Cryptocurrency Adoption Continues to Accelerate in MENA

The Middle East and North Africa, known as MENA, continue to adopt cryptocurrency. Blockchain researcher Chainanalysis reports that the region experienced a 48% increase in the volume of cryptocurrency for the year ending June 2022. It's not only the emerging areas accelerating cryptocurrency volume and adoption growth. According to the study, North America saw a 36% growth in cryptocurrency adoption. MENA is one of the smallest crypto markets, so the increase of 566 billion in cryptocurrency volumes during the 12 months ending June 2022 provides the backdrop for why it accelerated so quickly. According to the Chainanalysis study, three different MENA countries placed in the top 30 in global cryptocurrency adoption.

What is Cryptocurrency Adoption?

Cryptocurrency adoption is the process of accepting or embracing digital currencies. Adopting cryptocurrency would be like adopting any other new technology for some; it's not if cryptocurrencies will be used as a global payment mechanism, it's when. In a recent study by Finder.com, approximately 27 million Americans own cryptocurrency, with nearly 45% of those owning bitcoin. The adoption growth could accelerate once the total number of Americans reaches 10% of the population. Two examples of such growth would be the adoption of the internet in the 1990s and the adoption of smart phones in 2007. The adoption process takes time but can snowball and become mainstream once it accelerates.

Adoption Soars in the Middle East and North Africa

Emerging countries have started to experience an acceleration in the adoption of cryptocurrency volumes. While MENA saw the most considerable growth at 48%, Latin America showed the second most significant growth during the same period. Latin American growth surged at 40%, followed by North America, Central America, Southeast Asia, and Oceania at 35%. Of the MENA countries, Egypt experienced enormous growth, rising 221.7%, followed by Saudi Arabia, Lebanon, Morocco, UAE, and Turkey. In some MENA countries, the rise in cryptocurrency adoption has come in tandem with volatility in their fiat currencies. For example, the increase in cryptocurrency adoption happened in Turkey when its currency was experiencing severe devaluation.

What are the Benefits of Cryptocurrency Adoption?

There are several benefits to early adoption. When new technologies become available, those who try them can help shape to direction of the technology. Early adopters tend to be trendsetters, influencers, and innovators. When you adopt a product or technology early, you see if the processes can increase business flow or efficiencies. Your feedback can help shape the development of the product and help generate product advances. Cryptocurrencies also seem to portray a description of trust amongst their users. The transparency aspect of a decentralized coin makes some people feel that the currency is not getting manipulated.

What are the Uses of Cryptocurrency?

Cryptocurrency is a digital asset formed in a decentralized structure. The nature of the system allows the formulation of the currency to be outside the purview of government control or a central regulator. There are several benefits which include less expensive and more efficient money transfers. The disadvantages include a volatile exchange rate relative to fiat currencies.

Many cryptocurrencies run on a blockchain. A blockchain is essentially an online ledger that is not updated. When changes are made to the blockchain, a new block is not updated. Blockchain technology has many uses, including supply chain, crowdfunding, and online voting. Blockchain transactions cannot be deleted and are considered immutable.

There are two general types of blockchain verification. There is proof of work and proof of stake. A proof of work mechanism requires that blockchain verification solves a complex problem, and then the verifier can earn compensation for verifying a transaction. In a proof of stake environment, the verifier needs to own a certain amount of the underlying cryptocurrency to be able to confirm a transaction.

Why Might Cryptocurrency Be Popular in MENA?

Cryptocurrency is likely favored in emerging markets because of remittances. There is approximately $700 billion transferred annually by families in small increments. These small denominations are expatriated by families to their families back home. High fees and payout delays make this business perfect for cryptocurrency disruption. Smaller payments and quick payouts make cryptocurrencies a perfect payment mechanism for individuals sending money back home. In MENA, the payment processing arena is ripe for disruption.

Additionally, in countries where the currency is less than stable, individuals are more likely to seek an alternative. In Turkey, for example, there was an increase in cryptocurrency volumes as the fiat currency came under pressure and was devaluated. Higher currency volatility versus more stable currencies could likely generate increased demand for cryptocurrencies.

The Bottom Line

MENA has seen an acceleration in the volume of cryptocurrencies traded in the 12 months ending June 2022. A recent study showed that MENA had a 48% increase in volumes ahead of other emerging markets and North America. Egypt saw the most significant increase in volumes of cryptocurrencies. Cryptocurrencies might be popular in MENA because of the lower fees related to payment processing. Digital coins also might be less impacted by political turmoil within the region. Three MENA countries were placed in the top 10 counties that experienced the most significant increase in the volume of crypto trading. 

The adoption of cryptocurrencies goes beyond MENA. In the United States, 27 million people own cryptocurrencies. Once the adoption of cryptocurrencies reaches 10% of the population, it will likely accelerate further. There are several pros and cons associated with the adoption of cryptocurrency trading. Those who are first to adopt cryptocurrencies will have a more significant influence on how it is used. Eventually, a less volatile digital currency and lower payment fees may increase the disruption in MENA and the rest of the world.

 

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