The use of bitcoin for commercial payments has dropped dramatically this year, even as the original digital coin starts to fulfill one of the basic features of any payment currency: stability. The value of bitcoins handled by major payment processors shriveled nearly 80 percent in the year to September, data from blockchain researcher Chainalysis shows which suggests the cryptocurrency is struggling to mature from speculative asset to a serious alternative to state-issued money. A relatively stable crypto prices post rise and fall of crypto currencies in early 2018 gave many crypto enthusiasts and traders hope that it would be widely used for payments its intended purpose. But there hasn’t been any major pick up in usage of bitcoin for payments which has caused major finance and crypto insiders to look for better technological infrastructure to help bitcoin take off as commonly used payment form.
While stability as form of currency is basic requirement for any currency another major factor that decided the popularity of any currency for its usage is scalability which in this case would be to see if the currency can process the same amount of value/volume of transaction that fiat currencies normally see in day-to-day markets. The blockchain technology, where all bitcoin activity is recorded and validated, can only process a fraction of the transactions per second that major credit card companies can. That renders its mass use impractical. Bitcoin still endures torrid swings in price and post a brief period of stability is now seeing a sharp decline losing over 30% in just one week with retail investors and short term traders continuing to pull out funds resulting in decreasing popularity as a currency and preferred mode of payment.
Despite the increase in stability, the value of bitcoin payments collapsed to $96 million in September from a December high of $427 million as per the data from Chainalysis. The firm surveyed 17 bitcoin payments processors, including Atlanta-based BitPay, one of the biggest as most merchants that accept bitcoin do not do so directly, instead using intermediaries like BitPay to covert bitcoin to fiat currencies. Comprehensive data on bitcoin used for payments is patchy, as trades with other currencies tend to be included along with its use for commercial payments. That said, separate figures for individual payments processors reflect the downward trend. For example at Vancouver-based Coinpayments incoming and outgoing transactions slumped by more than half between January and October, according to blockchain analysis site OXT which servers as proof that Bitcoin payment processing is seeing slow but constant decline.