More Consumers Buying Crypto and Want More Ways to Spend It

If you want insight into how the cryptocurrency business as a whole is doing these days, look at how people are using it.

“The more places that you can spend crypto, the more reasons people have to spend crypto,” BitPay CEO Stephen Pair told PYMNTS’ Karen Webster recently. “And we’re seeing a huge amount of interest among merchants. What’s going on now is merchants are going to their existing payment processors and asking them to support crypto.”

And those merchants are asking that because their customers are asking for it. One quarter of consumers prefer to shop with merchants that accept cryptocurrency, according to PYMNTS’ U.S. Crypto Consumer study, released in April. Look at consumers earning more than $100,000, and that jumps to 29%.

See also: The U.S. Crypto Consumer: Cryptocurrency Use In Online and In-Store Purchases

More to that point, the number of those choosy consumers are growing, for that simple reason that crypto ownership is growing: 23% said that they own or have owned crypto within the past 12 months, up from 16% a year ago. That’s almost 60 million consumers, up 18 million according to the survey, which was done in partnership with BitPay.

“I think it’s organic growth,” Pair said. “You know people that are getting exposure to it, telling their friends about the family about it. And you’re just seeing more and more people ready to experiment and try something new. It’s a tremendous amount of growth.”

One reason for that is it’s easier to get exposure to crypto than in the past, Pair said, pointing to services like PayPal and Robinhood that are far more comfortable to navigate than crypto.

Why Buy?

That said, very few people are buying crypto specifically to use it to buy something else — cross-border payments aside, which are seeing an uptick as crypto-based services can make remittances and small payments faster and cheaper.

“What we’re trying to do is make it easy for people that have crypto to buy things,” Pair said. “It’s largely people that have experimented — made a small investment that has grown, and now they’re ready to buy something.”

Those people would rather be able to just spend that crypto rather than sell it on an exchange — paying fees that can be stiff, especially for bitcoin and ether, the two biggest cryptos — and then off-ramping it to a bank account.

“We just want to make it as easy as possible,” Pair said. “Wherever they have their crypto, we want to be able to let them use it to pay for things.”

One way BitPay does that is by testing and supporting almost 100 payments apps and more than a dozen cryptocurrencies, adding new ones regularly, he said.

Which Cryptos?

The simplest answer, after bitcoin and ether, are the ones that meet two criteria: First, they have to be on solid blockchain platforms, and second, people actually have them.

The biggest growth came from dollar-pegged stablecoins like Circle’s USD Coin, but others like dogecoin, a so-called memecoin with an intensely loyal and active following, also made the cut.

“There was a lot of marketing value that companies derived out of that, a lot of opportunities for marketers to generate interest in companies that support those coins,” he added.

As for stablecoins, Pair said he thinks the recent growth is due in large part to people not wanting to spend cryptocurrencies like bitcoin when they are in a bear market. Rather, they will buy stablecoins when the market is hot to be ready or able to make purchases.

“I’m sure that trend will go back in the other direction and people will want to tap into that wealth as the price of Bitcoin rises,” he said.

In addition, some crypto owners borrow stablecoins against their crypto in crypto lending platforms run by a number of exchanges, as well as decentralized finance (DeFi) projects.

Another issue is that stablecoins are largely issued on ethereum, which can mean high transaction fees, so BitPay is looking at stablecoins issued on other blockchains. Some of the biggest stablecoins, like tether and USD Coin, have versions native to a number of different blockchains, so you don’t need to sacrifice name recognition or wide acceptance.

Related: BitPay Adds New Crypto Wallets and Exchanges

While bitcoin has the same transaction fee issues as ethereum, a new option BitPay is supporting is the Bitcoin Lightning Network, a “Layer 2” solution that piggybacks on top of the Bitcoin blockchain, processing transactions on a faster, low-fee platform and sending bundles of finalized transactions down to be permanently written onto bitcoin — which is far and away the most secure blockchain.

“I think as soon as consumers make a purchase, as soon as they try it out, they realize how easy it really is, and then they do it again and again — and that’s our goal, to make it simple for them to try it out,” Pair said. “And then we think that they’ll love it and they’ll keep doing it.”