In Vietnam, many individuals in rural regions face significant economic challenges, including a lack of access to even the most basic financial services. The absence of essential infrastructure, such as ATMs, compounds these difficulties. There is a substantial need for platforms that enable efficient global remittances and payments in these underserved areas.
Despite Government Restrictions, Vietnam Leads in Cryptocurrency Adoption
Given these conditions, Bitcoin appears almost tailor-made to address the needs of the Vietnamese population. Although the government prohibits its use as an official payment method, cryptocurrency remains immensely popular. According to a 2022 report by Chainalysis, Vietnam ranked first globally in cryptocurrency adoption. Another independent study from 2021 corroborated this, placing Vietnam at the top for cryptocurrency adoption rates. Interestingly, while Vietnam rejected recognizing cryptocurrency as legal tender in 2017, it permits digital assets to be used as investment vehicles. The government has never banned crypto businesses from operating, indicating a complex but tolerant stance.
It is clear that despite regulatory barriers, digital assets continue to thrive in Vietnam and are likely to keep growing.
Primary Use Cases for Bitcoin in Vietnam
In Vietnam, the main applications of digital assets include trading and investment. The crypto community comprises enthusiastic traders and long-term believers, with Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB) being the most popular. Beyond investment, cryptocurrencies are also used for remittances. This aligns with findings from a Forrester report on Bitcoin adoption in emerging markets.
The study revealed that Southeast Asian Bitcoin users primarily utilize the leading cryptocurrency for financial management. Many use it to preserve asset value (51%), invest for profit (47%), and hedge against potential losses in other investments (44%).
Reportedly, consumer sentiment toward Bitcoin in Southeast Asia is highly positive, with 86% of users believing that Bitcoin significantly enhances their quality of life. Consequently, many plan to increase their usage over the next 12 to 24 months, expecting to use digital assets more frequently for receiving payments (68%) and making transfers (60%).
Key Drivers of Digital Asset Adoption in Vietnam
In rural Vietnam, most transactions are settled in cash due to limited access to banking services and credit cards. Poverty and educational gaps are more pronounced in these areas compared to major cities like Ho Chi Minh and Hanoi.
This is where Bitcoin offers a compelling solution. Achieving financial freedom through Bitcoin requires a few foundational steps: internet access and a smartphone. With these tools, individuals are already closer to managing their own finances. Research and education about the benefits of cryptocurrencies are also crucial. The first step, however, is introducing and implementing these measures in rural communities to drive adoption.
Bitcoin has the potential to assist the unbanked and underbanked—populations that typically lack access to the same financial products and services as the middle class. For rural residents, Bitcoin and cryptocurrencies are not a luxury but a necessity.
Rather than focusing solely on trading, Bitcoin pioneers in Southeast Asia emphasize its use as a store of value to protect their savings from currency devaluation and inflation. According to the Forrester study commissioned by AAX, macroeconomic pressures and dissatisfaction with the cost and security of existing financial services drive many in Southeast Asia to adopt digital assets. These challenges lead users to rely on Bitcoin for managing their financial portfolios.
Moreover, cryptocurrencies eliminate the need for third-party intermediaries, reducing transaction costs for deposits and withdrawals. This is particularly appealing for those living below the poverty line.
Ben Caselin, Vice President and Head of Research and Strategy at AAX, agrees, explaining why cryptocurrencies serve more than just investment purposes in emerging markets. In an interview with Forkast, he stated:
“Focusing only on trading misses other opportunities offered by cryptocurrencies, including self-custody, which shouldn’t be underestimated in countries where security is at risk and banking services are weak.”
Bitcoin Supports the Unbanked in Vietnam
There is still much progress to be made in Vietnam. However, Bitcoin provides a viable solution for the unbanked population. All that is required is an internet connection and a smartphone. According to data from the Ministry of Information and Communications of Vietnam, approximately 73.5% of adults in the country use smartphones, with penetration expected to reach 85% by the end of 2022. This widespread smartphone ownership enables Bitcoin to assist the unbanked, even where access to traditional financial services is limited.
This brings the unbanked population closer to the cryptocurrency ecosystem and its financial solutions. Statista data ranks Vietnam second among countries with the largest unbanked populations, with 69% of citizens lacking access to basic financial services. Additionally, over 61% of the population resides in rural areas with limited access to modern financial services like ATMs and banks. This is where decentralized finance (DeFi) becomes invaluable.
Vietnam has seized this opportunity. A 2021 Chainalysis report revealed that Vietnam ranks second globally in DeFi adoption.
The Rise of GameFi in Vietnam
As more unbanked individuals in Vietnam become aware of the broad applications of cryptocurrencies like Bitcoin, this trend is poised to continue. With growing Bitcoin adoption, Vietnam is becoming an ideal environment for tech talent and those open to technological disruption. Similar to the Philippines, Vietnam’s GameFi industry has experienced steady growth, with many exploring play-to-earn models in the digital realm.
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Accelerating Global Cryptocurrency Adoption for Better Financial Services
Emerging markets are undoubtedly at the forefront of digital asset adoption. But what factors could accelerate global cryptocurrency adoption? The answer lies in improved regulatory frameworks. With clearer regulations and policies, the growth of digital assets would likely surge, as this would encourage both retail and institutional investors to overcome the uncertainties within the crypto industry. Frankly, the digital asset sector anticipates further disruption and innovation—and this is only the beginning.
Frequently Asked Questions
Why is cryptocurrency adoption so high in Vietnam?
Cryptocurrency adoption is high in Vietnam due to a combination of factors, including limited access to traditional banking services, high smartphone penetration, and a young, tech-savvy population. Many use digital assets for remittances, investments, and as a hedge against inflation.
How do rural communities in Vietnam benefit from Bitcoin?
Rural communities benefit from Bitcoin by gaining access to financial services without needing a traditional bank account. With just a smartphone and internet connection, they can store value, make transactions, and receive remittances at lower costs.
Is Bitcoin legal in Vietnam?
While the Vietnamese government prohibits the use of Bitcoin as a legal payment method, it allows cryptocurrencies to be held and traded as investment assets. Crypto businesses can operate legally, contributing to widespread adoption.
What role does DeFi play in Vietnam’s crypto landscape?
DeFi plays a significant role by providing financial services like lending, borrowing, and earning interest without intermediaries. Vietnam ranks second globally in DeFi adoption, highlighting its importance in serving the unbanked.
How does GameFi contribute to cryptocurrency adoption in Vietnam?
GameFi, or play-to-earn gaming, introduces many to cryptocurrencies through interactive and rewarding experiences. This model has gained traction in Vietnam, further driving interest and adoption of digital assets.
What challenges remain for crypto adoption in Vietnam?
Challenges include regulatory uncertainty, the need for greater public education about safe crypto practices, and overcoming skepticism among those unfamiliar with digital assets. However, the trend continues to grow positively.