Friday another Bitcoin milestone was reached, as it is the first day that Internet retailer Overstock.com (Nasdaq: OSTK) started accepting the digital currency as payment.
If it seems puzzling that more and more merchants are taking Bitcoin seriously, you need only consider who uses Bitcoin. Two studies of who uses Bitcoin done earlier this year indicate that the typical user of the currency is male, relatively young and – most importantly – fairly affluent.
“One thing that people haven’t focused on with Bitcoin is that its users are a very attractive advertising demographic,” Nicholas Colas, chief market strategist at ConvergEx Group, told CNBC.
The mysterious nature of Bitcoin (they don’t exist in the physical world, despite all the photos you see of them), the extreme volatility of Bitcoin prices, and the unsettled regulatory situation with many world governments have restrained widespread adoption by merchants.
But as these concerns fade, the lure of attracting well-off Bitcoin users will tempt more vendors to take Bitcoin as a form of payment, which will in turn solidify its position as an alternative currency.
The surveys of who uses Bitcoin did not hold a lot of surprises. Bitcoin users are overwhelmingly male (88%), with an average age of about 32.
What few may have expected – and the one data point sure to draw the attention of more businesses – is that a person who uses Bitcoin frequently has a higher-than average income.
The Growing Appeal of Who Uses Bitcoin
According to demographic research firm Quantcast, nearly half of the people who use Bitcoin have annual incomes of $50,000 and above. More than one-third – 35% – have incomes over $100,000, and more than a quarter, 26%, make more than $150,000.
And it doesn’t hurt that most of these folks are by definition also very tech-savvy and are comfortable using the Internet to make purchases.
That’s also why many of the businesses that have made the move to accept Bitcoin so far are also web-based, such as game company Zynga Inc. (Nasdaq: ZNGA), dating website OKCupid, and blogging platform WordPress.
“Bitcoin is well suited for online transactions. It has no transaction fees and works well for international customers,” said Overstock.com Chairman and CEO Patrick Byrne. “Providing this convenience for the cult-following Bitcoin customer is the smart thing to do. Other online companies will have to follow suit soon.”
In fact, Byrne said the king of online retailing, Amazon.com (Nasdaq: AMZN), will have no choice but to start using Bitcoin or “cede the market” to Bitcoin-accepting sites like Overstock.
Actually, people can already use Bitcoin for more conventional purchases thanks to a Gyft, a mobile gift card app that allows people to use Bitcoin to buy gift cards for more than 200 vendors.
ClearGate & CIEO
Bitcoin Merchant Services