This year, remittance-demanding countries including Ghana, Malaysia and South Africa dominated search engine searches for the keyword bitcoin. Interestingly, countries that represent the highest bitcoin search engine inquiries in 2016 have either poor financial infrastructures or strict regulations on capital outflow.
— Jameson Lopp (@lopp) December 18, 2016
Users from Nigeria scored the highest on Google Trends with a 100/100 search interest. Ghana, South Africa, Malaysia and Venezuela followed, completing the list of top five countries with highest search engine inquiries on bitcoin.
Poor Financial Infrastructure
Ghana, South Africa, Nigeria and Venezuela have poor financial infrastructure. Cross-border payments are expensive and inefficient with existing remittance systems and outlets. The general population fails to obtain necessary banking services as local financial institutions require extensive documentation on savings, properties, financial status, etc.
Nigeria in particular has one of the lowest levels of financial penetration and the smallest banking sector, with just over US$118 billion in assets. EY, a multi-billion dollar research firm, stated that low account penetration in Nigeria is driven by low incomes, which currently are below US$2,000 on average. EY and other analysts also stated that Nigeria has large potential to grow in terms of finance as banks are becoming more aware of the problems originating from remittance and payments.
“Nigeria has a relatively low level of domestic credit to GDP, which suggests there is considerable scope for lending growth, and consumer lending to the expanding middle class should be a major opportunity for retail banks in the market,’ read a report from EY.
Population Running out of Patience
However, the general population is beginning to show increasing interest in alternative financial platforms and service providers. Various reports from leading analysts such as EY show that the general population has run out of patience with the country’s inefficient banking systems. Additionally, EY stated that local banks will struggle to gain capital to fund the growth of the Nigerian financial industry.
“With such an increase in demand anticipated for corporate lending and project finance, domestic banks, especially those outside the top tier, may struggle to raise sufficient deposits to fund this growth,” the report added.
The shift from conventional banking systems and financial services to mobile banking and fintech is evident in Nigeria. According to a paper entitled “Encouraging the shift to internet and mobile banking: A Nigerian perspective” released by leading auditor KPMG, the country’s 148 million mobile users are moving towards web-based transactions and mobile banking as they offer 24/7 access and enable cross-border payments.
Younger People More Ready to Embrace Technology
More importantly, KPMG also noted that one third of the entire Nigerian population is now below 24 years old, which has a significantly dense user base of mobile and web-based platforms.
“The problem is that Nigeria’s banks have largely failed to translate this passion for the internet and social media into increased adoption of internet and mobile banking solutions. Just 42 percent of Nigerian banking customers said they use online banking platforms for one or more banking activities,” said Femi Oke of KPMG. “The benefits of shifting transactions to web-based platforms are clear. For customers, web-based platforms offer convenience, 24 / 7 access, and freedom of location,” he added.
As millions of users begin to shift from banks to mobile banking, an increasing number of millennials and young adults have begun to search for alternatives like bitcoin, which ultimately led to search engine inquiries. Thus, the search engine domination of bitcoin inquiries from the Nigerian population should be considered as a strong evidence for rising demand for bitcoin services.
Malaysia’s Regulations Push Bitcoin Demand
Malaysia ranked fourth in global search engine rankings for the keyword bitcoin, mostly due to Malaysians’ and expat workers’ searches for alternative remittance outlets.
Since early 2015, Malaysia has imposed heavy capital controls to prevent the devaluation of the Malaysian ringgit. This decision of the government essentially disallowed cross-border remittance payments for expat workers serving the Malaysian economy.
However, in late 2016, the Malaysian Ministry of Finance assured investors that the government will no longer impose capital controls, and push for an open economy.
“As far as Malaysia is concerned, our fundamentals are solid (given) our Gross Domestic Product growth for the third quarter, economic activities and infrastructure investment. We will not go for capital controls or pegging as we are an open economy and we will remain one,” said Finance Minister Johari Abdul Ghani.
With remittance payments enabled by the government, it is likely that expat workers are searching for cheaper alternatives like bitcoin, which also has high liquidity. To supplement this demand for bitcoin, prominent bitcoin service provider headquartered in the Philippines called Coins debuted in Malaysia this year.
As governments continue to push for regulations on money transmission and banks fail to serve the general population, the demand for bitcoin in struggling or emerging economies will grow at a rapid pace.
Do you think emerging economies will adopt bitcoin at a rapid pace in the short term? Let us know in the comments below.
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