Argentina has the greatest potential for Bitcoin adoption in the world.

According to the Bitcoin Market Potential Index (BMPI), Argentina tops the list of ten countries with the highest relative potential for Bitcoin adoption followed by Venezuela, Zimbabwe, Malawi and the United States. China ranks only 27th in this survey conducted by the London School of Economics.

Index for investors

The survey is the first attempt at assembling a new data set to rank the potential utility of Bitcoin across 178 countries. In effect, it has confirmed that not much has changed since the first ranking was released in 2014.

Economic historian at the University of Cambridge and London School of Economics, founder of MacroDigest, Garrick Hileman, summed up the results of the survey to Cointelegraph:

“...assuming the same ranking criteria, for the vast majority of countries the picture today is likely still largely similar to what it was two years ago, with a few exceptions.”

Garrick Hileman, Founder of MacroDigest

According to Hileman, the index was created for entrepreneurs and investors planning to locate or expand operations so as to better understand which markets may prove most fertile for Bitcoin adoption - that is the utilization of Bitcoin and blockchain technology for a variety of monetary and non-monetary functions.

Forty variables related to Bitcoin’s current core functions - store of value, medium of exchange, and technology platform - are grouped into the index’s seven equally weighted sub-indices namely technology penetration, international remittances, inflation, size of informal economy, financial repression, historical financial crises, and Bitcoin penetration to calculate BMPI’s rankings.

The relationships between most of the BMPI variables are expected to be self-evident for those generally familiar with Bitcoin.

Technological advancement a key

For example, Bitcoin is fundamentally a technology, it says, and the level of technology adoption in a country as reflected in measures such as internet use and mobile device penetration will have an important influence on bitcoin adoption. Further, bitcoin’s prospects for adoption are enhanced by network effects associated with greater exposure to and awareness of bitcoin. Countries with more venture capital backed bitcoin startups, bitcoin client software downloads and nodes, and relative bitcoin Google searches rank higher in the BMPI.

Hileman adds:

“For example, significant financial liberalization has taken place in Argentina. However, I cannot say whether those (and other) changes are significant enough to knock Argentina from the top of the rankings until after the revised index is updated.”

Recent developments show that Nigeria and Zimbabwe, which were among the top 10 countries with the highest relative potential for Bitcoin adoption in the index, had economic situations that are appropriate for Bitcoin use.  

Sub-Saharan Africa still seems the most fertile region for Bitcoin adoption, followed by Latin America and the former Soviet states, as predicted by the BMPI.

New variables needed

The 2014 report noted that, although Bitcoin regulation could play an important, and perhaps even decisive, role in its adoption, in some cases due to insufficient data and uncertainty over its ultimate impact, it was excluded as an index variable.

Gileman says his view on what should be measured has changed in the last two years, and so it is appropriate to add new variables.

The three reasons for the exclusion of Bitcoin regulation from the BMPI are: Bitcoin regulation being a recent development and still evolving; it was unclear what its regulation would actually signal; and the uncertainty surrounding the efficacy of bitcoin regulation.