Mapping Bitcoin's Global Adoption
Submitted by Jonathan Stacke via The Genesis Block blog,
Bitcoin has made significant progress towards becoming the world's first truly global currency over the past few years. To gain better perspective on bitcoin’s impact, we took a look at global wallet downloads, demonstrated interest by region, exchange volumes across currencies, mining node locations, real-world interactions around bitcoin, and the major companies and investors pushing the bitcoin economy forward.
Bitcoin Software Downloads
We began by looking at which countries had the most downloads of bitcoin software and then calculated the trends over time and within context of a number of other factors. Worth noting: while this likely serves as a reasonable proxy, it is not inclusive of all bitcoin users, as hosted wallets, thin wallets and holdings at exchanges would not be reflected here.
The United States is the clear frontrunner in terms of total number of downloads. China had surprisingly few downloads for a country its size until the recent documentary aired by China’s largest state-run broadcaster. As shown in the chart above and echoed elsewhere in our findings, Russia was an early adopter but has since tapered off relative to interest growing elsewhere around the globe.
To normalize for country size, we compared total wallet downloads to the population of each country to find penetration into each region. In doing so, we quickly realized the Nordic countries are the clear leaders in bitcoin adoption. As the second chart below indicates, one probable reason for this is the region’s familiarity with and access to technology – all of the Nordic countries rank among the highest in the world for internet penetration.
They also all share similar and uniquely successful socioeconomic models based on a strong mutual trust between the citizens and states. So much so that Päivi Heikkinen, Finland’s Head of the Division for Oversight of Financial Markets Infrastructure explicitly responded to a question about whether or not bitcoin is illegal by stating, “Not at all; people can invest in and use any money they prefer.”
Global Search Traffic
Historical search engine traffic from around the globe tells an interesting story as well. By tracking this, we can see the waxing and waning interest from different regions. The chart below shows interest from key countries across different time scales. The way Google Trends offers data is set by normalizing search data for population size and then assigning a value of 100 to the region with the greatest number of normalized searches. Normalized data from other regions is then compared to that on a scale of 0 to 100.
The chart above offers some interesting information. Most notably, interest in China has grown tremendously, particularly in the last 30 days since the documentary aired. We can also see from this graph that interest from Russia has slowed, relative to other countries, and some new entrants like the Czech Republic are beginning to emerge.
Looking at the chart below, we can see interest from known U.S. tech hubs like San Francisco, New York and Austin. Interestingly, there is also apparent heavy search traffic from Portland, home to Gliph, the new startup offering pseudo-identities to help facilitate bitcoin transactions.
Searches and software downloads show interest, but the true story unfolds when money enters the picture, so looking at exchange volumes across currencies offers even deeper insight into the evolving bitcoin narrative.
As would be expected, USD still dominates trading volume, but mapped against other currencies we can see a consistent declining trend as other countries and their currencies enter the picture in larger amounts.
USD as a share of total bitcoin trading volume has fallen from near 100% to approximately 80% over the past two years. The most notable gain from is from CNY (Chinese Yuan), which grew from approximately 0.4% of total volume in April 2012 to an impressive 4.7% in April 2013.
Within the still-dominant USD trading, there is a healthy trend of diversification away from Mt. Gox towards alternative exchanges. As shown in the chart below, alternative exchanges have gained traction on the DDoS-susceptible leader in the space – a trend likely to continue after their recent loss of Dwolla as an account funding source and investigation by the Department of Homeland Security. Worth noting, the chart below should be viewed as an approximation, as data for exchanges that have shut down over the years was not available for this analysis.
Bitcoin is only as strong as the network on which it is based, so the value of connected nodes cannot be overlooked in an analysis of global adoption. The chart below shows a snapshot of the geographical breakdown of connected nodes taken on May 18.
This chart represents individual node connections, not total hashing/mining power. We’re working on an article to cover this topic in the depth it deserves, but for now we can see a story consistent with the rest of this analysis. The United States remains the power player, with significant interest from China. The Nordic countries, not represented on the graph due to their relatively low total connections, were represented at an impressive level within the data set relative to their size – as would be expected given the download data shown earlier.
Real World Interaction
The utilization of bitcoin in the real world, outside of the internet, will be paramount to its broader proliferation. There have been major advancements towards this, such as Kreuzberg, Berlin recently showing the world a significant step forward by deeply integrating bitcoin into the local economy and restaurants in New York City beginning to accept it as well.
As a proxy to determine the propensity for a region to bring the bitcoin movement offline, we looked at the number of people participating in bitcoin-oriented meetups across the world. The chart below shows the number of participants in the largest meetups in each city, grouped by country. The usual suspects are all present, with newcomers like Israel and Argentina demonstrating significant real world interest.
Breaking down offline bitcoin interest in the US even further, San Francisco and New York City remain the clear leaders, with a strong showing from Chicago and Seattle, the latter of which is home to CoinLab, the first VC-backed bitcoin startup in the US.
Companies and Venture Capital
At the backbone of the bitcoin movement are a handful of visionary entrepreneurs and prescient investors. To see where the future of bitcoin is being built, we compiled a list of leading bitcoin companies and venture capitalists, focusing on the US as it has by far the greatest number of successful companies and investment capital flow to date.
The notion of international collaboration across disparate individuals has never before been achieved at this scale, outside of the internet itself. There is a bright future ahead for bitcoin, and we’re looking forward to helping it unfold.