5 Countries Leading Blockchain Adoption
Countries are leading blockchain adoption for various reasons, including recognizing its potential to transform multiple sectors of the economy, promote innovation and economic growth, and create a favorable regulatory environment to attract blockchain businesses.
Types of Blockchain Communities Leading Blockchain Adoption
Blockchain community refers to groups of individuals, organizations and companies involved in the development and use of blockchain technology. These communities are formed to share knowledge, collaborate on projects and promote the use of blockchain technology.
There are different types of blockchain communities, including:
- Developer Community: These groups of blockchain developers work together to create protocols, programs, smart contracts, and other blockchain-based projects.
- Industry communities: Communities developed around specific industries or sectors, such as banking, healthcare and supply chain management, are known as industry communities. Members of these communities work together to create blockchain solutions that can address the particular problems faced by their respective sectors.
- Community of users: Individuals who use blockchain-based goods or services make up these communities. They exchange information and provide feedback to improve the usability and functionality of blockchain goods.
- Investment communities: These groups have grown around blockchain-based businesses such as cryptocurrency or startups that use the technology. Members of these communities engage in due diligence projects, exchange knowledge and views on potential investment opportunities.
- Social Impact Communities: These groups are focused on leveraging blockchain technology to solve problems in social and environmental areas. Members of these communities work together to develop blockchain solutions that can create a more just and sustainable world.
Countries leading blockchain adoption
Blockchain technology can potentially increase the productivity, security and transparency of a range of industries, reduce costs and improve customer experiences. Therefore, countries are investing in developing and using blockchain technology to address various societal and economic concerns.
El Salvador
El Salvador has emerged as a global pioneer in adopting blockchain technology after becoming the first nation to recognize Bitcoin as legal tender. In June 2021, El Salvador’s government established a law recognizing Bitcoin as a legitimate payment method for goods and services alongside the US dollar, the country’s legal currency. Through this work, the government aimed to prioritize financial inclusion in the country, where 70% of adults do not have a bank account.
The acceptance of Bitcoin (BTC) could make El Salvador a desirable location for international investors, an advantage mentioned by the country’s president, Nayib Bukele. To encourage the widespread use of Bitcoin, the government implemented several actions. The $150 million trust fund of the state development bank – Banco de Desarrollo de El Salvador – was approved by the Legislature’s Finance Commission in August 2021. It was created to allow the automatic conversion of Bitcoin into US dollars, enabling easy exchange between the two currencies for Salvadorans.
The nation debuted its Chivo (slang for “cool”) wallet in September 2021. Each wallet contained $30 in BTC. The government has established a network of crypto machines (ATMs) in El Salvador and 50 other US cities, making it easier to send money to their families.
In 2022, the crypto market crash badly affected the price of Bitcoin, raising concerns for the Central American country that had invested so much in the cryptocurrency. However, Bukele showed no concern and on the contrary promised an average dollar purchase of one BTC per day to confirm continued and full support for the digital asset.
Related: What is dollar cost averaging (DCA) and how does it work?
In January 2023, El Salvador passed the Digital Asset Issuance Law, establishing the parameters of a “Volcano Bond” – bonds backed by Bitcoin.
Portugal
Portugal has proactively created a favorable environment for blockchain and cryptocurrency startups. The nation has actively used blockchain technology in public services, healthcare and supply chain management. The Blockchain Panorama platform – which aims to encourage information exchange and collaboration between participants in the blockchain business – was introduced by the Portuguese government in 2019.
Since then, Bitcoiners and crypto enthusiasts have flocked to the region, attracted by a pro-crypto environment that offers the opportunity to use BTC in real life – paying bills and taxes with the cryptocurrency. Merchant adoption has also increased, with Spanish startup BitBase working to bring more Bitcoin ATMs and stores to major cities.
In 2021, the Portuguese government approved a decree establishing the basic conditions for the creation of technological free zones (ZLT) to promote technology-based innovation. That includes helping the implementation of blockchain technologies through experimentation and testing.
Since then, the country has started to adopt stricter rules on crypto taxes to follow the legislation of other European countries. In 2022, the government announced the reversal of a long-standing tax law that excluded crypto gains based on the assumption that they are not legal tender.
Singapore
Singapore is a leading country in blockchain adoption, with the government investing heavily in blockchain research and development. Due to its favorable regulatory climate, Singapore has become a hotspot for initial coin offerings (ICOs), with many blockchain companies choosing to incorporate there.
The country’s financial regulatory body, the Monetary Authority of Singapore (MAS), is leading the country’s development of governance structures, technical standards and infrastructure to encourage the use of blockchain and cryptocurrency. Its primary role is to monitor and mitigate risk to the crypto industry without impeding technological innovation.
