Blockchain analytics firm Chainalysis recently published a preview of its upcoming Geography of Cryptocurrency Report. Their data shows that the Eastern European crypto markets rank as No. 4 globally in terms of total transaction volume. As per the report excerpt, Ukraine holds the top spot for crypto adoption in the region, followed by Russia. The firm explained that the reason behind the intense level of crypto adoption in Eastern Europe is an emphasis on strong grassroots-level adoption of crypto.
Chainalysis points out that although transaction volumes for countries such as the U.S. and China are bigger, Russia and Ukraine still rank higher. The reason for this is that adoption in the Eastern European nations is more robust based on criteria such as population and market size.
According to the firm’s Global Crypto Adoption Index, Russia and Ukraine have a “disproportionately high cryptocurrency usage across all components of the index.”
This metric indicates that more folks in those countries are shifting from traditional financial transactions to crypto as compared to residents of other states.
Other nations in the region, specifically Belarus, ranked high for their surging level of peer to peer (P2P) crypto trading activity.
Lack Of Trust in Traditional Banks Drives Adoption
Increased adoption in Eastern Europe may be attributable to dictatorial regimes that erode the trust of citizens in the government and the media.
“Bribery, cronyism, and other forms of corruption are common in Russia and Ukraine, and it’s common knowledge that funds can be seized from businesses and private citizens who find themselves out of favor with government officials.”
Banks also face a lack of trust, prompting more individuals to opt for decentralized and permissionless digital assets for transactions and investment.
The distrust of banks and government-led financial policies has mainly fuelled the outsized adoption Bitcoin (BTC). Many people use BTC as a store of value and a way to circumvent the government-controlled banking industries in Russia, Ukraine, and other Eastern European nations.
Russia’s largest bank recently attempted to curtail the explosive adoption of crypto by proposing the development of a digital token pegged to the Russian Ruble.
The proposal came after president Putin approved a law that prohibits the use of crypto as a means of payment in August 2020.
Outsized Darknet Market Booms
The Chainalysis report highlights that exchanges such as Binance and Bitfinex as well as P2P platforms like Paxful foster accelerated crypto adoption in Eastern Europe.
Unfortunately, darknet site Hydra also ranks among the top ten market places for crypto transactions. Data shows that Hydra generated $1.2 billion in crypto-related revenue between June 2019 and July 2020.
This staggering amount of revenue shows that more eastern Europeans could be procuring illicit goods, according to Kim Grauer, head of research at Chainalysis.