Using Bitcoin in a commercial setting is challenging. Few companies accept cryptocurrencies as a form of payment. All companies facilitating Bitcoin payments are also suffering from fewer transactions to process. These warning signs do not bode well for the future of Bitcoin as a payment method, but they are also not unexpected.
Bitcoin Payments Are on the Decline
New information gathered by Chainalysis paints a worrisome future for Bitcoin as a payment tool. All cryptocurrency merchant processing services have noted a sharp decline in overall transaction volume. This study includes information shared by BitPay, Coinify, GoCoin, and so forth. However, a sharp decline in Bitcoin payments and transactions amounts is not entirely surprising at this stage.
A lower Bitcoin price makes holders less eager to spend it. Overall transaction volume has dropped to $60 million in May of 2018. This coincides with the low point of the bearish trend affecting all cryptocurrencies throughout 2018. When people profit from their Bitcoin holdings rising in value, they will spend the “excess” a lot sooner. If prices go down, they will hold on to their investment to break even.
June of 2018 already proved to be a slightly better month. Despite all companies processing just $69 million in Bitcoin payments, it represents a 15% increase. July saw a major bull run for Bitcoin, thus the numbers are expected to be even higher. Reaching record numbers of $270 million like in late 2017 will not happen anytime soon. Bitcoin may need to reach an all-time high prior to seeing such an uptick happen.
Can Bitcoin Become Money?
There are conflicting opinions on how and if Bitcoin can become money. Having more people use it for payments can contribute to achieving that goal. On the other hand, people use Bitcoin as money in many different ways. Freelancers often get paid in BTC for their work if they live in a different country than their current employer. Using Bitcoin in this manner is often far cheaper than traditional payment services due to the borderless and near-instantaneous nature of the world’s number one cryptocurrency.
Another factor holding people back from making everyday Bitcoin payments for things like a cup of coffee is speculation. People expect the cryptocurrency to increase in value, so spending a bitcoin when you don’t have to actually costs you money in the long run. Suppose you spent $2,000 in BTC over the course of the month for all your daily expenses (food, rent, car, etc.) and then Bitcoin goes on a massive bull run, doubling in value. The result is that you then lost $2,000 you could have had if you had been hodling instead. Of course, if people are paid in BTC, they’re going to have to spend it anyway.
The important thing to remember is that Bitcoin is still growing and evolving as a project. It is just nine years old and has surpassed most people’s wildest dreams. The network hashrate is still growing despite declining prices, which is another sign of maturity. Merchant adoption and using Bitcoin for purchases is still in the early stages. Cryptocurrency, as a whole, can become a means of everyday payments for normal things, but it would require a great deal more stability in the market than currently exists.
Do you think Bitcoin payments will become a normal, everyday activity? Let us know in the comments below.
Images courtesy of Shutterstock.
