Retail data points to Bitcoin Cash (BCH) fulfilling the original promise of Bitcoin as a “Peer-to-Peer Electronic Cash”, a fast, reliable, secure, and efficient currency.
Our last report (September 2019) was a story confirming Bitcoin Cash (BCH) retail ascendancy with BCH accounted for 92.45% ($36,431) of the total cryptocurrency spend, a stunning 80.3% of total cryptocurrency transacted, and the heaviest recorded cryptocurrency spend per transaction.
The September data was bolstered by the Bitcoin Cash City Conference earlier in that month, a first of its kind as delegates were expected to “walk the talk” and use Bitcoin Cash exclusively for all their needs; flights, accommodation, scenic helicopter tours, food, taxis, entertainment etc. The conference was a major success injecting a bucket of Bitcoin Cash to the local economy over the course of the event and set a high bar for cryptocurrency conferences generally.
But what of the relative crypto performance without a major event supporting the Bitcoin Cash tally? And why is retail data so important?
By limiting the comparison to retail data we achieve the very best contrast of the respective value of each crypto. If merchants are willing to accept a crypto as a payment option, there must be a perceived value for their business. Tempting market share away from fiat at the cash register is rather difficult and requires a justifiable value proposition. Looking at merchant retail data is perhaps the single best indicator of a crypto’s utility as a currency. Such hard retail data signals utility and is a vital metric if markets are to make informed decisions.
Sourcing the Data
The Australian crypto retail landscape is dominated by two systems, a conventional multi-crypto PoS by TravelByBit and a fast growing group of merchants electing to support just a single crypto - Bitcoin Cash (BCH). Between them the data confidently covers the vast majority of crypto retail sales in Australia. TraveByBit PoS, being centralised, enjoys a convenient view into all their retail data while on the other hand, characterizing Bitcoin Cash retail sales has been notoriously difficult due to the very nature of their decentralised peer-to-peer payment system. Recently however, Bitcoin Cash merchants have begun adopting the Hula, an innovation that is helping to automate parts of the adhoc decentralised underwriting network pioneered in Australia by these merchants. Among other things, the Hula supports a direct conversion capability that many merchants find useful and as a side effect also provides the first practical view of Bitcoin Cash retail traffic in Australia.
Verified data and graphs
In maintaining the confidentiality of the merchants whose retail data contributed to these reports, our analysis has attracted some petty criticisms. In an effort to both protect our merchants and provide an additional measure of confidence, we have elected to have our raw data and analysis reviewed. The reviewer concludes:
“In my opinion, based on the assumptions and methodology as outlined below, the data and graph results as provided by Hayden Otto in the Report titled Australian Cryptocurrency Expenditure at Retail Business - October 2019 give a true and fair view of Australian cryptocurrency expenditure for retail businesses for the month of October 2019.”
Examining cryptocurrency usage
Bitcoin Cash (BCH) is by far the most useful cryptocurrency with Australian retailers. The chart below has Bitcoin Cash trouncing all other cryptocurrencies combined with a staggering $19,450 (90.74%) of the total October cryptocurrency retail spend.
The data indicates a collapse in retail sales for most of the minor coins: LN shrank from $1,224 in September to $941 in October, BNB shrank from $913 to $457 and BTC from $744 to just $251.
When considering the total number of retail transactions (see graph below), Bitcoin Cash (BCH) is again a titan with 264 transactions (75.0%) of all transactions recorded across Australia for the month. LN accounted for just 50 transactions (14.2%) and even when combined with BTC’s 16 transactions (4.6%), their total of 66 (18.8%) falls short of the 70 transactions LN alone achieved back in September. The balance is made up of BNB 12 transactions (3.4%), LTC 6 transactions (1.7%) with BSV 3 (0.8%) and ETH one only (0.28%).
Comparing back-end systems
The TravelByBit PoS market share continued to shrink during October, recording just $2,041 in sales down from $3,737 in September.
It appears that TravelByBit PoS is in some trouble and unable to gain any advantage over merchants fielding just Bitcoin Cash alone, and it is easy to see why.
Why would a merchant want the trouble, expense, training, and complication of deploying a PoS system that supports a basket of currencies when the bulk of a merchant’s business is in Bitcoin Cash (BCH) in any case? There are further disadvantages with operating multi-coin PoS machines. Any coin hosted on a multicoin PoS becomes uncompetitive against fiat systems. The TravelByBit PoS is slow and cumbersome when it is these very properties that dominate the user payment experience (PX).
The higher density of Bitcoin Cash merchant adoption presents BCH merchants with the significant circulation advantage underpinning their dominant retail sales. Also, underwriting and the Bitcoin Cash Hula in particular, allows many smaller community based investors to participate in the circulation and provides a ready source of cheap coins for their spend-and-replace activities. The Hula is in effect amplifying BCH circulation by reducing the time it takes to put coins back into the community. In contrast, the TravelByBit PoS has the double disadvantage of both instantly extracting supported coins from the community and lowering the density of adoption with their policy of hosting multiple coins.
Australian retail data is indicating that, in order to compete with the Bitcoin Cash (BCH) juggernaut, other cryptocurrencies are best to go it alone - they are advised to win over merchants directly to their coin and avoid multicoin PoS systems altogether.
When looking at the transactions processed by each service (see graph below), TravelByBit continues to lose market share dropping to 91 transactions from September’s 151.
Examining the daily transactions for the month, we observe two days of very high Bitcoin Cash (BCH) retail traffic (see graph below). On October 14th a large BCH purchase was made while on 23rd clearly a big event (not believed to be a Bitcoin Cash meetup) was held at a leading restaurant.
By removing these (legitimate) outliers, we can get a view of the relative daily retail spend per coin.
The graph below is the same retail data minus the two large (valid retail) transactions. On only 4 days during October did the combined retail spend of all other coins exceed that of Bitcoin Cash (BCH).
The daily transactions for October also consistently featured Bitcoin Cash (BCH) and only 5 days did the combined transactions of all other coins exceed the Bitcoin Cash daily total.
The October retail data confirms the strong utility of Bitcoin Cash (BCH) relative to other coins. This utility is more pronounced when merchants adopt a single cryptocurrency, especially if the bulk of retail business is in that one cryptocurrency in any case. Further, if a group of merchants accept a single cryptocurrency, the effects are amplified with circulation, user groups, and supporting technical development.
We conclude that Bitcoin Cash (BCH) is now firmly entrenched in Australia and will be virtually impossible to dislodge. Bitcoin Cash (BCH) is busy absorbing the remains of the Australian retail cryptocurrency market and continues to grow and win market share away from fiat systems consistent with its global mission. Upcoming improvements targeting compliance, along with major projects, will likely allow further BCH penetration into the Australian economy.
It is not just the tough retail space that Bitcoin Cash (BCH) is dominating. In Australia, Bitcoin Cash is onboarding the most young people, enjoys the most meetups, the only fielding new and exciting retail technologies, the one with the largest development programs, and the only that has founded several major projects. What is more, the techniques that have allowed Bitcoin Cash to flourish in the land down under are easily replicable in other economies. Finally, the importance of hard retail data whereupon merchants must decide to accept a cryptocurrency as a payment option, can not be understated for revealing the measure of a coin’s utility. Such information is essential for traders and investors to make informed investment decisions. Australia’s retail data suggests a complete reversal is in order. Bitcoin Cash (BCH) comprehensively dominates the utility leaderboard whereas the market perception has Bitcoin Core (BTC) priced more highly. It appears the markets have yet to price-in Bitcoin Cash’s superior utility or Bitcoin Core’s retail collapse.