Measuring User Growth: Blockchain Vs. ‘Regular’ Fintechs
By Julian Leitloff on ALTCOIN MAGAZINE
FinTech’s user growth has dominated the headlines and tech conferences, but blockchain-based FinTechs (Finance 3.0) received comparatively little attention.
We wanted to know where the industry stands in terms of user numbers. What is the total number of crypto exchange users? What is the monthly user growth of blockchain-based FinTechs? We know that onboarding numbers during the 2017 bull-run have been extraordinary, but could this be maintained?
The Finance 3.0 ecosystem is large, spanning from the biggest segment, cryptocurrency exchanges, wallet providers, asset tokenization projects, stable coins, prediction markets, and many other applications. We decided to start with exchanges.
Gathering The Data
There are surprisingly few sources available online on user count. Coinbase started transparently but stopped publishing data end of Nov. 2017. The last publicly available data put Coinbase at over 30mio users mid-July this year (which is 6x more users than the 5mio users Revolut reports). While FinTechs are eager to report user numbers, exchanges are lacking transparency, which might be partly to avoid scrutiny from the regulator. Especially exchanges like BitMEX that have avoided performing KYC/AML on their customers are not keen to talk about user numbers.
So we decided to gather publicly available information. We shared the final dataset that this article is based on here. We started with a list of Coinmarketcap to identify the largest 150 exchanges by trading volume. We then gathered the publicly available information we could and included the largest FinTech companies to compare the dataset to. We tried to find industry measures like monthly (MAU) -, weekly (WAU) and daily active users (DAU) as well as total visitors/month, monthly user growth and total user base.
The data available is patchy and hard to compare, but one consistent available piece of information is the total visitors/month that Similarweb displays. We matched the total monthly visits with the known user numbers and got a correlation coefficient of 0.78, which means there is a high correlation between visits and user base. Unfortunately, the numbers (n=10) are too small to satisfy the statisticians (t-test at 0.25), but we let it pass.
We proceeded with the ratio of unique visitors to the reported total user base and found that on every total user came 1,4 visits. To enable a better comparison, we took this ratio to estimate all total user numbers, including the ones we knew the actual number of.
We then took a look at how many months have passed since the company was founded and took a linear approach to monthly user growth, dividing the user base by the month since the inception of the company. Growth numbers are likely higher as nominal growth increases while the relative growth is stable or even declines with high nominal user numbers.
Looking At The Analysis
Even for us, the results were surprising: Blockchain-based FinTechs are already dominating the FinTech sector in terms of user numbers, with the clear behemoth being Binance and Coinbase. Even more striking is how many users are bound to exchanges in the long tail. We estimate that exchanges have at least 156m users already. This does not include users from exchanges that did not make the cut-off (the least important 140) and exchanges we could not find coherent data on like Huobi. Half of the users flock to the top five exchanges while the rest accounts for the other half.
When looking at the growth rates, the numbers are even clearer tilted in favor of exchanges due to the overall younger age of inception. There are eight exchanges that see over 100.000 new users onboard each month.
We continued to compare the top ten companies from each group (crypto vs. regular FinTech) but quickly realized that taking into account both outlier's Binance and Coinbase would skew the comparison. We thus excluded both from the sample in the candlestick graphic below.
Even without Binance and Coinbase, the average regular FinTech user base is at 3,32m (median 2,64m users), while the top ten crypto exchanges see 4,74m users (median 4,37m users). The user growth of crypto FinTechs exceeds those of the top ten regular FinTechs by on average 23k users (53k vs. 76k).
Drawing Conclusions
Even though there is an obvious limitation to this analysis, it becomes clear that the blockchain-based FinTech space has outpaced the regular FinTechs already. Not surprisingly growth rates are higher for crypto exchanges, but also the total user base is already bigger.
Estimating user counts based on total visits allows us for the first time to draw conclusions and compare them to other FinTechs, but estimates bring inaccuracy (e.g. N26 visit number exceed those of Revolut, but its user count is a lot lower). However, using estimates for both sets allow us to compare the groups in general.
A cleaner set of data on user counts would be helpful and the industry has already largely agreed to become more transparent. In addition, it would be interesting to see if the diverse nationality of user traffic that can be observed for crypto exchanges is also as diverse for regular FinTechs.
This research was put together by Fractal, a user-centric KYC/AML platform specifically built for Finance 3.0 services. You can check out our software Fractal ID at free.fractal.id or contact our sales team at sales@fractal.id. Learn more about the company on our homepage. If you are an engineer, you might be looking for our technical documentation.
