Crypto Culture: A Walk Through Vietnam

If you’ve visited Vietnam, you’ll know it’s a staggeringly beautiful country. In the northeast there’s Ha Long Bay, whose limestone islands are among the world’s most photographed natural structures. The country’s verdant, platformed rice fields have featured on travel book jackets and magazine covers for decades. At night, the locals who live in Vietnam’s ancient towns adorn their streets with vividly colourful lanterns, illuminating the waterways that wind beneath their ornate wooden bridges.

Vietnam’s two megacities — Hanoi in the north, and Ho Chi Minh in the South — boast rich and fascinating cultural histories. And both, of course, are teeming with motorbikes. There is in fact one motorbike for every two people in Vietnam today.

Provided you survive your spiritual scooter excursion long enough to reach a locally run Vietnamese restaurant, congratulations — you’re in for a treat. Vietnamese food is famously delicious, and the country’s culinary scene is vibrant, inventive and imitated all over the world.

Vietnam: Entrepeneurs Welcome

Vietnamese entrepreneurs have capitalized on crypto’s popularity and created some remarkably valuable crypto companies, including the likes of Sky Mavis and the Kyber Network, to name a few. These and the many other crypto companies launched from Vietnam have cemented the country’s reputation as a prime location for tech firms who want to expand their operations abroad.

First Prize in Crypto Adoption Goes to...

Why do so many Vietnamese people own crypto? And how is Vietnam outpacing the U.S. and every European country in terms of crypto adoption?

One of many possible answers is that Vietnam’s government has a generally positive attitude toward crypto regulation. So far, the government hasn’t imposed many rules or regulations on cryptocurrencies, other than to clarify that you can’t pay for goods and services with crypto — for now at least. The government also recently passed an investment law that clarified crypto’s status as a legal investment vehicle, meaning Vietnamese citizens can legally invest their money in crypto. Additionally, the country’s ministry of finance is developing a digital asset framework which will set out the country’s strategy toward growing its digital economy.

Another explanation for Vietnam’s positive stance on crypto is that most Vietnamese people don’t have access to a wide range of investment vehicles from which they could earn passive revenue (or at least, they have fewer options than a typical Westerner might have). And since crypto soared to record highs in 2020 and 2021, it’s likely that lots of Vietnamese people saw crypto as an exciting new profit source and jumped on the bandwagon. One academic who supports this idea is Binh Nguyen, the senior program manager of finance at the Royal Melbourne Institute of Technology. Nguyen studies how Vietnamese people use crypto, and he’s found that the market is strongly retail driven, which means most Vietnamese crypto investors want to grow their wealth rather than hedge against inflation.

We should also consider the possibility that some Vietnamese people are simply buying crypto in order to gamble. Why would they do this? The short answer is that most forms of gambling are illegal in Vietnam, and they have been for generations. Most locals can’t visit a nearby casino because in order to do so, they first have to prove their monthly earnings exceed 10m VND ($426) per month before they can even get through the door. For context, the average wage in Vietnam is about 6.1m VD, or $260 a month. As such, it’s plausible that at least some people are buying crypto to simply satisfy their gambling urges rather than as an investment.

There doesn’t need to be just one reason to explain why crypto’s so popular in Vietnam. In all likelihood, all of the foregoing explanations together explain why Vietnam has adopted crypto faster than any other country. In addition to these explanations, however, we should also consider the fact that several Vietnamese crypto companies have enjoyed extraordinary success over the past few years, which will have boosted the popularity of digital assets within Vietnam.

Who's Building in Vietnam?

Crypto firms like Coin98 draw the attention of foreign investors and the global crypto community to Vietnam, which is great for Vietnam’s economy — especially its startup sector. Of course, Coin98 isn’t the only well-known crypto platform to have launched from Vietnam.

Both Coin98 and Kyber achieved success remarkably quickly, and both helped solidify Vietnam’s reputation as a hub for crypto investment. However, neither comes close to matching the success of Vietnam’s runaway crypto success story: Axie Infinity.

Axie Infinity is an NFT-based game developed by Sky Mavis, which launched in Vietnam. In case you haven’t played Axie before, the game involves creating adorable little monsters and battling them against other equally adorable little monsters who belong to other players. Unlike other turn-based games, your whole team battles another team at once, as opposed to one character battling another character each turn. If you win your battles, you can gather up Smooth Love Potions (SLP), which essentially work like experience points, except that you can sell them for profit or consume them to breed more Axies (which you can also sell for profit).

Axie was partly inspired by CryptoKitties — a blockchain game that momentarily took over the world in December 2017 — and by Pokémon, which needs no introduction, and which uses a similar turn-based fighting system to that which Axie uses today.

Unlike most of the video games that came before it, you actually own your in-game items in Axie, including your creations — called Axies. This is because each Axie is an NFT, which means you can sell your Axies and SLP.  This NFT-based functionality remedied what Web3 gamers see as a fundamental flaw in Web2’s gaming model — that you don’t actually own your in-game items and can therefore lose access to them arbitrarily.

North Korean hackers fooled a Ronin engineer into downloading a document riddled with malware that let the hackers control Ronin’s validator nodes. This let them drain $600 million from the sidechain’s funds, most of which belonged to the Axie player community.

The answer it seems is that Axie’s play-to-earn (P2E) model hit the markets at the perfect time; when much of the world was locked down and unable to work. In countries where most people can’t work from home, like the Philippines and Vietnam, Axie provided something of a lifeline as it gave them a way to earn some much-needed cash during the lockdown.

When word got out about how much money you could make from playing a video game, Axie’s popularity exploded overnight. The game’s monthly player count soared from 28,000 in July 2020 to nearly 3 million in December 2021. This was great news for Axie’s community, and even better news for Vietnam. Axie’s success led to many discussions in the media about the country’s new status as a fast-growing startup hub. Since then we’ve seen hundreds of other P2E games try to follow in Axie’s footsteps, although none have yet been anywhere near as successful.

Unfortunately, Axie’s runaway success eventually led to an inflationary problem caused by too much SLP farming and not enough Axies being created (the only way to destroy SLP is by creating Axies). Despite Sky Mavis’ efforts to intervene, this inflation caused SLP’s price to crash, at which point millions of players sold their Axies and abandoned the game. At the time of writing, Axie’s monthly player count was hovering at around 470,000 players.

Regardless of Axie’s currently diminished player count, or whether its popularity will ever recover, most will agree that Axie served as a huge on-ramp for thousands of new crypto users, especially in Vietnam. This, and Vietnam’s bustling crypto startup scene, undoubtedly contributed toward the crypto’s growth throughout 2020 & 2021, and will certainly continue to do so in the future.