Crypto Use Cases in Developing Economies

Developing Economies: A Proven Use Case for Crypto

Source: Conor Ryder, CFA, Kaiko Research

 

 

Bottom line:

One of crypto’s biggest use cases: Financial Freedom

Crypto offers a path away from wealth destruction, but close to Wealth Preservation.

 

 

 

Use Case 1. Brazil

Wealth Protection

• Brazilian Real (BRL) devalued by over 200% during last 10 years = Damage to savings in domestic currency 
• Capital controls by Brazilian government on foreign currencies.
  • Brazilian bank accounts can only hold Brazilian Reals.
• Brazilians became desperate for an alternative to protect their savings. = Stablecoins
  • Stablecoins eneable Brazilians to participate in global markets and tie their savings directly to the US Dollar.

• Stablecoin trading volumes on BRL pairs: 50%
  • Volumes on USD-denominated pairs: 5%
  • USDT has increased its share of total BRL-denominated volume by nearly 20% at the expense of altcoins
  • Brazilians = Prefer stablecoins(safety) over the altcoins(speculation).

• According to a report by Chainalysis, roughly 41% of Brazilian adults own some cryptocurrency.
  
  • Brazil: 66% saying that cryptocurrency is the future of money. 
  • US: 23% 

Source: Kaiko Research

 

Source: Kaiko Research

 

Use Case 2. Turkey

Wealth Protection

• Turkish Lira, significantly devalued in the last number of years due to a record high inflation.
  • September inflation YoY: 80%
• Turkish people are moving to crypto to protect their wealth.
• Turkey: Faster currency devaluation
  • BTC/TRY: Above 15% profit range when quoted in Lira
  • BTC/USD: Below -50% loss range
  • BTC/BRL: Below -50% loss range
• Stablecoin trading volume: 40% in Turkey’s most popular exchanges, Binance and BTCTurk.

Takeaways

1. Rising USDT dominance since the Lira experienced major devaluation in 2021.
2. Turkish's huge interest on altcoins as evidenced by the share of “Others” volume (48%).

Source: Kaiko Research

 

Use Case 3. Mexico

Remittance payments

• Mexico: Second largest recipient of remittances in the world, according to 2021 statistics
  • Remittance fees as high as 12%
• Huge opportunity for crypto companies by offering lower fees to customers

Ripple (XRP)

• Since 2022, XRP's market share of trading vs BTC and ETH on Bitso grew from 36% to 77% of volume

Source: Kaiko Research

 

 

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Developing Economies: A Proven Use Case for Crypto