Bitcoin is the largest cryptocurrency by market cap, but despite being billed as ‘digital cash’ its use as a payment method is dwarfed by its employment as a speculative investment.
Although cryptocurrency is used as a payment method, and an estimated third of small and mid-sized businesses in the US accept it, the vast majority of people are hoarding it rather than using it in transactions. According to the Chainalysis 2020 Geography of Cryptocurrency Report, just 1.08 percent of cryptocurrency value sent to Europe between June 2019 and July 2020 came from merchants. This is the highest by region, with the Middle East lowest at 0.65 percent. Furthermore, of the 18.5 million Bitcoin in circulation, Chainalysis says 93 percent has remained in wallets for more than two weeks, and 57 percent for more than a year.
So, why aren’t more people paying with cryptocurrency such as Bitcoin? Aside from the corresponding two thirds of businesses that do not accept it, there is a stigma surrounding it due to its association with online black markets, and it can be confusing. Most critically, it is not the most reliable payment method, suffering from higher drop-out rates than alternatives such as cash and cards.
A higher drop-out rate due to offering Bitcoin as a payment method compelled us to discontinue its usage.
For now—after 11 years of existence—Bitcoin seems to have settled into its role as a speculative investment, and will leave transactions to more traditional methods… like cash.