While not accepted as an official currency by the Canadian government, cryptocurrency (also known as ‘crypto’) is gaining notoriety. In this article, learn more about cryptocurrency usage as well as the crypto trends that may be useful to businesses.
What we will cover
Digital currencies have become an unignorable trend in the financial sector, so much so that the Bank of Canada has been considering implementing a digital loonie. However, these plans will only go forward if one or more private cryptocurrencies become widely adopted in Canada. Switching to a completely digital economy will likely affect business operations of every kind, especially payment processing systems and other financial services.
To help SMEs get a grasp on the world of cryptocurrency and what it may mean for their businesses, Capterra surveyed over 1,000 Canadians familiar with cryptocurrency to gain insight into the current use and future expectations of cryptocurrencies (find the full methodology at the bottom of the article).
What is cryptocurrency?
Cryptocurrencies, as defined by the Canadian government, are “a type of digital currency created using computer algorithms.” These currencies are based on decentralized systems that record transactions, which are not backed by the government. These systems consist of peer-to-peer (P2P) networks in which the computers of those involved in digital currency transactions make up the network; as such, cryptocurrency is often considered inflation-proof.
Digital currencies can be used to buy goods and services online, though few retail businesses in Canada accept direct payment with crypto. Despite this, 25% of respondents say they are currently using cryptocurrencies, with another 37% planning to use them in the near future.
What types of cryptocurrencies are preferred?
Capterra found that 1 in 4 respondents are currently using cryptocurrency, so it’s possible that some SMEs may start considering accepting them as payment. Cryptocurrency payments aren’t widely accepted by traditional payment methods, meaning it would be necessary to adopt a payment processing service that accepts the cryptocurrencies your customers use most often.
Out of the Canadian crypto-users surveyed, the most used cryptocurrencies were:
- Bitcoin (81%)
- Ethereum (48%)
- Dogecoin (28%)
- Litecoin (18%)
- Cardano (18%)
When considering whether to implement cryptocurrency as a valid method of payment, businesses should take the hype with a grain of salt. While crypto trends have gradually gained traction since the introduction of Bitcoin in 2009, their mainstream use is fairly new. In fact, the majority of crypto users surveyed (31%) had only been using cryptocurrency for between 6 months to a year.
What is motivating cryptocurrency buyers?
For those wondering why crypto trends are growing with such speed, the answers may do more than satisfy your curiosity. Understanding the motivations behind cryptocurrency investments could help businesses reach crypto users as a target audience.
According to our survey, most crypto users (58%) seem interested in using them to make a profit. However, nearly half of them (48%) also appreciated being a part of something innovative and alternative, which may allude to their values as buyers.
When it comes to the method of making these investments, 82% are doing it through online cryptocurrency exchange platforms. The blockchain technology used to facilitate cryptocurrency exchanges allows users to interact and verify each other’s financial information without revealing their identities, which is why it is considered an anonymous way to exchange money. This feature also leaves crypto transactions open to illegal activity, which is an important risk to consider.
In addition to digital cryptocurrency platforms, 38% of crypto-using respondents are using traditional trading platforms (stock markets with crypto options). 15% are also using Bitcoin ATMs which have appeared across Canada, making users’ access to their cryptocurrency wallets as simple as anything else they’d need to grab from local convenience stores.
The demographics of cryptocurrency users
To understand whether SMEs should take cryptocurrency trends into consideration at their organizations, breaking down the demographics of crypto users may help.
Out of 250 Canadian survey takers who currently use cryptocurrency, 66% are men. Female survey-takers used cryptocurrency less; only 34% of crypto buyers were women despite being represented equally in the survey.
Although men may currently be leading in cryptocurrency use, the demographics even out when future use of crypto comes into play. In the future, 55% of female respondents plan to start using cryptocurrency and 45% of men report planning to do the same.
The role age plays in cryptocurrency use
As cryptocurrency is a relatively recent creation, it makes sense that younger generations may be more familiar with it. Our survey found that younger respondents reported currently buying and using cryptocurrency in higher numbers. Among older survey respondents, fewer people reported having bought/currently buying cryptocurrency. As age increased, respondents were also less likely to want to deal with crypto in the future.
Ages of respondents who report currently investing in cryptocurrency:
- 34% of 18- to 22-year-olds
- 41% of 23- to 35-year-olds
- 21% of 36- to 55-year-olds
- 8% of 56- to 65-year-olds
Ages of respondents who haven’t used and aren’t interested in trying cryptocurrency:
- 23% of 18- to 22-year-olds
- 21% of 23- to 35-year-olds
- 38% of 36- to 55-year-olds
- 60% of 56- to 65-year-olds
Looking at the horizon of future use, however, all age groups represented in the survey showed at least some interest in cryptocurrency investment. 19% of respondents 65 and over said they plan on using crypto someday, and at least 30% of all other age groups had the same plans for investing.
More than half of respondents are interested in being paid in crypto
When asked if they would be interested in being paid in cryptocurrencies in the next 5 years, 62% of respondents indicated an interest in varying levels: 18% felt at least slightly interested, 28% felt moderately interested, and 15% reported significant interest in the idea. While this could influence a change in employee expectations and, eventually, SMEs payroll operations, it would be remiss not to consider the risks that cryptocurrencies carry.
Many of those who are interested in buying crypto further in the future say that they’re hesitating due to a lack of knowledge. Large groups of respondents also cited the fear of cryptocurrencies disappearing (for example, governments making them illegal) as well as the risks of fluctuation, both of which signify a lack of certainty in cryptocurrency as well as the missing know-how.
As with any business investment, studying the risks and obligations of cryptocurrency purchase and sale is highly important before investing. If the investment concerns employee salaries or a potential business model, employee education will be paramount to protecting the security of your financial information and encouraging tax compliance.
The rising use of cryptocurrencies may be influencing Canada to consider creating its own digital tender, but the future of virtual currency is far from certain. Despite the consumer readiness to use cryptocurrencies shown in our data, it is vital to remember the risks pointed out above as well as the fear associated with these currencies.
The pros and cons of cryptocurrency will likely change as new technologies are developed and society adapts more to these currencies. For now, businesses should keep an eye on crypto trends and start doing thorough research on the benefits and risks of this technology, as well as the technological implementation, regulatory compliance, and security tools necessary to their functioning.
Correction: A previous version of this article identified respondents as representative of all Canadians. Respondents were limited to those who demonstrated an understanding of cryptocurrency.
NOTE: This article is intended to inform our readers about business-related concerns in Canada. It is in no way intended to provide financial advice or to endorse a specific course of action. For advice on your specific situation, consult your accountant or financial consultant.
To collect the data for this report, we conducted an online survey in October 2021. The survey was sent to 1,356 people, of which 1,008 were selected to participate. The criteria for selecting participants are as follows:
- Canadian resident
- Over 18 years old
- Must be familiar with the concept of cryptocurrency. Selected participants answered “I know what it is,” or “I am familiar” with the concept of cryptocurrency and were able to define what it means by selecting the correct answer from three possible answers.
The sample of participants is representative of the population of Canada.