Ranked blockchain’s Crypto Hubs 2023 Methodology.

Ranking the world’s top crypto hubs with a certain level of accuracy and credibility is quite challenging. There are basic questions that need to be considered such as: What geographic boundaries should be used (cities, states, countries)? What criteria should be used? What happens if data sources are difficult to obtain or only available for some cities/regions being evaluated?

Even determining which cities/regions should be considered is not always clear.

As the editor and consultant for Crypto Hubs 2023, we aim to provide insights into the methodology and data sources we used to resolve these questions. We acknowledge that our list is far from perfect, but we hope it will help advance the conversation about which places around the world are crypto hotspots.

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Jeanhee Kim is a senior editor for lists, rankings, and special projects. She is a veteran journalist who launched the inaugural Forbes Asia “100 to Watch” in 2021. Early in her career, she was a reporter for Money Magazine’s Best Places to Live. Boyd Cohen is CEO and co-founder of Iomob, which is building the Internet of Mobility network and WheelCoin Move2Earn to gamify green mobility. He produced “Smartest Cities in the World” for Fast Company.

Step 1: Selecting Cities & Regions

The team first debated what constitutes a hub. Could it be a city, an entire state, or even a small country? Ultimately, we said yes to all, as the reality is that depending on population density, tolerance for commuting, and embedded connectivity across a geography, any of the above could constitute a crypto hub.

The next challenge was to create the initial sample of hubs we should collect data for. Both of us have worked professionally in the past on rankings that began with a sample of hundreds of metro areas. But our time and resources are not unlimited; we sought to shortcut the process by reaching out to dozens of crypto experts representing media, blockchain clubs, venture funds, founders of layer 1s, 2s, and decentralized applications, players in DeFi, ReFi, and more. We sought diversity wherever we could: race, gender, sexual orientation, and nationality, at least. We asked these experts to independently respond to a survey to indicate five to 10 or more crypto hubs around the globe they felt deserved being considered for the ranking. We also asked them to explain in a sentence or two what each hub had to offer and how they would prioritize criteria to be used in the ranking.

After communicating with more than three dozen experts around the world, we received 18 responses. We also harvested from published lists of the prior year and a half, including Decrypt’s Most Influential Crypto Cities in the World, Recap.io’s The Rise of Crypto Hubs, and Quantilus’ The 10 Most Crypto Friendly Cities in the World. From those, we gleaned 38 hubs for possible inclusion in our initial sample. Finally, we narrowed down to the 25 that were identified by two or more of the sources. These 25 hubs became our initial sample. All of our subsequent data research would be focused on these hubs only.

Step 2: Identifying Criteria and Data Sources

Next, the team reviewed the comments from the experts on the reasons they gave why certain hubs were among the top in the world. Looking at all factors we found, combined with what other previous crypto rankings had examined and our own internal discussions, we identified eight indicators across three primary categories: Drivers of Crypto Growth, Base Enablers, and Crypto Network & Opportunities. Below we discuss the criteria and data sources in more depth.

Drivers of Crypto Growth

For a hub to be a vibrant place for the crypto community, it is reasonable to expect the governing bodies in the region to have created regulatory support for the industry and that there is popular support among residents to engage in crypto ownership and trading.

Crypto Regulation Perhaps the most widely discussed and debated topic in crypto is the state of the regulatory environment in jurisdictions around the globe. While places like Hong Kong, Dubai, the United Kingdom, and Europe have made waves in recent months for their proactive attempt to create a regulatory environment conducive to successful crypto markets while also protecting retail users, the U.S. has been making headlines for the U.S. Security and Exchange Commission’s regulation-by-enforcement approach and lack of regulatory clarity.

The text is discussing a review of attempts to create objective ratings of crypto regulation worldwide. However, each attempt had a serious drawback, such as a lack of inclusion of a large number of initial sample, outdated results, or a lack of nuance in scoring. Therefore, the authors developed their own scoring system that leaned or borrowed from other sources.

The text also discusses the annual Chainalysis Crypto Adoption Index, which aims to quantify the level of grassroots, retail adoption of crypto in 172 countries via three metrics.

In addition, the text considers general factors such as quality of life, digital infrastructure, and ease of doing business when ranking places to live and work in the tech industry. The authors used Numbeo’s quality of life index, the Digital Intelligence Index from Tufts University, and the World Bank’s Ease of Doing Business index to evaluate these factors.

