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.

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Bitcoin Survey Results – 2013


One of the unanswered questions about Bitcoin is one of the absolute most basic – how much stuff do people actually buy with Bitcoin?  It’s an important question. It will tell us if people actually use Bitcoin or if people are still just speculating on the future exchange value.

If it’s the latter, Bitcoin is doomed to failure. No market for goods or services means that the Bitcoin market is just waiting for a negative shock to permanently bury the currency.  On the other hand, if the current userbase utilizes the currency because it provides identifiable benefits to them there is a chance that it will remain an online fixture, barring a technologically superior alternative.

In last year’s survey, Bitcoin users reported spending an average of about $1,550 U.S. each. Given the estimated number of active users, about 25,000, I estimated that the total commerce of Bitcoin in the past year was around $28 million.

In addition to last year’s survey, researcher, Nicholas Christin, estimated that  public Silk Road transactions alone accounted for about $22 million U.S in spending, although he later reduced this estimate to $15 million. His estimate matches quite well with my previous survey, given that I found that about 70% of users admitted that they had used Bitcoin to remain anonymous while making a purchase. A quick and dirty calculation of 70% of $28 million gives $19.6 million. It makes some sense that my estimate is a bit higher given that he only measured public sales.

This Year’s Survey

For this year’s survey, I used GoogleDrive so I could collect a broader range of data. In addition to spending, donation, and mining habits of users, I also collected some baseline demographic data. I had nearly double the number of respondents this year (n =182). A big thanks to everyone who responded!

Bitcoin User Demographics

Survey respondents were from 22 different countries, although over half were from the United States. Europe was also fairly well represented – about 30% of all respondents were European. Despite the recent articles on Spaniards and Cypriots jumping on Bitcoin, less than 2% of respondents were from either country.

Respondents were overwhelmingly male – a full 97% of those who provided their gender chose male.

Most respondents – 61% – had been using Bitcoin for more than 6 months. About 20% of respondents were new to Bitcoin, which is quite a bit higher than last year. I did this survey during a huge price run-up, so that probably explains the jump.

Sixty-five percent were employed, 35% unemployed. However, many of the unemployed were students. Only 15% were both unemployed and not in school.

Nearly half of Bitcoin users have completed a university degree.

Bitcoin User Spending Habits

The spending habits of Bitcoin users were very similar to those from last year. Just under two-thirds of all respondents had purchased something with their Bitcoin in the past year, slightly lower than the 72% of last year. However, the amount spent per user was up a lot from last year. Bitcoin users who had spent any Bitcoin spent an average of $2,180 each on goods and services in the past year compared to $1,550 the year before. The drop in the percent of users who have spent Bitcoin may be related to the recent influx of new users – 58% of new users had not purchased anything with Bitcoin yet.

Some users reported spending well over $10,000 U.S. in goods and services, although the median amount spent per user was $200 U.S.

Many users – about 40% – have made donations in the past year. On average, each Bitcoin user who made a donation had spent about $180 U.S. A few respondents answered that they had donated over $1,000.

Users primarily bought internet services and electronics. However, about 25% of all respondents admitted they used Bitcoin to purchase illegal goods or services in the past year. Obviously, one would expect that this is underreporting the actual number of Bitcoin users who buy illegal goods and services since survey respondents normally underreport illegal activity. However, I think that the share of illegal goods in Bitcoin e-commerce has almost certainly fallen for the following reason.

Anonymity and Bitcoin

What I think is probability the greatest reversal since last year’s survey is that Bitcoin users are no longer as concerned about anonymity. This year, only 31% of respondents said that they had used Bitcoin for purchases to maintain their anonymity. Last year, exactly double – 62% – responded that they had used Bitcoin to help maintain their anonimity.

The drop might be explained by the much broader range of merchants and websites that now accept Bitcoin payment. WordPress, 4chan and Reddit, which have millions of users, have adopted Bitcoin as a payment method. On top of that a number of retailers, especially electronic retailers like BitcoinStore, have opened shop and deal exclusively in Bitcoin.

Are Bitcoin Users Gamblers?

Early adopters of a new technology are generally risk-takers, and it certainly shows. Forty-five percent of users reported gambling at some point with their Bitcoins and nearly one in five had gambled with Bitcoins in the last week.


Although 43% of users reported mining Bitcoins in the last year, over half of Bitcoin miners reported mining less than one Bitcoin. Six users reported mining 100 Bitcoins or more, all of whom had made significant investments – generally, thousands of dollars – in mining technology. The top six miners had mined over 90% of the total Bitcoins.

Bitcoin User Outlook

Like last year, Bitcoin users have a positive outlook on the price of Bitcoin. Despite the recent stratospheric rise in price, 85% of Bitcoin users believe that the price will rise in the next 12 months. Users are even more optimistic about the next five years – 90% believe the price will rise in the next 5 years.

Along with their optimism, 9 out of 10 Bitcoin users also plan on increasing their use of Bitcoins in the next year.

In the next post, I use this data to estimate the amount of Bitcoin e-commerce.

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