Crypto adoption reached a ‘tipping point’ in 2021

Cryptocurrencies reached a “tipping point,” last year, according to crypto platform Gemini’s 2022 Global State of Crypto report, “evolving from what many considered a niche investment into an established asset class.”

Crypto’s market capitalisation hit almost $3 trillion in 2021 as Bitcoin reached an all-time high of $68,000 – making crypto the best performing asset class in the last decade.

According to Gemini, 41 percent of crypto owners surveyed globally purchased crypto for the first time in 2021. One of the report’s key findings is that inflation and currency devaluation were powerful drivers of adoption, particularly in emerging markets.

Slightly more than half of respondents in Brazil, India (54 percent) and Hong Kong (51 percent) made their first purchases last year. Roughly 45 percent did in the US, Latin America and Asia Pacific, and 40 percent in Europe.

Compared to the global picture, Europe had the lowest crypto ownership rate at 17 percent.

Gemini’s study surveyed nearly 30,000 adults across 20 countries between November 2021 and February 2022, exploring the attitudes, drivers and adoption of this new asset class and how it’s being deployed across the world.

41 percent who do not currently own crypto said they are “crypto-curious” – or interested in learning more or report they are likely to acquire cryptocurrency in the following year. Ireland led all “crypto-curious” countries, with 58 percent, followed by Germany (53 percent), Colombia (50 percent) and the UAE (49 percent).

Nearly 80 percent of respondents who reported owning crypto last year said they chose to purchase digital assets for long-term investment potential, with more than half of crypto owners in Asia Pacific (56 percent), Africa (53 percent), and the Middle East (56 percent) reportedly actively trading crypto to achieve profits.

Overall, crypto ownership is highest in Brazil and Indonesia, with around 41 percent owning crypto assets in each country, followed by the UAE and Singapore with 35 percent and 30 percent respectively. That number is 20 percent in the US and 18 percent in the UK.

Among those who plan to purchase crypto for the first time in 2022, 47 percent were women, suggesting the gender gap in crypto ownership is primed to narrow. Among crypto owners, women in developing countries led the way representing at least half of Israeli (51 percent), Indonesian (51 percent) and Nigerian (50 percent) respondents.

Key drivers for adoption

The report found that respondents in countries that have experienced over 50 percent devaluation of their currency against the US dollar in the last decade were more than five times as likely to say they plan to purchase crypto in the coming year.

These include South Africa (32 percent), Mexico (32 percent), India (40 percent) and Brazil (45 percent). In the US, 40 percent of crypto owners see it as an inflation hedge, while only 16 percent of all American respondents say it is a protection against inflation.

Meanwhile, crypto ownership among Black Americans nearly doubled from 9 percent in 2020 to 17 percent in 2021. Similarly, the number of Hispanic American crypto owners increased from 2020 (13 percent) to 2021 (22 percent).

People living in inflation-afflicted markets were also more likely to view crypto as the future of money. Brazil (66 percent), Nigeria (63 percent), Indonesia (61 percent) and South Africa (57 percent) had the strongest support for this view, while the US (23 percent), Australia (17 percent) and Norway (15 percent) had the weakest.

The majority of crypto owners in almost every region said that owning crypto is a good asset diversification strategy, including 78 percent in Latin America.

There are regulatory questions surrounding crypto globally, particularly in the Asia Pacific and Latin America regions, where 39 percent and 37 percent of respondents respectively said that legal uncertainty, tax questions and general education deficit could affect adoption.

About 56 percent of respondents in Africa and 51 percent of those in Latin America said more educational resources to explain cryptocurrencies were needed.

Globally, respondents were nearly twice as likely to say that additional education would help them get started with crypto (40 percent) compared to recommendations from friends (22 percent).