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P2E games, protection against inflation and crazy bank commissions: how and why they use crypto in different countries

Published
January 29, 2024
Updated
January 29, 2024
< 3 min read

Intro

Over the past few years, cryptocurrency has gained significant popularity in the world. In some countries where payment restrictions exist, crypto remains the only bridge for private finance. Swaps has many users around the world and our team regularly conducts research on the penetration and reasons for the use of cryptocurrency in various countries. By understanding the audience’s motivation to use crypto, you can improve or customize the product or make profitable offers for users. In this article we will share interesting cases.

What is happening with crypto in the world

It seems like everyone is talking about cryptocurrencies now, but in fact, the rate of adoption of cryptocurrencies during the 1st half of 2023 has decreased slightly. This can be explained simply: during Covid times, there was an explosive growth of cryptocurrencies, and their use became exponentially wider - the same processes occurred with other digital technologies. And in the last 1-2 months we have seen the return of positive dynamics of interest in the profit and an increase in the value of tokens. This was the case in 2021, when interest in cryptocurrency grew even stronger: the value of many assets increased many times, new technological projects appeared, and meme coins made a lot of noise.

In the first quarter of 2023, interest in crypto grew again. It was expected that the trend would continue, but in the end it happened; by the end of the year we are seeing a multiple increase in interest in cryptocurrency. Chart: Chainanalysis

Globally, the situation with crypto looks like this: countries with developed economies have already made crypto a part of everyday life. Residents invest in digital assets, buy and sell in crypto, save and transfer money around the world.

In developing economies, there is still a huge interest in crypto: it opens up great opportunities for local residents. With crypto, they can earn above the market, work with foreign companies, and withdraw savings when moving. For this reason, the markets of Asia and Africa are now growing faster than North America, Europe and the CIS.

Index of perception of cryptocurrencies in the world: the highest indicators are in developed countries and where the market is growing most actively. Index: Chainanalysis

This is a general situation, let's move on to interesting cases. They show how many different use cases and opportunities crypto opens up.

Vietnam: Bypassing Commissions and Taxes

In Vietnam, as many as 17% of the population uses cryptocurrency - almost every fifth resident of the country. Over the past few years, the country has been ranked first or second in the global cryptocurrency adoption index. This is not surprising: the local currency is very unstable, so the Vietnamese protect their savings. It’s just that before they invested in dollars, now they invest in bitcoins.

Vietnamese dong to dollar exchange rate chart: the local currency has been falling for ten years, so residents of the country are trying not to save in it.

Volatile currencies are not the only reason why Vietnamese are switching to crypto. For them, decentralized finance is also a way of profitable and accessible trading.

Because many Vietnamese live in rural areas, they do not have access to banks. Approximately 61% of local residents are not covered by the financial infrastructure (data tradingeconomics.com) - so instead of classic banks, they are switching to crypto. Card transfers cost a lot of money: the World Bank estimates that on average banks charge a 7.2% commission per transaction (data worldbank.org). At the same time, a transfer from one crypto wallet to another may not be subject to additional fees at all.

The place of large banks and the state was quickly taken by private traders, who placed exchangers on the streets: using machines you can cash out, deposit and transfer currency with a lower commission. Photo: Vietnam Plus

Enterprising Vietnamese also have an indirect reason for using crypto. The country has a progressive taxation scale: the higher the income, the higher the taxes. They reach 35% at high turnover, but if you add cryptocurrency as a means of payment, the income taken into account can be reduced. This gray scheme allows you to circumvent the law, but cunning businessmen are often caught and fined.

In resort countries, crypto makes life easier for tourists

The number of crypto exchangers (crypto ATM) in the world has significant coverage, especially in tourist locations where competing crypto exchangers may be located right across the road. To avoid hassle with banks, travelers transfer money into cryptocurrency and then cash out through a crypto exchanger.

Crypto ATM world map (data coinatmradar.com)

Often, such exchangers turn out to be more profitable for tourists than transactions through a bank. For example, Turkish Denizbank, depending on the ATM, may request up to 10% commission for withdrawing cash from foreign cards. At the same time, local crypto exchange NakitCoins charges a flat commission: 3.5% on amounts up to $10,000 and lower if you cash out more money. Crypto exchangers in tourist countries look more attractive than banks: as a rule, you don’t have to stand in a long line to exchange with other people.

Residents of Africa and the Middle East bypass restrictions

Iraq, Iran, Egypt, Saudi Arabia and many countries in Africa and the Middle East have been under sanctions from Western countries for many years. In these conditions, big business is looking for workarounds: creating offshore companies and subsidiaries through which they funnel money. And ordinary residents have to pay for familiar services in cryptocurrency.

Among the sanctioned countries, Iran has advanced the most in using cryptocurrency. The government even issued a decree in 2019 that recognized cryptocurrency mining as a legal sector of the economy. Iran became the first country to use cryptocurrency as a reserve to pay for imports and exports.

