Australian Cryptocurrency Expenditure at Retail Businesses - September 2019

Hayden Otto

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Australian Cryptocurrency Expenditure at Retail Businesses September 2019
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Despite its small population, Australia has certainly proven itself as an innovative global cryptocurrency adoption leader. Unafraid to pioneer new technologies such as Underwriting, Australia is challenging conventional Point of Sale (PoS) system approaches and even developing and fielding new domestic systems. This monthly report sheds some light on the relative scale of these approaches as revealed by hard merchant data. The results may surprise you.

Sourcing data

For merchants looking to accept cryptocurrency, there is a common problem that many are not comfortable dealing with - price volatility. In Australia there is an emerging contender to the traditional payment systems approach to mitigating volatility risk called Underwriting. Underwriting has become popular in Australia for performing back-end direct conversions as it is more decentralised than payment processors and keeps coins circulating in the community longer with dramatic results.

This report captures and analyses the majority of all merchant cryptocurrency payments in Australia for the month of September 2019 by harvesting data from both the underwriting systems and TravelByBit (TBB), a dominant payment processor operating in Australia.

TravelbyBit is a multi-coin point-of-sale system that has been operating since September 2017 with 195 merchants using their product. According to the TBB website, they accept Bitcoin Core (BTC), Lightning Network (LN), Binance Coin (BNB), and Litecoin (LTC) but are known to accept Bitcoin Cash (BCH) at a limited number of merchants in Brisbane City, Brisbane Airport, and the town of 1770. TBB is most known for launching the world’s first cryptocurrency airport in Brisbane and for helping set up the town of 1770 with cryptocurrency payments with the help of Queensland government grants and a $3.5 million investment from Binance. TBB’s live transaction data was recorded from here.

Travel by Bit Map
Map of TravelbyBit merchants

Underwriting is an innovation that grew out of Bitcoin Cash (BCH) merchant adoption and is a broad term for agreements between a Bitcoin Cash (BCH) investor and one or more merchants. With underwriting, the merchant enjoys a ready buyer of Bitcoin Cash (BCH) willing to buy at the exchange rate at the time of sale, thus commuting each BCH sale into a cash sale and saving several percent in EFTPOS bank fees. The BCH investor on the other hand, enjoys the benefit of buying cryptocurrency without any exchange fees by avoiding exchanges altogether. Further, the underwriter is likely a member of the local community whose actions help keep the coins circulating rather than instantly being repatriated as is normal for centralised payment processors.

Only two months ago BitcoinBCH.com launched the HULA (Hockings Underwriting Logistics App), an automated underwriting system that is proving popular among the broader Australian underwriting community with 17 businesses currently utilizing the technology. Ordinarily it has been difficult to estimate the BCH retail economy in Australia on account of it consisting of a decentralised conglomeration of merchant agreements and relationships. There were however hints furnished by some of the larger BCH merchants that a substantial Bitcoin Cash economy may be forming in Australia. Bitcoin Cash (BCH) is the only cryptocurrency that has seen significant adoption in a purely peer-to-peer fashion with over 190 Australian businesses recorded in the Marco Coino merchant directory. While many of the underwritten BCH merchants are still out of view, the HULA affords us our first serious examination of this emerging BCH retail economy.

BCH Map
Map of Bitcoin Cash Merchants

Examining cryptocurrency usage

By combining data from both TravelbyBit and HULA, we can examine the total spend and transaction count for each cryptocurrency across Australia for the month of September. The chart below makes it abundantly clear that Bitcoin Cash (BCH) is by far the preferred choice for Australian users of electronic cash, with a dominant 92.45% ($36,431) of the total cryptocurrency retail spend in September. The balance is a small group comprising LN 3.1% ($1,225), BNB 2.3% ($913), BTC 1.9% ($745) with a barely visible LTC 0.19% ($74.5), BSV 0.03% ($13.5) and ETH 0.01% ($3.5).

