As the number of cryptocurrency owners making purchases in stores and online is growing rapidly, thanks in large part to the growing number of crypto credit cards making such spending much easier than it was a year or two ago, it is worth looking at who is spending it and what they are spending it on.
In April, the PYMNTS US Crypto Consumer Study found that 23% of consumers – nearly 60 million – have owned crypto in the past 12 months, and of those, 30% have used it for purchases. , 21% in physical stores.
Read more: PYMNTS Data Shows Crypto Use for In-Store Purchases Is Growing
One point that emerged from the study, and which was reinforced by anecdotal evidence, is that people rarely buy crypto to spend. But when they have it, they are more likely to want to spend it.
See also: PYMNTS Data Shows Jump in Crypto Ownership, Willingness to Spend It
This is especially true when prices are high, said Stephen Pair, CEO of crypto-payment technology company BitPay, in an interview with Karen Webster of PYMNTS. When it’s low they tend not to, or if they know they’ll want to spend some of their holdings, they’ll put it into stablecoins in good times to spend in crypto bear markets.
Read more: Bitcoin’s Future as a Payment Tool Is Bright, Says BitPay CEO
What and how they spend
While bitcoin was the most-spent digital asset, used by roughly three-quarters of crypto consumers, it’s worth noting that 16 other cryptocurrencies were used to make purchases by 30% to 45% of respondents, and eight other chips by 20% to 30%.
Interestingly, in virtually all cases the amount spent in stores was close, or in some cases – including bitcoin and another payments-focused token, bitcoin cash – spent slightly more often at retail than online. .
Given that few major retailers accept crypto directly at the point of sale (POS), this would seem to suggest that Visa and Mastercard-branded crypto debit and prepaid cards, which allow cardholders to spend crypto but pay fiat traders, are widely used among crypto holders.
Yet more crypto-spending consumers surveyed — nearly 75% — said they use digital wallets in stores than any other method. The use of digital wallets to make online payments was #2 at almost 70%.
Crypto cards in stores were in third place, at around two-thirds. They were used online by around 55%.
A few things stand out. First, a large percentage of these consumers, around 20% to 25%, used crypto for high to very high priced items like real estate and vehicles, as well as potentially large purchases like travel. , jewelry, gold and furniture. This was not far off from the number of users spending crypto on mundane purchases like groceries, clothing, food delivery, and attending events.
This suggests that a high percentage of crypto consumers are crypto rich — or at least affluent: people who have reached at least six figures in their investments.
At the high end, this includes early investors in bitcoin, ether, and other assets that have made large, even huge returns, although bitcoin and many other cryptocurrencies have lost more than half. of their value since November. Part of it is quite recent. At the end of 2021, five cryptocurrencies were up around 10,000% to 15,000% and a few others 2,000% to 3,000% on the year.
If you think about it, who is making large crypto purchases? If you’re wealthy enough to have bought tens or hundreds of thousands of dollars in bitcoins after it started to skyrocket – that’s about when it became a more mainstream investment – you have enough liquid assets to use dollars or other traditional fiat currencies. Why pay the full value of a house in crypto all at once when you could take out a 20 or 30 year mortgage in dollars, especially when newer bitcoin investors tend to expect exorbitant returns?
middle class buyers
Looking at categories such as groceries, apparel, computers and technology equipment, education and training, restaurants and food delivery, subscription products and entertainment, and event outings, two likely consumer types emerge.
First, the same group of crypto-rich who spend a lot would also spend a little. This is a group that on the whole does not tend to diversify too much, believing that crypto still has a lot of “mooning” to come.
Second, you have people who have earned extra income and want to spend it on living a little more or on basic needs.
This is consistent with other findings from the study “US Crypto Consumer: Cryptocurrency Use in Online and in-Store Purchases”.
On the one hand, he revealed that high-income consumers and millennials — those with six-figure incomes — “are most likely to consider cryptocurrency as a payment option” and are more likely to say they prefer to shop at merchants that accept crypto. But while that was 28%, 20% of crypto consumers earning less than $50,000 said the same.
So, who is spending crypto?
Like anything else, those who have more wealth to spend, spend it more. But a growing number of users across the income spectrum are spending it as more people buy cryptocurrencies as an investment and ways to spend it become easier.