Bitcoin

Bitcoin [BTC]: Data Scientist’s research suggests Satoshi’s vision achieved; Bitcoin has global penetration

Bitcoin was created with the intent of devising a global currency that cut the middleman from financial transactions and allowed a fully decentralized peer-to-peer network to handle financial transactions without the involvement of authorities such as banks or national governments. Data Scientist Matt Ahlborg attempted to address questions about whether the coin has been able to enter global consciousness, in a research paper he published on Medium.

The paper, published yesterday suggests that despite the many issues Bitcoin has faced over the years, has justified its existence by working as Satoshi originally intended it to. Ahlborg argues in favor of this stance by looking closely at trading volumes data he obtained from LocalBitcoins.com.

According to his research inferred from the obtained data, Ahlborg has suggested that despite the fact that Europe and North America were the first to embrace cryptocurrency, daily trading volumes in Asia and Latin America, led by Venezuela, are slowly dwarfing that of the first world.

More interestingly, Ahlborg uses a new metric to quantify and analyze the degree of Bitcoin adoption across the world. The metric, Usage per [Online] Economic-Person, or UP [O] EP was devised by him to correct for differentials in the value of fiat currency against the US Dollar in different parts of the world. Using this new metric and a global animated chart, Ahlborg’s studies made some very interesting findings that back his hypothesis about Bitcoin’s success.

For starters, the data suggests that UP [O] EP levels have steadily increased in countries that score low on economic freedom and have imposed on their citizens financial and monetary restrictions. In such countries, China and Venezuela for example, these restrictions have involuntarily catalyzed and accelerated the conditions for adopting cryptocurrencies such as Bitcoin. However, this isn’t a cent percent inference as some factors such as a high level of technical literacy, internet and smartphone penetration etc contribute significantly to the same.

Secondly, countries such as Turkey and India, which have fair conditions for the adoption of cryptocurrency, however, have not taken flight yet. This, Ahlborg’s research suggests, is due to a multitude of factors which include local laws, customs, culture, and ingrained habits.

Finally, his research also suggests that while the wide use of cryptocurrencies in the developed world has stalled somewhat, the market is booming significantly in the third world. In fact, as the data from LBC suggests, 21 countries, most of them of the third world, posted their highest ever Bitcoin trading volumes last quarter. These countries were led by Venezuela, whose trading volume three years ago was less than 1% of its present value. The South American country is followed by Colombia, Panama, Chile, Argentina, Belarus, Kazakhstan, Egypt, Japan and even, Sudan and Afghanistan.

Ahlborg does however accept some gaps in his research. For starters, he only uses data collected from LBC, one that charges a high transaction fee, instantly dissuading a huge set of cryptocurrency traders. Secondly, with the rise of many cheaper exchanges, especially in the first world, the number of trades in the United States and Europe may be a tad under-represented.

These gaps, however, Ahlborg feels, should not undermine the significance of his findings with this research. His finding, that Bitcoin has been successful in fulfilling Satoshi’s vision by penetrating world economies and be of utility to people of all backgrounds is one that he feels, will stand in the face of more in-depth research.

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