London School of Economics

The Bitcoin Market Potential Index conceptualizes and ranks the potential utility of bitcoin across 178 countries to show which countries have the greatest potential to see bitcoin adoption. The index utilizes a data set with 40 variables related to bitcoin’s current core functions: store of value, medium of exchange, and technology platform. The variables are grouped into the index’s seven equally weighted sub-indices: technology penetration, international remittances, inflation, size of informal economy, financial repression, historical financial crises, and bitcoin penetration. Standardized and re-scaled country level data both indicate that Argentina and Sub-Saharan Africa are the country and region, respectively, where bitcoin has the greatest potential for adoption. It is argued that while bitcoin regulation can play an important, and perhaps even decisive, role in bitcoin adoption it should be excluded as an index variable for now due to insufficient data and uncertainty over its ultimate impact.