Despite the strong devaluations of crypto assets in the last 14 months, Brazil has advanced seven positions and become the seventh largest cryptocurrency market in the world. The information is from a study by Chainalysis, a consulting firm specializing in blockchain.

The Brazilian advance goes against the grain of cryptocurrency trading in the world, especially after the second quarter of 2021, when Bitcoin and other altcoins plummeted.
“Still, it is important to note that global adoption remains well above pre-boom 2019 market levels. The data suggests that many of those attracted by the price increases in 2020 and 2021 have remained and continue to invest a significant portion of their wealth in digital assets,” Chainalysis says.

In relation to the countries with the largest movement of funds, Brazil also stands out. The Chainalysis report informs that the country is only behind China, India, USA and Vietnam, respectively.

The consulting firm explains that this phenomenon occurs due to the high participation of institutional investors and companies, such as investment funds and cryptocurrency startups. These companies handle large volumes of digital currencies.

When considering only retail transactions, Brazil falls to seventh place.

Brazilians see cryptocurrencies as investments
Chainalysis reports that Brazilians see cryptocurrencies as a form of financial investment. This is in contrast to other South American countries such as Argentina, Colombia and Ecuador, which are adopting cryptocurrencies as digital currencies for financial transactions. The inhabitants of these regions do this to escape the intense volatility of their local currencies.

As a result, the country ranks 113th in peer-to-peer (P2P) trading, which involves transactions between individuals. Brazilians have a preference for making payments through other means, such as Pix.

Emerging countries dominate crypto-activities
The study also informs that emerging countries dominate the cryptocurrency adoption rate. Vietnam was the country with the highest adoption of digital currencies in the economy and in the daily life of the population. The Asian nation does not have a cryptocurrency as an official currency, as does El Salvador.

Ukraine also increased its cryptocurrency transactions due to the war against Russia, jumping from fourth to third place.

Of the 20 countries with the highest cryptocurrency turnover proportional to their economy, 18 are emerging markets. According to Chainalysis, these markets prefer to use bitcoin and stablecoins to preserve their savings from inflation and the volatility of local currencies, as well as the ease of sending funds to their relatives abroad.

US and China increase number of crypto transactions
Like Brazil, the United States has a low volume of P2P transactions, ranking 111th. However, the country has risen from eighth to fifth among the largest crypto countries due to higher transacted volumes, including retail, and in decentralized finance applications, such as digital currency-based lending.

China also went from 13th to 10th even as the government banned cryptoactive mining and transactions in September 2021. “Our data suggest that the ban was ineffective or poorly enforced,” the study cited.

Cryptocurrencies: what are they?
Cryptocurrencies are decentralized digital currencies, meaning that they are not controlled by any particular institution or country.

They are created on the blockchain network responsible for securely storing many different types of information.

For example, financial transactions, records, and data about the people involved in those transactions.

The value of these cryptocurrencies generated on the blockchain can in some cases be converted into other currencies, such as dollars or reais, so that they can be used as currency of exchange to buy products and consume services.

As its relevance grows, more and more companies are interested in receiving cryptocurrencies as a form of payment. But volatility is a point against this use.

By Lucinélha Feijó