An Analysis Of The Bitcoin Market In E-Commerce

Blockonomics, one of the leading Bitcoin payment gateways, has just released an analysis using their e-commerce data to provide a snapshot of how the Bitcoin and e-commerce markets intersect and have grown or waned over the past three years. The report offers a look into the growth of Bitcoin and e-commerce, users of both, and what the future might bring. Blockonomics started in 2015 and has seen significant growth in the past three years, allowing them to stay on the pulse of the market.  

For their analysis, Blockonomics pulled data on who was utilizing their service, what industries merchants are from, and other basic information. Unlike most payment providers, full ID verification is not performed. Overall, this data provides insight into how e-commerce and Bitcoin have grown since 2017 and what industries intersect with e-commerce in mind.  

Which e-commerce industries use Bitcoin the most? 

Blockonomics found that web hosting, health, and cannabis were the biggest users of Bitcoin in their e-commerce stores. In 2020, 75% of their market share was split between those three groups. Web hosting saw a 12% increase in the first half of 2020. This makes sense, as COVID-19 has forced a lot of people to move their business operations online. Somebody needs to host those servers. For the companies working in and with technology, using Bitcoin comes more naturally than for the average person that is not familiar with digital asset transactions. 

Meanwhile, cannabis is also a fast-growing industry with a 54% increase in the number of merchants using Blockonomics’ payment solution. As cannabis continues its path to legalization, this number is expected to rise. Bitcoin is an easy way for cannabis companies to manage their sales as banks are typically hesitant to provide financial services to the cannabis industry. Health stores also saw a 17% increase from 2019. 

Bitcoin for physical goods is a thing

Despite the common stereotype that Bitcoin is only used to buy digital goods and services, that’s far from the truth according to Blockonomics’ data. Cannabis and health stores top the charts, as well as a growth in purchases within vaping stores in the past year. People are buying physical goods with Bitcoin and that trend is growing.

Bitcoin Mining on the Decline

One interesting aspect of the data is the decline of Bitcoin mining companies using the service. In 2017 and 2018, Bitcoin mining was in the top 10 for Blockonomics, but has since seen a decline in usage, especially in the first half of 2020.  This was largely due to a decrease in the price of Bitcoin in 2018 and 2019. Despite the recent price increase, a lot of miners have moved on to greener pastures. The drop also ties in with the 2018 drop in NVIDIA's stock, a GPU company. Miners use GPUs to mine for Bitcoin, and similar with the price crash of Bitcoin, NVIDIA also saw its stock shoot way down. 

Final Takeaway

Blockonomics’ data also offers a glimpse into the future. New industries are entering the Bitcoin market looking to increase their own market value or bypass banks that might be making it hard for them to obtain easy financing and credit card services. Blockonomics has seen the following industries grow the most so far in 2020:

The results of the survey both confirm and dispel some ideas of the e-commerce and Bitcoin intersection. For example, cannabis and web hosting were expected. However, the lack of digital goods makes the results surprising. Beyond miners, web hosting providers, and crypto exchanges that offer a digital service, the top industries using Bitcoin are in fact oriented around physical goods. In this study, digital goods do not have as strong of a market share as many other industries. 

Examining this data offers a fascinating look into the world of e-commerce and Bitcoin. It allows us to explore who is using Bitcoin and for what goods and services. The growth of Blockonomics as a company also shows how Bitcoin itself is growing in the e-commerce world. More and more entrepreneurs are looking to include Bitcoin payment options at their physical stores. It will be interesting to see the data from the rest of 2020 and 2021 as the COVID-19 pandemic progresses.