Ukraine, Russia and Venezuela outperformed China and the United States in adopting cryptocurrencies per capita, according to the new analysis of transactions in Bitcoin and 30 other electronic denominations between July 2019 and June 2020. “Eastern Europe may have only the fourth market in cryptocurrencies, by volume, in all the regions we analyzed, but it also has the first and second ranked country in our world index: Ukraine and Russia ”, presented Chainalysis.
The index applied by the cryptocurrency research site takes into account the population and wealth of a territory as well as the size of the market itself, “Since the objective is to highlight the countries with the highest base adoption by regular users,” he explained. “Russia and Ukraine top the list because they have disproportionate use of cryptocurrencies across all components of the index, indicating that a most of the residents have switched more of their financial activity to cryptocurrency than residents of other countries ”.
Ukraine it ranked first in the world in cryptocurrency adoption, with the equivalent of USD 8.2 billion sent and USD 8 billion received. Russia ranked second with $ 16.8 billion sent and $ 16.6 billion received, a higher figure in absolute terms but lower if adjusted according to the size of the population of each country. In both cases, he highlighted Fortune, “the the vast majority of the activity was legitimate ”, but not all: “Eastern Europe is also number one in the world in the illicit use of cryptocurrency in the markets of the dark web And in the ransomware operations”, Or electronic data hijacking for extortion purposes.
In general, all Eastern Europe concentrated 12% of global activity in cryptocurrencies in those 12 months from the boreal summer of 2019 to 2020, although there he lives less than 4% of the world’s population. No less striking – he emphasized Cryptonews– is the Venezuela’s presence in the third place in the adoption of cryptocurrencies. As different as the territories may seem, there is, however, a reasonable thread of explanation that links them: in the three countries confidence in the banking system and in the financial policy of governments is extremely low.
Coin Idol explained the case of Ukraine and Russia, which can be extended to other nations in the region: “This rate of adoption of cripto in the main post-soviet countries could be due to lack of public trust in the regime, the media and companies. The two nations live massive activities of bribery, large-scale cronyism and other types of corruption, so that people and companies not favored or harassed by the government of the day they fear their money may be confiscated or stolen at any time, and they end up investing it in crypto or making transactions or payments with cryptocurrencies, which are difficult to track compared to paper money. “
He 56% of Russians, he gave as an example, harbor negative feelings towards banks since the crises that the country suffered in the decade of 1990, after the disintegration of the Soviet Union. And for the past decade in Ukraine large banking institutionss recorded a large amount of debt until, finally, they collapsed. “As a consequence of the lack of trust in the two countries, citizens have tended to seek refuge in Bitcoin, which caused the adoption of cryptocurrencies to skyrocket. “
In the case of Venezuela, according to him blog Chainalysis, it is necessary to take into account the concomitant factors influencing economies such as those of Latin America. “Venezuela represents an excellent example of what drives the adoption of cryptocurrencies in the developing countries and the way in which citizens use them to mitigate economic instability “explained the article. “Our data show that the vVenezuelans use cryptocurrency more when the country’s native fiat money loses value due to inflation, which suggests that Venezuelans turn to cryptocurrency to preserve savings that they might otherwise lose ”.
Chainalysis added that the same pattern is observed in other Latin American countries and also “in Africa, East Asia and other places”. Many times the use of cryptocurrency is popularized up to the usual commercial transactions.
Fortune spoke with Roman Sannikov, a specialist at the Russian cybersecurity firm Recorded Future, who explained in more detail the particularities why cryptocurrency is so popular in Eastern Europe. “For a decade or so, Since the early 1990s, former Soviet citizens did not have good access to the global banking system“, said. “They got used to using alternative routes to send money internationally, including some forerunners of cryptocurrencies such as e-gold, even for mundane uses like shopping on eBay”. Electronic gold, from e-gold Ltd., a corporation of Nevis, was backed by bullion deposits from the London Bullion Market Association and allowed electronic payments and collections.
Already in 2014 A British survey citing Chainalysis revealed that the 46% of internet users in Russia used e-money regularly for your purchases, mostly through platforms such as Yandex, WebMoney and Qiwi. In comparison, even a strong market like the U.S, and even five years later, it had only a 26% electronic payment as a first choice for online shopping.
Furthermore, Sannikov stressed, “the people in Eastern Europe are also generally very tech-savvy”. If you add to that the ruble instability in recent years, you get the logical result of the popularity of cryptocurrencies there.
Another derivation of the story, Chainalysis observed, is that “payment systems developed in Russia After the Cold War they allowed major financial crimes to be committed”. Currently that could partly explain “the Unique role crime plays in the cryptocurrency economy”. Because not all cryptocurrency users are legitimate, the report underscored.
“Chainalysis found that Europe was the only part of the world where a dark web marketplace, underground site offering illegal merchandise, as drugs, to buy with crypto, was among the 10 highest volume services: Hydra was located in the sixth place, “added the analysis. That made her outnumber popular and legal exchanges like Kraken and BitMEX. “Eastern Europe contains more cryptocurrency activity linked to the darknet market than any other region ”.
The former area of influence of the Soviet Union is also a world leader in ransomware operations. Fortune described the standard practice: “Hackers lock files or computers of their victims and require a payment – usually in crypto – to unlock them”. According to the new 2019-2020 report, the 23% of all funds sent from ransomware addresses were funneled to Eastern Europe.
“Although we cannot be sure why this happens, security researcher Brian Krebs attributed the feats of Russian piracy specifically to greater emphasis on computer education for young peopleChainalysis concluded. According to Krebs, more than double of Russian high school students take the national computer science exam in compared to americans. “The higher prevalence of computer science education, combined with fewer economic opportunities — and, in some cases, the government sponsorship of piracy activities– “could explain why Eastern Europe accounts for such a high proportion of ransomware activity.”