This is what an average Iranian mining farm looks like: components for crypto mining are stored in metal containers right in the middle of the desert. Photo: The New York Times

In 2021, about 4.5% of all bitcoins mined came from Iran (data reuters.com). Local residents mine them for cheap electricity, and use them for purchases in foreign services and for trips abroad.

Germany uses cryptocurrency for investment

Europeans generally view cryptocurrencies positively. The UK is in the top 15 countries on the Crypto Perception Index. This helps to store and increase savings, pay for goods and services around the world. In northern European countries, cryptocurrencies are used mainly for investment: in some countries, more than 10% of residents invest money in them. Governments are adapting to the trend and modernizing their laws.

Since 2013, German legislation began to regulate cryptocurrencies, and in a very liberal manner. Initially, the German Financial Supervisory Authority recognized Bitcoin as a digital currency and introduced a classification of digital assets. The status of cryptocurrencies was in limbo until 2017, when they were officially recognized as a financial instrument.

Now in Germany, mining is not subject to taxes, and blockchain companies pay them on the same basis as other businesses. For individuals, everything is also simple: transactions with cryptocurrency are exempt from VAT and are not subject to capital gains tax.

Due to their legal status and the absence of taxes, cryptocurrencies have become a popular investment in Germany. Approximately 5% of the country's population owns digital assets, many use them every day - for this purpose, almost a hundred exchangers have been installed in different cities.

Cryptocurrencies are popular not only in Germany, but also in other European countries. For example, in the Netherlands there are 0.1299 search queries per capita on this topic

Residents of Thailand make money in P2E games

Thailand is the first country in the world in the number of holders of NFTs, non-fungible tokens. These are unique units of information located on the blockchain: images, texts, videos or digital property. If you're being picky, NFTs can't be called a cryptocurrency, but the principle is similar: the technology is built on the blockchain, but the digital asset itself is not equal to others.

Remember the news about how Eminem bought a picture with a monkey for $450,000? This is an NFT

There is a simple explanation for the popularity of NFTs in Thailand: locals love mobile games. In such projects, players earn virtual coins and then use them to buy some improvements or upgrades, decorative items or accessories for their characters in NFT format.

Screenshot from the game: the better a player upgrades his character for virtual currency, the more often he wins battles

There are two main strategies among gamers: some complete tasks, earn digital coins long and hard, and purchase virtual items. Others deposit real money into the game and then buy armor and weapons from more persistent users. Everyone wins.

High-level characters on the gaming marketplace can cost around $500–$1,000 per unit, and rare items can cost upwards of a million dollars.

El Salvador has fully legalized cryptocurrency

The Japanese became pioneers in the legalization of cryptocurrency: the country legalized Bitcoin as a means of payment back in 2016. But in El Salvador they not only completely legalized crypto, but even thoroughly purchased bitcoins.

Many financiers believe that the legalization of crypto is a relief for local residents. El Salvador does not have sufficient resources to produce its own fiat currency, and dollars are difficult to put into circulation. In this case, bitcoins are the way out, because with their help you can trade without any problems.

Shops in El Salvador are displaying banners stating that you can pay with cryptocurrency inside. Photo: Getty Images

El Salvador currently holds about $130 million in Bitcoin. In December, the country's President Nayib Bukele announced that the investment had turned into a profit (data wsj.com) - the country had already earned more than three million dollars from crypto.

US entrepreneurs hire workers at a profit

Businessmen in Europe, Canada and the USA often look for specialists not in the expensive local market, but in remote corners of the world. Often, talented workers are found in developing countries in Eastern Europe, Asia and the Middle East. Such employees perform tasks at a good level, but their salaries are several times lower than those of similar specialists in countries with developed economies.

To make it easier to transfer money to the other side of the world and pay salaries, entrepreneurs use cryptocurrencies. In this case, you don’t need to spend a long time processing payments in banks and filling out a lot of documents - you can send the required amount in a couple of clicks. This way, the entrepreneur saves money on personnel and time during translations.

It is not so difficult to pay contractors’ bills, make transfers to partners in cryptocurrency legally, or simply transfer money to family or relatives from abroad legally under the conditions of many restrictions. To do this, you need to transfer funds through a reliable and certified payment service. This opportunity is available in Swaps - a fully regulated European company with licenses in Canada and Estonia, so a business can send funds without gray schemes, quickly and conveniently. To solve such problems, there is a product called Receive and also a detailed guide on how you can make cross-border crypto transfers in just a few clicks.

This is what the transfer and payment process looks like:

You can receive or send payment easily: you just need to enter the details and click on three buttons. Literally. Look in the gallery:

Receiving or sending payment is easier than shopping online: you just need to enter your details and click three buttons. Look in the gallery how simple, fast and safe everything is. The service is designed with an intuitive interface so that anyone can get used to it as easily as possible. With Swaps, you can move money seamlessly around the world while remaining fully compliant with the law. Cryptocurrency opens up new opportunities for us and solves the problem with payments - invest, travel, do business and don’t forget about your loved ones

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