Finally, the authors wanted to gain a sense of the career and networking opportunities within each hub. They leveraged data on jobs, companies, and events with a focus on crypto in the region and converted all indicators to per-capita rates to provide more fairness regardless of population size.

Step 3: Weighting the Categories and Indicators

The most controversial aspect of the ranking process is likely to be the decision on the relative weights of each indicator. Clearly, they are not all equal, and some categories matter more than others. What makes it even more difficult is that some of the experts we spoke to have substantially different views on what is most important when ranking crypto hubs.

We took feedback from a range of expert opinions and did our best to develop a weighting system that we felt was appropriate.

Drivers of Crypto Growth (Violet, 45% total weight)

This category is the most important for determining the strength of a crypto hub. It reflects openness and interest from both government and the people and is an indicator of the current and future growth of the crypto ecosystem in the hub.

Crypto Regulation (35%)

The most heavily weighted criteria in our rubric, the regulatory score reflects the existence of laws on the books, what level of government the laws are in, and whether the laws allow crypto. What we were unable to measure is how effective the laws are and how well they are enforced, both of which would likely lead to different scores for all of our hubs. Enforcement of the laws could be a local quality that no global analysis could determine.

Crypto Adoption (10%)

Chainalysis’ methodology of looking at retail adoption of crypto reflects a decentralized view of adoption and therefore is one of our favorite criteria in this project. Reassuringly, the 2022 index included all but one of the countries included in our 25-hub sample. We calculated an approximate 2022 index value for the missing UAE data using its relative placement in the 2021 index.

Base Enablers (Blue, 37% total weight)

This category and the weight we placed on the criteria may be among the most easy to challenge. We debated how heavily to weigh measures that had no connection or impact on crypto at all. But in the end, Crypto Hubs is a ranking of places to live and work, and fundamentally, qualities that reflect the ease or hardship of daily life and business had to be factored in.

Quality of Life (15%)

A good quality of life is what attracts the creative class to move to a region. This Numbeo index is comprehensive and includes nearly every hub in our sample, but among the factors not included are the quality of schools or the natural beauty of a locale.

Digital Evolution (12%)

Digital infrastructure, especially a reliable network of broadband capabilities, is a must for a crypto-related ranking. While this index from Tufts University does an outstanding job, it was measured in 2020. Furthermore, it did not include the Caribbean or Latin America, which Tufts last measured in 2018. For these reasons, we put less weight than might seem necessary, and also note that in the global south people are overcoming digital divide challenges to become active crypto participants. Ultimately, when crypto is desired, the infrastructure limitations can be overcome.

Ease of Doing Business (10%)

The World Bank’s Ease of Doing Business ranking was last produced in 2020, from which we took our scores. Not only did the list include all of the countries included in our 25-hub sample, but it also gave a separate score for the U.S. territory of Puerto Rico. After the 2020 list was published, however, an investigation revealed that a handful of governments may have interfered with the objective reporting of their data, including the UAE. We did not penalize the UAE, but note that its ranking in the top 10% of all countries may not be an accurate reflection of its ease of doing business.

Crypto Opportunities (Green, 18% total weight)

These criteria were a way to get a sense of the vibrancy of the crypto ecosystem. However, many crypto professionals are digital nomads and the actual presence of crypto companies or crypto jobs within the physical borders of a hub is not important because they can work anywhere in the world.

Jobs (6%)

We gave the least importance to this criteria because it only measured job ads on LinkedIn that included the words “crypto,” “blockchain,” or “Web3.” While this is an indicator for actual jobs, it is not a true measure. Also, LinkedIn may have lower utility in non-English language hubs, despite being global and searchable for all 25 places in our hub sample.

Companies (6%)

As we used LinkedIn to find crypto companies, we were relying on self-reporting rather than an objective measure. Similar to the jobs criteria, LinkedIn may have lower utility in non-English language hubs despite being global and searchable for all 25 of our hub samples.

Events (6%)

While events may seem less important than jobs and companies, we gave it equal weight. If a crypto nomad lives in a city, they don’t care about companies and jobs as much as they care about opportunities to engage with other people from the local and global crypto community on a regular basis.

Conclusion

This is the first attempt to rank global crypto hubs in the blockchain industry. We expect and welcome rigorous debate over our results and methodology. We made our choices based on limitations of time, available data, and our own resources. However, we believe our efforts were earnest and our decisions were justifiable. We are eager to hear from policy makers, crypto entrepreneurs, venture funds, and the broader crypto ecosystem regarding the best places in the world to put down roots and engage in the crypto ecosystem.