🇧🇷 BCR Special Edition: How Brazil Stacks Up in Chainalysis' Geography of Cryptocurrency Report
👋 Hello everyone,
For this special issue of 🇧🇷 Brazil Crypto Report I’m going to dive into the Brazil-specific findings from Chainalysis’s recent Geography of Cryptocurrency report.
For those not aware, Chainalysis has long been one of the best source of on-chain data and analytics, particularly as it relates to cryptocurrency usage and adoption across different parts of the world.
The report looks at Brazil’s level of crypto adoption relative to the rest of the world and also compares and contrasts Brazil’s on-chain transaction volumes to those of Venezuela.
As two countries in the midst of very different economic situations, it’s not necessarily surprising to see the Brazil market leaning more heavily toward the speculation and investing use cases out of a place of relative luxury, while Venezuelans are using crypto more for transfers and saving out of necessity.
Spoiler alert: there aren’t any bombshell findings in here, but the data and charts are a helpful visual for understanding Brazil’s maturation as a crypto market.
Special thanks to Chainalysis for producing this report (full version can be found here) Keep scrolling and we’ll see you on the other side of the sponsor break.
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Breaking Down Chainalysis’s Geography of Cryptocurrency Report
Brazil checks in at 14th place on the 2021 Global Cryptocurrency Adoption Index, as shown in the table below and then in the heat map below that.
I won’t go super deep into the methodology beyond saying that each of the primary metrics are waited by purchasing power parity in an attempt to gauge the impact on average people in these respective countries. This is one of the reasons I like the work that Chainalysis puts out - they focus on identifying crypto adoption trends among ordinary people rather than the just the investor and trader class. So the metrics employed assess everyday activities like saving and transacting moreso than trading and speculating.
We can see that Brazil checks in at 14th on the adoption index globally. That’s pretty good high rank, though Latam counterparts Venezuela and Argentina are still ahead.
Brazil vs Venezuela
The report lays out an interesting comparison between the Brazilian and Venezuelan crypto markets - two natural resource rich countries with obviously very different political and economic conditions.
From July 2020 to July 2021, the period of surveyed for the report, Brazil saw three times the overall on-chain transaction volume, US$91bn, as did Venezuela, US$28bn. However, the size and make up of these transactions suggests two fundamentally different sets of buyers acquiring crypto for different reasons.
Brazilians appear to be using crypto primarily for speculation and wealth creation purposes, whereas Venezuelans appear to be using it more for saving and transacting - an indication of grassroots adoption driven by necessity.
As evidenced in the chart below, larger institutional entities make up significantly more of the transaction volume in Brazil than in Venezuela. 36% of overall transaction volume in Brazil stemmed from large institutional transactions of over US$10m, compared to just 22% for Venezuela. On the other hand, small retail transactions of less than US$1k made up just 4.7% of volume in Brazil compared to 6.7% in Venezuela.
None of this should come as much of a surprise. Brazil has a PPP per capita of US$15,643 while Venezuela checks in at US$5,178, meaning that these are two divergent economies with differing sets of needs that this data reflects.
🤝 Another area of divergence is found when looking at where consumers are acquiring cryptocurrencies in the two markets, as seen in the chart below.
Decentralized finance applications made up 39% of all volume in Brazil, compared to just 22% in Venezuela. The report notes:
“As we’ve learned from speaking to DeFi operators, DeFi typically draws seasoned cryptocurrency investors looking for new sources of alpha, which we’d expect to find more of in a country like Brazil with a larger, more established cryptocurrency market and stronger overall economy”
Lastly, we see large discrepancies in peer-to-peer transaction volumes. P2P barely registers a blip in Brazil (0.2%), while Venezuela’s rate (3.0%) is on par with other “less advantaged markets.”
“Even with Brazil’s much larger overall market, that means Venezuela’s raw P2P transaction volume is much higher than Brazil’s.”
This edition was a quickie but hope you found this data as interesting and useful as I did.
👋 Ate mais,
If you’re new here, the meta-thesis for this publication is that Brazil - with a population of 214 million and a US$1.8tn economy - is the most overlooked crypto market in the world. The objective is to highlight the important news and provide useful context for the estrangeiro (foreigner) English-speaking audience.
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