The recent report from the Bank for International Settlements (BIS) sheds light on the increasing use of Bitcoin and other cryptocurrencies during times of economic instability. This trend is particularly prominent in countries where inflation rates are high, sending money is costly, or the government imposes restrictions on capital outflows.
Cryptocurrencies like Bitcoin and stablecoins such as USDT and USDC have emerged as viable alternatives for people when traditional financial systems fail or become prohibitively expensive. In situations where conventional banking services are unreliable, crypto provides a secure, fast, and cost-effective means of storing and transferring funds.
The BIS report confirms the growing role of Bitcoin as a practical tool rather than just an investment vehicle. When local currencies depreciate rapidly or cross-border transactions become expensive, individuals turn to Bitcoin for safeguarding their assets and facilitating swift, affordable, and transparent transfers. Moreover, the study reveals that crypto usage tends to surge in countries implementing capital flow restrictions, indicating that people use digital assets to circumvent such barriers.
Analyzing data from crypto exchanges and application usage patterns, the BIS observed a significant rise in cross-border transactions involving Bitcoin, Ethereum, USDT, and USDC from 2017 to mid-2024. While initially dominated by Bitcoin, these transactions now see a greater share of stablecoins, reflecting the diverse preferences of users based on their specific needs.
Contrary to conventional banking services that are often constrained by geographical boundaries, crypto adoption transcends location and language barriers. The report underscores that people turn to cryptocurrencies out of necessity rather than mere popularity. Additionally, during periods of heightened global financial uncertainty, as indicated by indicators like the VIX, the use of Bitcoin and other digital assets tends to increase, highlighting their appeal to investors and businesses seeking stability in turbulent times.
In conclusion, the BIS report underscores the evolving role of cryptocurrencies as a lifeline for individuals facing economic stress. The data presented emphasizes the resilience and versatility of digital assets in providing financial solutions to a diverse global audience, irrespective of their location or prevailing market conditions.