From a marketing and research perspective, there’s a lot to be said these days for the use of personas.
On a high level, they can help companies understand the needs, behaviors and attitudes of key customer groups. For example, a digital nomad won’t settle on one bank for very long. But a digital quality seeker will go for traditional banking companies and stay there.
Personas can work for even the most volatile industries, and there’s none more volatile right now than cryptocurrency. There’s the crypto-newbie, the crypto-enthusiast and the curious investor. Or maybe it’s as simple as the sophisticated, hardcore crypto investor and the casual crypto-spending user. As more consumers want to spend cryptos, and more merchants want to accept them, these personas take on greater importance. After all, the PayPal user who buys a latte at Starbucks is a lot different from the investor who just spent $100,000 for Coinbase stock.
The result is the emergence of different approaches, products and/or ecosystems — different paths and options — that support different ways to cross the Rubicon from investing and speculating toward actually transacting. It’s early innings, yet, and volatility remains the key crypto hallmark. After all, it’s not uncommon to see bitcoin — the marquee name and arguably the proxy for the space — to swing wildly by 20 percent or more percentage points. At a recent $62,000, we’re leagues above lows around $3,000 seen not all that long ago, and near new highs. That volatility might make some people hesitant to embrace cryptos as a means of commerce.
As BitPay CEO Stephen Pair told PYMNTS, the market is starting to see the differences in crypto customers and treat them accordingly. As Pair noted, the casual crypto user might not understand that the current volatility is the basic economic function of supply and demand at work.
It’s impossible to create more crypto beyond what its algorithm prescribes, and as Pair said, “because that supply function is fixed, then your price is going to be very reactive to changes in demand. So, if demand goes up, it’s going to be reflected in the price. That’s what creates volatility.”
That stands in marked contrast to national currencies like the dollar, where central banks can manipulate supply to try to maintain pricing within some prescribed or preferred band.
He said bitcoin’s volatility is also spurred by the interest some people have in grabbing onto the crypto as a store of value (with the added lure of the fact that it is the most secure and oldest blockchain in the world) even if they’re not, actively, looking to buy and sell goods and services with the coins (or fractions of them).
“Many people — myself included — would say the store of value is a great use case for bitcoin,” he said. “… You’re speculating that it will be that [store of value] in the future.”
The upward trend in crypto prices has people thinking about what they could buy with their gains, he said. Those gains motivate people to look past the fees that are tied to bitcoin transactions (and which, in the past, along with relatively slow computer network/processing times, seemed headwinds for mainstream adoption).
As Pair told PYMNTS, crypto newbies may not understand the reasons why their latte cost $15 with bitcoin. The fees on the bitcoin network to get a transaction confirmed are higher than other networks because of the level of adoption and the demand for transactions in that blockchain. Consumers are paying for additional security and the fact that there are more computers securing that network by orders of magnitude.
As time goes on, he said, we’ll see new use cases blockchains that prove their resilience and security. Pair told PYMNTS that contrary to conventional wisdom, the bitcoin blockchain is anything but dumb.
“You can do a lot more than people realize with smart features,” he said of blockchains in general.
We may see the emergence of purpose-built blockchains for specific use cases — such as voting, keeping track of land ownership or issuing stablecoins.
As it stands now, Pair said there has been a move by many crypto enthusiasts to move beyond bitcoin — toward other crypto offerings, such as Litecoin, Ethereum and even Dogecoin. Dogecoin, once a joke and a meme, is now worth almost 20 cents (up from nothing a short time ago) and being used for transactions.
“That’s what happens when Elon Musk and Mark Cuban start tweeting about you,” Pair said.
“People do hold some, spend some and diversify and they say, ‘Well, bitcoin’s kind of the leader, but maybe I should look at some of the others just as a hedge,’” he added.
As the actual coins on offer diversify, different paths toward getting merchants and consumers to transact are taking shape. There’s the “build your own approach,” which has been Tesla’s initiative, in which the company has been using internal and open-source software to operate nodes (computers) directly to take payments.
“I think they wanted to have control over the complete user experience and make it a ‘Tesla thing,’” said Pair, who added that Tesla is actually using a real bitcoin transaction — but that from-the-ground up approach will be “the exception, and most companies are going to opt to use a provider like BitPay to process payments.”
BitPay, he said of his own firm’s approach, enables crypto spending and, importantly, merchant acceptance directly on the blockchain across a variety of cryptos, and customers can pay using more than 80 wallets.
“PayPal owns the crypto, and you have a balance,” he said, which may deter users who actually want to own the crypto itself.
“PayPal is not creating a transaction on the blockchain network,” he added. “When you make a payment, PayPal is using their existing technology for the payment. Whereas with BitPay, we’re actually using the blockchain technology to make the payment happen.”
As it stands now, transactions across PayPal start with fiat currency (such as dollars), move it into PayPal wallets, use the balance to buy bitcoin, transact with the merchant, and convert the crypto back to dollars that are sent to the merchant.
“If you’re using crypto to transact on a day-to-day basis, you’re probably not going to use PayPal for that,” he said. “And if your interest in crypto is for investment purposes, you’re probably also going to use something other than PayPal,” such as Coinbase or Kraken.
The Coinbase Factor
It will be interesting to see what personas and consumer types come out of this week’s Coinbase initial public offering (IPO). With the excitement over the Coinbase listing, and with the continued upswing in crypto prices, Pair said, “if you start out investing in something and then it becomes worth significantly more, I think you’ll find that many holders of bitcoin and other cryptocurrencies — after they appreciate — are going to want to buy things.”
The Wednesday (April 14) debut of Coinbase, depending on the point of view, was a seismic event for cryptos or simply a continuation of a story that’s been winding through more than decade. Share prices soared that first day of trading, where, intraday, the market cap of Coinbase stood well above $100 billion. For some context, the market cap of American Express is $118 billion.
The Coinbase listing comes on the heels of PayPal’s announcement that it would start letting U.S. consumers transact with merchants using bitcoin, Tesla’s statement that consumers can buy cars with bitcoin and Square’s decision to let P2P transactions done in bitcoin go through without fees. And at least some observers remarked that it all marks the “beginning of crypto” — where the digital offerings are moving mainstream, and in a sense, downstream, into consumers’ hands.
As Pair said, “The Coinbase IPO shows there’s a huge demand among investors for exposure to companies building out the infrastructure for blockchains and cryptos.”
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