Bitcoin replacing a country’s government currency would be a huge achievement for cryptocurrency as well as a historical milestone. But which countries are most likely to adopt such a nascent currency?
One of the biggest drivers for adopting a cryptocurrency would be necessity. Countries where citizens experience hyperinflation, political instability, or other factors that shake confidence in a government currency typically see higher demand in alternative currencies like Bitcoin.
Countries possibly adopting Bitcoin on a major scale, for this reason, would be Iran, Venezuela and Argentina, to name a few.
Iran has made headlines with plans to withdraw EUR 300 million from German banks. Rising tension since 2015, when the US left the Nuclear Agreement, has only amplified with Trump entering the presidency.
The tension has only weakened confidence in the Iranian rial, leading to higher than market prices within Iran borders. Couple this with the US sanctions placed restricting liquidity and hyperinflation of 112%, and Bitcoin easily becomes the currency of choice for Iranian citizens.
While rial’s hyperinflation will lead to holders of the currency losing more than half of their value, this is nothing compared to Venezuela’s economic crisis.
A year ago, a cup of coffee in Venezuela was 2,200 Venezuelan bolivar (VEF), or around USD 0.20. Since then, inflation has been rampant, causing that same cup to be sold at VEF 1,400,000, for an effective annual inflation rate above 60,000%.
This has led to an extreme demand for the cryptocurrency; peer-to-peer exchange Localbitcoins shows Venezuela traders selling Bitcoin at rates of VEF 9 billion (USD 75,000) to VEF 19.5 Billion (USD 158,531). Despite these massive premiums and the cryptocurrency experiencing a correction of its own, Bitcoin is still a more attractive option than the fiat currency.
Such an extreme devaluation of the currency makes Venezuela a prime country to embrace Bitcoin wholeheartedly.
Argentina is in a similar situation and currently has the higher interest rate in the world (40%). Continually rising prices coupled with increasing unemployment rates makes Bitcoin a viable currency in this case, over the Argentine peso.
Cashless societies could also be primed for a crypto take over but cryptocurrency needs a lot of refinement before this could become a reality.
Contactless payment methods are already very convenient and with credit cards, even offer cashback rewards and customer protection. For cryptocurrency to penetrate markets like Canada, Sweden and the UK, digital currencies must not only offer similar characteristics but be much better than existing systems.
A good scaling solution needs to put in place as well, in order for Bitcoin (or whatever cryptocurrency a society adopts) to handle the number of transactions.
The third set of countries likely to adopt Bitcoin are the ones that are already open to cryptocurrency-related businesses, regulatory wise.
Countries that fall into this category include Japan, Estonia, Singapore, Australia, and South Korea. Sweden also goes into this category because despite its cashless society, recognizing Bitcoin as a legal form of payment.
Countries that are Bitcoin-friendly will typically have a higher percentage of citizens already exposed and actively using the cryptocurrency, making it far easier for Bitcoin to become widespread.
Being on welcoming turf also allows companies to come in and introduce new use case scenarios for the cryptocurrency, thus improving Bitcoin’s penetration rates.
Bitcoin is a fairly new currency and as more people begin to understand and classify it, more countries will become more receptive to the decentralized money. It will be interesting to see which country becomes to adopt Bitcoin as a dominant currency and if it’s from necessity, convenience or another reasons.
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