In 2021, crypto exchange Independent Reserve conducted a survey across all demographics of Singaporeans, revealing that 43% owned crypto. In 2022, a new survey by the same company highlighted that the population’s interest, trust and confidence in the future of cryptocurrency and blockchain was very high, and 58% of the population interviewed perceived Bitcoin as an investment asset and a store of value.
Malta
Along with Singapore, Malta started promoting blockchain adoption as early as 2017, when it gained a reputation as the “blockchain island” after drafting some industry regulations to speed up the growth of blockchain technology. In 2018, the Maltese Parliament passed three laws providing a blockchain and digital currency regulatory framework to regulate ICOs, digital assets, digital currencies and related services.
Regarding the taxation of crypto-assets, Malta specified that electronic money and utility tokens are not listed as capital assets in the Income Tax Act, and excludes them from capital gains tax. In contrast, securities and virtual financial assets are considered capital assets and are subject to taxation.
In late 2021, the Maltese government included blockchain and artificial intelligence (AI) in their commercial guide prospectus and framework to commit to promoting the technology. The aim is to motivate international companies to establish themselves in Malta for the testing and operation of blockchain technology.
Malta has not yet achieved “blockchain island” status. Consistent and increased international scrutiny of the island’s domestic political and economic events led the leaders to pursue more conservative policies towards the industry than those previously promoted.
However, many blockchain and crypto-focused businesses are flourishing. For example, companies using blockchain in the supply chain of products, such as wine and olive oil, are a concrete reality on the island.
Related: How is blockchain technology used in supply chain management?
United Arab Emirates (UAE)
In April 2018, the UAE government launched the Emirates Blockchain Strategy 2021 to become a smart region, with public services and private businesses powered by blockchain for more efficiency.
The region has always had a reputation for being a hotspot for digital innovation, and blockchain allows governments and businesses to save time, money and effort while allowing people to use a transparent and decentralized system. The UAE government is pushing for policies that welcome innovation in the metaverse and non-fungible token (NFT) markets.
Related: Regulation of cryptocurrency in UAE and Dubai Virtual Assets Law
The remaining emirates that form the United Arab Emirates are aligned with Dubai and Abu Dhabi to implement initiatives and regulations to promote blockchain and crypto businesses in the region. In February 2023, the Emirate of Ras Al Khaimah (RAK) announced the creation of the first free economic zone fully dedicated to virtual assets and digital companies, called RAK Digital Assets Oasis or RAK DAO.
Other countries
The digital asset market – primarily blockchain and cryptocurrency – is growing worldwide. Neglecting some other regions that have become industry hotspots for innovation and investment would be unfair. Here are other top countries where adoption has grown tremendously in the last couple of years, encouraged by a crypto-friendly approach.
USA
The US is home to the most extensive crypto ATM network. It is the highest contributor to the Bitcoin hash rate, suggesting that blockchain and crypto adoption is booming in the country. Although there is not yet a consistent legal approach at the state or federal level, the government is trying to develop a more precise cryptoregulatory framework to encourage adoption and investment.
Switzerland
With the city of Lugano aiming to become Europe’s cryptocurrency capital, Switzerland is one of the most exciting countries to watch in the blockchain space. The small European country welcomed blockchain and crypto payments back in 2016, with a pro-crypto regulatory framework encouraging businesses to settle and invest in the area.
South Korea
South Korea has experienced a growing interest in blockchain and cryptocurrency, and has become a significant player in adoption in Asia. The country has taken a proactive but cautious approach to the regulation of digital assets to ensure the safe operation of the market for both consumers and entrepreneurs. Careful attention is paid to anti-money laundering and combating the financing of terrorism laws to ensure market transparency and security.
Japan
Japan has always been at the forefront of Bitcoin and blockchain adoption since many Japanese were mining Bitcoin even when the cryptocurrency had little value. The first and most prominent Bitcoin exchange was Japanese-based Mt. Gox until it was hacked and ceased operations.
Failed Mt. Gox inspired the government to take action to protect consumers while maintaining a leading role in the world’s cryptocurrency market. In 2022, the Japanese government awarded seven mayors with NFTs for their achievements, giving more official status to the technology and encouraging its adoption.
Nigeria
A Google Trend data analysis revealed that the use of blockchain and cryptocurrency had experienced a clear rise in Nigeria, especially after the 2022 crypto market crisis when the country emerged as one of the most crypto-curious nations. It also appeared among the top countries with a high global crypto adoption index, according to a report by crypto data analysis company Chainalysis.
The Nigerian population faces an uncertain domestic situation, with high inflation and the weakening of the country’s fiat currency fueling an acceleration in the use of digital assets. The government seeks to implement a fair regulatory framework to protect consumers while encouraging innovation. In October 2021, the Central Bank of Nigeria launched eNaira, a blockchain-based digital central bank currency (CBDC) linked to the country’s national currency, the naira. Nigeria is one of very few countries to fully roll out a CBDC to the population, along with the Bahamas and Jamaica.