Retail graph

Unsurprisingly, the absolute dominance of Bitcoin Cash (BCH) continues when considering the total number of transactions (see graph below) capturing a comfortable 80.32% (502 transactions) of all transactions recorded across Australia for the month. It’s worth noting that even if LN 11.2% (70 transactions) were to be combined with BTC 4% (25 transactions), their total is just 15.2% (95 transactions). The balance is made up of BNB 3.04% (19 transactions), LTC 1.12% (7 transactions) with both ETH and BSV recording a single transaction netting them 0.16% each.

Transactions graph

The total cryptocurrency retail sales in Australia for September 2019 was $39,405 spent across 625 separate transactions. The vast majority of economic activity occurred on the Bitcoin Cash (BCH) blockchain, as noted above.

Table

Comparing back-end systems

By examining the payment processing services (see graph below), we can draw additional conclusions. For example, 91% of Australia’s retail cryptocurrency economic activity occurred with HULA on the Bitcoin Cash (BCH) blockchain which processed $35,667 out of September’s total $39,405. This is despite only accepting a single currency as opposed to a basket as featured with the TravelbyBit PoS.
Point-of-Sale systems supporting a basket of currencies generally result in an inferior user payment experience. Such systems are more complex, require additional steps, support cryptocurrencies not suitable for retail use, and are compounded by poor staff training.
Much can be said for the simplicity of Bitcoin Cash (BCH) which enables merchants to highlight the BCH speed advantage, especially when speed dominates the user payment experience. Close attention to speed is mandatory if BCH is to win business away from VISA and Mastercard. Simpler systems also require fewer steps, less staff training and more modest support.

Pie graph

When looking at the transactions processed by each service, HULA remains dominant on 76% as opposed to TravelbyBit on 24%.

Pie graph 2

One final point to consider is that despite TravelByBit only enabling Bitcoin Cash (BCH) on a minority of their Point of Sale systems, Bitcoin Cash (BCH) was still the 3rd most spent and 2nd most transacted among their supported cryptocurrencies. Given that the vast majority of the Australian retail cryptocurrency economy is conducted on the Bitcoin Cash (BCH) blockchain, TravelByBit would do well to consider enabling BCH on all their systems as a matter of policy.

Table 2

In examining daily transactions for the month, we can observe periods of above average usage. The period of high usage as revealed by the HULA retail data corresponds to the Bitcoin Cash City conference that took place in Townsville, North Queensland, early in the month. The conference was the first cryptocurrency event of its kind that expected delegates to use only Bitcoin Cash (BCH) for all their expenses over the duration of the event. After this period, we can see the usage return to normal levels and yet still match usage of all other cryptocurrencies combined. September 4 showed highest usage that correlates with the Bitcoin Cash North Queensland meetup, where $5,949 was recorded over 105 transactions. Over the period of the month, the average daily usage of HULA was $1,189 spent and 16 transactions. The average transaction size was $75.
The daily usage of TravelbyBit tells a different story with relatively consistent usage throughout the month. However the 17th of September stands out with increased spending and transactions, that correlates with a Blockchain Australia meetup in Brisbane, where $713 was spent over 20 transactions. Over the entire month, the average daily usage of TravelbyBit was $125 spent and 5 transactions. The average transaction size was $25.

