The use of cryptocurrencies in the retail market

Cryptocurrencies in Retail - Consumer Report


It is well known that one of the functions of cryptocurrencies is to act as a means of payment. However, the size and characteristics of the phenomenon, particularly the use of cryptocurrencies by retail consumers, has never been clear. The research carried out by CryptoRefills Labs has shed light on the current situation, explaining not only the size of the phenomenon, but also the demographics of the users, their characteristics in terms of age, level of education, and income level.

Finally, the report clarifies what are the reasons why these consumers pay for goods or services with cryptocurrencies, what types of products they buy and what problems they may encounter when using them.

Who shops with cryptocurrencies

There are crypto-consumers in every country of the world, but the distribution is not completely homogeneous. There is a higher percentage presence in the more technologically advanced countries, where there is a higher number of people who come into contact with cryptocurrencies for professional reasons. On the other hand, in the poorest countries, where the number of people who do not have access to financial services is high. These people must resort to alternative means to transfer their funds (migrants, for example, are a category in which the use of cryptocurrencies is high precisely to avoid the fees associated with traditional money-transfer services) and they often use cryptocurrencies.

The three countries with the highest crypto-consumer presence are the U.S. (7.6%), Nigeria (6.6%) and India (6.2%), these countries, therefore, host one-fifth of the users.

In terms of geographic areas, however, the area with the highest presence of crypto-consumers is South Asia (22.8%) followed by Sub-Saharan Africa (19.4%) and Europe & Central Asia (18.7%).

Image 1. Breakdown of crypto-consumers by geographic area

Thus, there is a strong interest especially in the use of cryptocurrencies for retail purchases in both countries with a more developed economy and those with a less developed economy.

This is also shown by the fact that 52.2% of crypto-consumers are in countries whose population has a low or lower-middle income.

The cryptocurrency use obviously also changes depending on people’s characteristics, depending on age, educational qualification, gender and type of occupation.

According to statistics, the average crypto-consumer is male, is between 25 and 34 years old and has a high school degree, is self-employed or an entrepreneur and has an income between 10 and 20 thousand dollars. More specifically, crypto-consumers are 91.2% male. Generation Z (between 15 and 24 years old) accounts for 32.8% of users, while Generation Y (between 25 and 34 years old) is the largest group (39%). Generation X (between 35 and 44 years old) reaches 18.3%, while above 44 years old there are only 10% of crypto-consumers.

Image 2. Breakdown of crypto-consumers by age groups

As for educational qualification, the median user has a high school diploma, but in reality the highest concentrations are found among people with Bachelor’s (20.7%) and Master’s (17.1%) degrees, and among those who only attended primary/secondary school (10.5%).

In terms of employment, however, people who are self-employed tend to use cryptocurrencies in their purchases to a greater extent. Among crypto-consumers, 29.3% are self-employed and 13.5% describe themselves as entrepreneurs or investors, thus representing a total of 42.8%. On the other hand, 28.3% are employed, 20.7% are students, 6.9% are unemployed and only 1.4% are retired.

Among those in employment, the software, education, and computer/electronics sectors dominate, each with about 10 percent people.

If we look at the income of crypto-consumers, we find them at all levels: 46.1% of people, however, have an annual income of less than 10,000 dollars while 19.4% are between 10,000 and 20,000 dollars. As income goes up, the percentage of users goes down, but this is in line with the income distribution in the global population, however the presence of crypto-consumers with high incomes is higher percentage-wise than the global one. People with high incomes therefore have a particular tendency to make purchases with cryptocurrencies.

What they buy

The goods and services purchased by crypto-consumers are obviously limited to those offered by companies. Digital goods and services are therefore more purchased than physical goods and services.

The most bought product is phone recharges (including extended data volume and communication time), 55.2% of crypto-consumers buy them.

This is followed by credits for video games and their related content, which reach 52.3%, and the purchase of smartphone apps, purchased by 34.7% of people. Further down the list come digital entertainment products (video on demand, music, etc.) with 28.5% and the purchase of other (non-mobile) software at 22.2%.

Image 3. Most purchased goods and services by crypto-consumers

Preferences for purchased goods and services differ by gender, income level and type of employment of consumers. For example, men buy significantly more products belonging to digital entertainment, cloud services, hardware, software, and publications than women, while women buy more than men in the areas of fashion, food, and smartphone apps.

How they buy

Among all the products that are bought with cryptocurrencies, only 59.6% are bought directly from the stores, in the remaining 40.4% of cases cryptocurrencies are used to buy gift cards and vouchers that are later used in the stores. This is essentially to have the possibility to buy products even in stores that do not accept cryptocurrency payments.

In terms of cryptocurrencies used, Bitcoin leads the way with 78.3% of transactions. Although there are thousands of cryptocurrencies in circulation, about twenty of them account for 90% of the market capitalization and therefore almost all transactions are concentrated on them.

