Professor Coin: What Are the Driving Factors for Global Cryptocurrency Adoption
Cryptocurrency adoption varies significantly worldwide, as a series of recent academic studies have demonstrated.
Professor Andrew Urquhart is a Professor of Finance and Financial Technology and Head of the Finance Department at Birmingham Business School (BBS).
This is the fifth issue of Professor Coin's column, where I will bring important insights from published cryptocurrency academic literature to Decrypt readers. In this article, we will examine cryptocurrency adoption.
Cryptocurrencies are clearly growing in scale, scope, and product types, collectively indicating their increasing importance and influence on the traditional financial system.
Initially traded only by a few computer programmers, more and more investors have begun to pay attention to this innovative asset class since the launch of Bitcoin futures in 2017 and subsequent derivatives, up to the launch of Bitcoin spot ETF in January 2024.
The core of the Fourth Industrial Revolution is artificial intelligence, information and communication technology, Internet of Things, and blockchain - PwC predicts that blockchain will increase global GDP by $1.76 trillion by 2030.
China has listed blockchain as one of its top five priorities, while potential gains in countries like Germany, Japan, the United Kingdom, and France exceed $50 billion. The recent increase in investor interest may have permanently changed the user base, and this adoption may vary by industry, region, regulatory, and political domains. In this column, I will explore the driving factors of global cryptocurrency adoption.
Recent studies examining the relationship between certain macroeconomic national development indicators and cryptocurrency deployment in 137 countries interestingly found that countries with higher education levels, human development, democracy, regulatory quality, and GDP have higher cryptocurrency adoption rates.
Countries with lower economic freedom and higher corruption levels have lower adoption rates, indicating that more open and free countries have adopted cryptocurrencies. This suggests that cryptocurrencies are not adopted by corrupt, less-educated countries, but by more open, democratic, and free nations.
Trust, but Verify
Now we know that economic and national variables affect adoption rates in different regions, but what about trust? Trust is a social construct and belief that promotes economic growth, financial development, and financial inclusivity.
Trust has declined in recent decades - as European Central Bank President Christine Lagarde said, "In this era of declining trust, the financial sector ranks last in public opinion polls."
Research by Jalan et al. (2023) supports Bhimani et al. (2022), indicating that countries with higher trust levels show more interest and higher adoption rates of cryptocurrencies, confirming the importance of trust in financial market growth.
In a more detailed study, Saeedi and Al-Fattal (2025) explored which aspects of trust are important for cryptocurrency adoption, finding that women place more importance on regulatory trust than men, while social trust is more important for older participants.
DeFi Adoption
What is the difference between cryptocurrency adoption and decentralized finance (DeFi) adoption? A recent study by Nguyen and Nguyen (2024) suggests that high cryptocurrency adoption rates may be jointly driven by high population, high inflation, low social connections, democracy, and uncertainty avoidance, while high human development, high population, and high financial development seem to explain a country's DeFi adoption rate.
But what impact does adoption and different types of adoption have on cryptocurrencies? A recent study by Rzayev et al. (2025) indicates that early cryptocurrency adopters drive cryptocurrency returns and improve price efficiency, while later adopters lead to more noise in prices and efficiency. Therefore, early adopters are key drivers for any cryptocurrency.
Thus, academic literature indicates that cryptocurrency adoption varies significantly worldwide, but some key economic and national indicators can explain adoption. Moreover, the type of adoption affects cryptocurrency performance, suggesting that not all attention is equal.
