According to Chainalysis’ 2022 report, Vietnam was ranked first among all countries in terms of global cryptocurrency adoption. How can Bitcoin further aid the rural communities in Vietnam financially?
Resilient characters are often built and molded during hard times. That much can be said of the population residing in emerging markets – their day-to-day lives provide a sharp contrast to the life of an average New Yorker or Parisian. That in itself should be a wake-up call for us. It signals that there is much work to be done.
In Vietnam, many living in rural areas struggle to survive. Many do not have access to even a basic financial account. To add insult to injury, ATMs are not accessible in rural areas. Needless to say, there is a high demand in Vietnam for a platform that enables people to send and receive money globally.
Cryptocurrency adoption in Vietnam soars despite ban on digital asset payments
With all this taken into account, it is almost as if Bitcoin was made for Vietnam’s demographic. In Vietnam, cryptocurrencies are prevalent despite the government banning their use as a payment method. According to Chainalysis’ 2022 report, Vietnam was ranked first among all countries in terms of global cryptocurrency adoption. In 2021, Vietnam Daily media outlet reported that Vietnam also ranked first in cryptocurrency adoption among all nations, with two independent studies citing the same findings. And what’s more, this was despite a ban issued in 2017 against the use of cryptocurrencies as legal tender in Vietnam.
Although its ban as legal tender was officialized, cryptocurrencies as an investment vehicle are still permitted. And interestingly, there has never been a practice set in place to ban crypto businesses from operating in Vietnam. It is therefore safe to say that digital assets have flourished in Vietnam and will continue to do so, despite any centralized entities’ motives to halt its growth and disruption.
What is Bitcoin mainly used for in Vietnam?
In Vietnam, the main use case for digital assets consists of trading and investing. The Vietnamese population is composed of avid traders and believers of cryptocurrencies, with the leading virtual currencies being Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB). Often, cryptocurrencies are leveraged not only for investments but also for remittances. This echoes the findings of the Forrester report commissioned by AAX regarding Bitcoin adoption in emerging markets.
Per the study, Southeast Asian Bitcoin users reported mainly using the leading digital asset for money management purposes. Bitcoin was used by many to preserve the value of funds (51%), to invest money with the aim of making gains (47%), and to hedge against potential losses or gains in other investments ( 44%).https://www.youtube.com/embed/vcPNKXDP258
Within Southeast Asia, consumer sentiment towards Bitcoin was also reported to be extremely positive, with 86% of Bitcoin users agreeing that BTC had greatly improved their quality of life. In line with this, consumers expressed that they planned to increase their use of Bitcoin over the next 12 to 24 months, with many foreseeing increasing their use of the digital asset for settling transactions, including receiving (68%) and making payments and/or transfers (60%).
Key motivations behind digital asset adoption in Vietnam
In rural parts of Vietnam, most transactions are often settled with fiat, since not everyone has the luxury of owning a credit card. In addition to this, poverty and lack of education are also prevalent in the countryside – much more than in big cities like Ho Chi Minh and Hanoi.
That is why Bitcoin is perfect. However, certain measures must be implemented first in order to achieve financial freedom through Bitcoin. Frankly, all you need is internet access and a smartphone, and you’re already one step closer to having ownership and control of your own funds. Education and research around the benefit of cryptocurrencies are also of utmost importance to achieving financial freedom. But first, these measures must be instilled and applied to rural communities in Vietnam to fuel Bitcoin adoption.
Bitcoin has the capability of onboarding the unbanked and the underbanked, who often do not have access to the same financial goods and services as middle-class men. Often, for countryside folks, Bitcoin and cryptocurrencies is not a luxury to have – it is more of a necessity.
Rather than focusing on trading cryptocurrencies, Southeast Asian Bitcoin pioneers focus on securing their funds through Bitcoin as a store of value, protecting their savings from currency devaluation and inflation. Per the Forrester study commissioned by AAX, Southeast Asian crypto users often become digital asset pioneers due to macroeconomic pressures, and dissatisfaction with existing financial services surrounding cost and security. These problems push Southeast Asian users to rely on Bitcoin to manage their financial portfolio.
To download the Forrester report now, click here.
Additionally, cryptocurrencies have the power to eliminate the need for a third-party intermediary, therefore driving down the costs of transaction fees for withdrawals and deposits. This is an attractive factor for those living under the poverty line.
VP and Head of Research and Strategy at AAX Ben Caselin echoes this and explains why cryptocurrencies are more than just an investment tool for many in emerging markets. In an interview with Forkast, he said:
“A focus on trading alone misses several opportunities that cryptocurrencies offer, including self-custody that shouldn’t be under-estimated in countries where security is at risk and banking services are thin on the ground.”
Bitcoin to help the unbanked population of Vietnam
There is much work to be done in Vietnam.
Bitcoin therefore provides an adequate solution for the unbanked, since all you need is access to internet services and a smartphone. According to data from the Ministry of Information and Communications of the Socialist Republic of Vietnam, about 73.5% of the adult population in Vietnam have access to a smartphone. The target result by the end of 2022 is for 85% of the population to convert to being a smartphone user. This is in line with how Bitcoin can help the unbanked population in Vietnam as it illustrates that the average Vietnamese still possess a smartphone, despite having limited access to basic financial goods and services.
This in itself draws the unbanked population closer to the realm of cryptocurrencies, and with that comes financial solutions. According to data from Statista, Vietnam ranks second – among ten countries- with the highest unbanked population. 69% of its citizens do not have access to basic financial services. Additionally, over 61% of its population resides in rural areas, where access to modern financial services, such as ATM machines and banks, are limited. This is where decentralized financial services come in handy.
Vietnam has certainly jumped on that opportunity, with Chainalysis revealing in a 2021 report that Vietnam ranked second globally in terms of DeFi adoption.
GameFi is all the rage in Vietnam
This trend is set to continue, as more and more of the unbanked population in Vietnam grow to recognize the extensive use cases of cryptocurrencies like Bitcoin. With the observed growth of Bitcoin adoption, Vietnam is certainly home to many who are tech-savvy and who do not shy away from technological disruptions. Just like the Philippines, Vietnam has also experienced a steady growth spurt in the GameFi industry, with many exploring the play-to-earn model of this digital realm.
How to trigger worldwide crypto adoption for better financial services
Emerging markets are without a doubt at the forefront of digital assets adoption, but what factors can accelerate cryptocurrency adoption worldwide? The answer to this is better regulatory frameworks. With better regulations and policies set in place, digital asset growth will undoubtedly soar as this will encourage retail and institutional investors to look beyond the unknown that exists in the crypto industry. Because let’s be honest, more disruption and innovation are to be expected of the digital assets industry – we have only experienced the very beginning of it.
The author Shine Li is Senior Content Manager at AAX. Focused on branding and content initiatives at the digital asset exchange, she aims to drive the adoption of cryptocurrencies and blockchain forward with engaging content. The original article can be found here.