Chart
Chart 2
TravelbyBit HULA
Date Spent Txs Date Spent Txs
1/9/19 $55.00 1 1/9/19 $677.67 7
2/9/19 $256.50 6 2/9/19 $2,131.16 62
3/9/19 $32.00 4 3/9/19 $4,464.07 105
4/9/19 $0.00 0 4/9/19 $5,948.95 52
5/9/19 $20.00 2 5/9/19 $645.14 39
6/9/19 $66.83 7 6/9/19 $2,998.51 35
7/9/19 $106.80 5 7/9/19 $2,470.57 86
8/9/19 $84.90 1 8/9/19 $760.52 12
9/9/19 $69.60 4 9/9/19 $4,486.89 13
10/9/19 $145.00 6 10/9/19 $286.12 4
11/9/19 $64.24 5 11/9/19 $7,272.53 4
12/9/19 $216.90 3 12/9/19 $360.70 2
13/9/19 $281.03 16 13/9/19 $115.05 4
14/9/19 $43.50 2 14/9/19 $366.70 6
15/9/19 $135.80 5 15/9/19 $231.03 4
16/9/19 $88.15 9 16/9/19 $102.23 1
17/9/19 $713.00 20 17/9/19 $162.52 1
18/9/19 $64.20 3 18/9/19 $341.22 2
19/9/19 $81.50 2 19/9/19 $165.54 4
20/9/19 $189.10 5 20/9/19 $193.43 4
21/9/19 $63.40 4 21/9/19 $150.54 4
22/9/19 $292.93 5 22/9/19 $157.36 4
23/9/19 $24.10 3 23/9/19 $219.17 3
24/9/19 $56.05 3 24/9/19 $98.73 3
25/9/19 $125.18 7 25/9/19 $390.90 3
26/9/19 $164.12 9 26/9/19 $61.14 2
27/9/19 $107.80 6 27/9/19 $209.09 3
28/9/19 $27.50 3 28/9/19 $168.92 3
29/9/19 $76.20 1 29/9/19 $26.86 1
30/9/19 $85.90 4 30/9/19 $4.08 1
Total $3,737.23 151 Total $35,667.34 474
Average
Per Day
$124.57 5 Average
Per Day
$1,188.91 16
Average
Transaction
$24.75 Average
Transaction
$75.25

Conclusion

Cryptocurrency adoption in Australia has taken some interesting turns. Today there is an obvious shift toward a mono-cryptocurrency adoption policy, where merchants have chosen to accept Bitcoin Cash (BCH) only rather than point-of-sale systems supporting a basket of different cryptos. Further, a large percentage of these merchants have chosen to accept Bitcoin Cash (BCH) in a purely peer-to-peer fashion rather than by way of payment processors. This has made the Bitcoin Cash (BCH) economy notoriously difficult to characterise given the decentralized nature of the network.

Prior to the undertaking of this report, there had been plenty of anecdotal evidence suggesting a thriving Bitcoin Cash (BCH) economy was developing in Australia. In addition to high merchant adoption there has been a steady rise in technical development in the Bitcoin Cash (BCH) space. Most notably the apps and technology revealed at the Bitcoin Cash City Conference, named after the Bitcoin Cash City (Townsville) which rose to prominence on the back of its extraordinary merchant adoption. One pioneering Australian effort has been the invention of Underwriting, which is a major contributor to the success of Australian Bitcoin Cash (BCH) adoption and the expansion of economic activity by keeping coins circulating in the local economy longer.

It was not until the advent of the HULA by BitcoinBCH.com which helped automate aspects of underwriting that hard BCH retail economic data became available. This report was able to piece together the vast majority of cryptocurrency retail transactions for the month of September by combining the data made available by the HULA with that gleaned by the TravelByBit PoS system.

The data confirms that Bitcoin Cash (BCH) is fulfilling the original promise of Bitcoin as “Peer-to-Peer Electronic Cash” of a fast, reliable, secure, and efficient currency. Bitcoin Cash (BCH) alone accounted for 92.45% ($36,431) of all cryptocurrency spent and 80.3% (502 tx) of all cryptocurrency transactions in Australia.

What is also surprising from the numbers, is the extent to which Bitcoin Cash (BCH) has overtaken Bitcoin Core (BTC) in the retail space. Bitcoin Cash (BCH) out-spent Bitcoin Core (BTC) by a staggering 48.93 to one, and recorded more than 20 times its transaction count. One can not help but think the Bitcoin Core (BTC) experiment has almost run its course with only the markets to play catch-up because, in Australia at least,

Bitcoin Cash (BCH) is soundly #1.