. The establishment of crypto payment special zones is more experimental in nature.

In addition, financial technology products like Crypto and LianGuaiLianGuaira, mobile money, can help users obtain financial accounts without barriers.

According to data from the World Bank in 2021, 1.4 billion unbanked adults believe that lack of money, distance from the nearest financial institution, and insufficient identification documents are the main reasons they do not have accounts. This can be solved through technological solutions and financial regulatory policies, referring to the technical experience popularized in Africa through mobile money; or by directly using permissionless Crypto accounts to increase the account penetration rate of the population.

Figure: Proportion of Adults Without Bank Accounts in Each Country in 2021

Source: The Global Findex Database 2021

As two friends from Africa and Argentina said,

“Living in China, the US, JaLianGuain, and Korea, you don’t really need Crypto. They hold crypto to speculate.

People in Africa and Argentina need Crypto to live.”

“People don’t care about self-custodial, they don’t give you a shxx

People care about how to transfer money across borders easily.”

Crypto presents two different faces in different regions. It is a speculative object in developed regions and a financial lifeline in emerging regions. For residents in China, the US, Japan, South Korea, Crypto is not necessary and is mostly used for speculation and narrative. However, residents in Africa and Argentina truly need Crypto to improve their daily lives, which is unrelated to narrative.

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