Chainalysis: Bitcoin payments 80 percent down in 2018
Data from blockchain research firm Chainalysis shows that the use of bitcoin for commercial payments has dropped dramatically this year, Reuters reports.
Despite that growing stability, the value of bitcoin payments went down by nearly 80 percent in 2018, to $96 million in September from a December high of $427 million, the data from Chainalysis shows. Reuters notes:
“That suggests the cryptocurrency is struggling to mature from speculative asset to a serious alternative to state-issued money.”
The title of a PYMNTS summary reads: “Bitcoin Fails To Take Off As Payment Method.”
The full text of the Chainalysis report is not publicly available at this moment. According to Reuters, Chainalysis surveyed 17 bitcoin payments processors, including BitPay.
Most merchants that accept bitcoin do not do so directly, instead using intermediaries like BitPay to convert bitcoin to fiat currencies. Therefore, data from payment processors is a good indicator of the popularity of bitcoin as a currency.
It’s worth noting that the 80 percent drop in bitcoin’s usage as a currency for payments is similar to its drop in price over the same period. Covering last week’s bitcoin crash (which continued at the beginning of this week), Mashable suggested a direct correlation:
“On a broad level, Bitcoin’s adoption as a means of payment has been glacially slow.”
I’m persuaded that, at the end of the day, the market value of bitcoin is determined by its usability and utility as fast, private and secure digital cash. If bitcoin doesn’t take off as digital cash, I don’t think it will thrive (or even survive).
Joni Teves, a strategist at UBS in London, told Reuters that stability is an important requirement for bitcoin to become another form of money, adding:
“But one thing that would take bitcoin into the mainstream is scalability — is it able to process the value or volume of transactions that money tends to do?”
In fact, stability is not enough. It seems likely that, to succeed as a payment means, the bitcoin network should be significantly faster than its current throughput of a handful of transactions per second.
According to specialists consulted by Reuters, the Lightning Network is a step in the right direction. Cryptocurrency analyst Ed Cooper told Reuters:
“Lightning solves some of bitcoin’s scaling issue. It’s getting payments into the wild, into the bitcoin network.”
Picture from Wikimedia Commons.