Bitcoin Commerce Market Size: How much are Bitcoin users spending?

As I reported previously, the average Bitcoin user reported purchasing about $2,180 of goods and services in the past year. Users were primarily buying internet services, electronics, or illegal goods (probably on SilkRoad).

To estimate the amount of commerce, one needs an estimate of the number of active users. Unfortunately, Mt. Gox hasn’t reported the number of active users in a while. The last time I estimated the sales for the number of ‘active users’ – the number of users who had made an exchange in the last 30 days. I may have underestimated the number of actual users buying/selling stuff with Bitcoins since some users may have been inactive on exchanges but buying goods and services.

Based on the number of unique addresses since April 2012 to just before Easter of this year, about 3.4 times more unique addresses are used every day (46,000/13,000) now. The number of transactions excluding popular addresses shows a similar tripling from just over 6,000 to just over 18,000 daily transactions (I’m ignoring the meteoric increase over the last couple of week).

As of August 2012, Mt. Gox had over 190,000 accounts but only 8% (about 15,000) had actually been active in the past month. In January 2012, Mt. Gox reported just under 23,000 active accounts based on 122,500 accounts (18.7%). Last year,

A Reddit user, John Vandivier, posted a good analysis of the number of Bitcoin users (, but I believe this counts the number of users ever rather than number currently active. He estimated in February 2012 that there are about 450K accounts. As noted above, the number of active users actually dropped on Mt. Gox between January and August 2012, despite the rise in the number of accounts.

So, now here is the very, very, rough math (please feel free to provide suggestions to improve this estimate). Last year in April there were 25,000 active users multiply by 3.4 gives 85,000 active users. This is similar to taking John’s 450k estimate, adjusting for the increase in unique Bitcoin addresses in the past month (about 10%, so we’ll say 50K) and assuming about 15% of accounts are active. This estimate gives right around 80,000 active accounts.

So, if the average user spends around $2,180 on goods and services with Bitcoin about 82,500 accounts are active, and 64.4% have purchased something.

Total Bitcoin commerce in the last year was about $116 million – quadruple the amount from last April.

Similarly, the total average donated per user ($183) multiplied by 82,500 active users and 40% of users who have actually made a donation, creates a total Bitcoin donated estimate of $6.1 million.

A number of things could affect these estimates:

Reddit/Bitcointalk users make more and/or higher valued purchases than average. In particular, the number of very active users who have spent thousands of dollars on goods and services is probably higher on Reddit/Bitcointalk than in the general Bitcoin user population. It’s also possible that many speculators who don’t purchase anything with Bitcoin don’t participate in these forums – Reddit and Bitcoin users are probably more likely to make purchases than average.

The assumption of 82,500 active accounts does not take into consideration users who may only be active less than once a month. It could also be quite conservative given that there are reportedly now millions of wallets.

Last, and least likely, substantial market manipulation could make the market appear more active than it actually is, completely ruining the number of active user estimates.

I think the first is particularly important. The users who reported over $10,000 pretty significantly skew the average and I suspect Reddit and Bitcointalk have the most active users in the entire community. Dropping the users who reported over $10,000 in spending, the average spending per Bitcoin user is a much more conservative $1,200.

At a much more conservative estimate, the total amount of Bitcoin e-commerce in the past year was just over $64 million U.S.

To support my efforts to increase knowledge about the Bitcoin market for goods and services, user sentiment, etc, please make donations to 1EySGJWKjN5U4gQwkvPjNApKxL1KwpCZ9L


One thought on “Bitcoin Commerce Market Size: How much are Bitcoin users spending?

  1. Pingback: What is the real price of Bitcoin? Measuring Bitcoin hoarding, irrational exuberance and the inevitable crash | Bitcoin Survey

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