Is Bitcoin losing “dominance” as a means of payment?
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Bitcoin is losing “dominance” among cryptocurrencies used as a means of payment.
This was revealed by Bloomberg, citing data released by BitPay.
BitPay’s analysis
BitPay, one of the world’s largest crypto payment processors, revealed that during 2021, the percentage of transactions handled in BTC dropped from 92% the previous year to 65%.
So in 2021 Bitcoin was still by far the most widely used cryptocurrency by those making crypto payments via BitPay, but with a sharp decline from 2020.
In second place in this special ranking was ETH, with 15% of payments, while stablecoins as a whole accounted for 13%. Of the remaining 7%, almost half of the transactions were made in Dogecoin, Shiba Inu and Litecoin, the cryptocurrencies added by BitPay in 2021.
The biggest increases were in stablecoins, which are used for example by companies to make cross-border payments, and ETH. Furthermore, the use of stablecoins increases when cryptocurrency prices are falling overall.
Bitcoin’s decline as a means of payment
According to Bloomberg, however, with Bitcoin’s rise in value over the year, many investors may have chosen to keep their BTC in their wallets rather than spend them.
BitPay also reveals that those who pay in BTC often do so to buy luxury goods, such as jewellery, watches, cars, boats and even gold. It is worth noting that the company claims that during 2021 the volume of transactions related to the purchase of luxury goods rose to 31% of the total volume, while the previous year it was only 9%.
The company as a whole, processes around 66,000 transactions per month, or around $1 billion per year.
CEO Stephen Pair also revealed that the company’s business is highly dependent on cryptocurrency prices, since when the value of cryptocurrencies drops, people tend to spend less on them. Despite this, as of November 2021, there has been no drop in transaction volumes on BitPay, despite the recent price drop.
According to Pair, this anomaly could be due to the fact that more and more companies need to use these tools to make payments.
He also pointed out that PayPal’s entry into the crypto sector at the end of 2020 has helped a lot because it has convinced many companies to ask themselves whether they should accept cryptocurrency payments or not.
However, it is also worth mentioning that the price of many cryptocurrencies during 2021 has increased much more than that of Bitcoin, so following the logic illustrated by Pair it is more than normal that payments in altcoins have increased more than those in BTC.
Cryptocurrency