The second most widespread cryptocurrency is Ethereum (54.5%), which is, however, the third in terms of use in shopping, surpassed by Litecoin (31.2%), probably preferred for the lower costs of commissions.

Image 4. The most popular cryptocurrencies among crypto-shoppers

Why they use cryptocurrencies

70.4% of crypto-consumers consider it attractive to buy goods using cryptocurrencies, and two-thirds of people consider cryptocurrencies a normal means of payment. Specifically, 68% believe they have compelling reasons to pay for products or services with cryptocurrencies. 70.4% use cryptocurrencies because they think they are the future of payment systems, about 57% of people consider it a safer system than traditional payment systems tied to banks and financial companies, and again about 57% are against currency control. Then there are cases where the use of cryptocurrencies has become almost essential, these are the countries with a struggling economy where the local currency is subject to large fluctuations in value. In these contexts, people often lack other reliable payment systems. Forty-three percent of crypto-consumers are unbanked or underbanked, and two-thirds of crypto-consumers in low-income countries said they have no other means of payment.

Those who buy with cryptocurrencies do so with some regularity: 40.5% of people shop at least once a week, while a quarter buy rarely, about once a year.

Future use

The indications from the surveyed sample on the future use of cryptocurrencies for purchases is positive: two-thirds plan to make new purchases in the next month, while 14.8% do not plan to do so. 81.2% plan to buy products or services in the next six months.

We can therefore conclude that crypto-consumers get some benefits from using cryptocurrencies in purchases, so they intend to continue and are willing to tolerate the costs and possible difficulties.

User experience

About two-thirds of crypto-consumers find shopping with cryptocurrencies easy, while one-fifth consider the payment process a challenge. Only 48.3% of consumers know where to find stores that accept cryptocurrency, and only 41.4% say they know how to find reliable and secure stores.

In general, consumers are satisfied with the shopping experience, however, this satisfaction is greatly reduced as fees rise and order confirmation times lengthen, delays caused by the underlying blockchain infrastructure that cannot guarantee consistent and relatively short transaction validation times. Validation times vary by cryptocurrency, but also by time, as they are tied to the number of transactions waiting for validation. Approximately one-fifth of the orders in the sample studied had immediate approval, and another third were confirmed within 5 minutes. Overall, 80% of orders were confirmed within 20 minutes. But 4.6 percent were confirmed between 1 and 6 hours, while 3.4 percent took more than 6 hours.

The study finds that crypto-consumers find it satisfactory to receive order confirmation within an hour.

Image 5. The time it takes for an order to be confirmed

Then there’s the issue of transaction validation fees: nearly half of people find them too high. The fees change depending on the currency and network congestion and can range from a few cents to several dollars. During the study period, on the day when the median was highest, the fee for Bitcoin was $9.27, while it was $3.2 for Ethereum and $0.001 for Litecoin.

For those who purchase low-cost products or services, the issue of commissions is very sensitive, because it could greatly affect the overall cost of the purchase.

To remedy the situation, for example, you can use Lighting Network, a layer 2 payment protocol that allows you to perform off-chain transactions while only saving on-chain the final result. The current percentage of purchases using this system is still very low, about 1.9% as of February 2021, but users using this payment method have a higher level of satisfaction than others. In general, we also see a higher level of satisfaction in people from Generation Z and Y, while it drops for older consumers.

There are also other factors besides order approval time and fees that prove to be barriers for the crypto-consumer: lack of stores of interest that accept crypto payments, fear of fraud, uncertainty regarding privacy, and the fact that products are sometimes priced lower if they are paid for with fiat currencies.

Image 6. Problems crypto-consumers encounter while shopping


The research shows that there is a global spread of cryptocurrency use in the retail market but there are still some difficulties that pose as barriers for those who want to use this means of payment and therefore should be resolved. The main obstacles to broadening the crypto-consumer base are: the limited number of stores that accept cryptocurrency payments, high fees for transaction validation, and possible long waiting times for order approval.

An effective way that many shoppers use to bypass these difficulties is through the use of giftcards and vouchers. Advances in technology are forcing many permanent changes in consumer shopping habits. Like online banking, credit cards, and digital money, cryptocurrencies are also becoming an integral part of the modern economy and finance.

Seventy percent of consumers who use cryptocurrencies believe that cryptocurrencies will be increasingly commonly used in the retail market.

The research shows that the best cryptocurrencies by market capitalization and stablecoins have the best chance of success provided they can offer easy, scalable and cost-effective solutions to both consumers and businesses.

Such scalable solutions can go through other blockchain, sidechain and scalability networks as long as they are deemed usable by both merchants and consumers.

Read the full Report on CryptoRefills Labs website.