Payment settlements on the basis of Bitcoin started off with a boom last year however the boom is fading away because of the two major reasons i.e. gradually declining value of Bitcoin and Tesla’s suspension of Bitcoin payment mechanism, says Bitpay.
Bitcoin first became a payment settler in the year 2020, which took more than 11 years after Bitcoin’s launch. Bitcoin use for payment settlements started off really well however it very soon started to decline the reason being its rising value. When Bitcoin passed the value of US$ 10,000, its use as payment declined. But Bitcoin payment mechanism started to swell especially in 2020.
In 2020, Bitcoin payment settlement went mainstream. Later in 2021, companies such as Tesla Inc. also made good use of Bitcoin by introducing a Bitcoin payment mechanism. However, by the year 2021, Bitcoin use as payment reduced considerably from 93% to 65%. One of the major reasons for this reduction was again the high value of Bitcoin. Secondly, when Tesla Inc. incorporated Bitcoin as a payment mechanism, it took only 2 months for it to suspend the mechanism. Tesla stopped the Bitcoin payment option because it grew concerns over the Bitcoin mining process, which was criticized for not being environmentally friendly.
Now a study regarding the use of Bitcoin as payment settlement has been carried out by Bitpay. According to Bitpay, Bitcoin use for payments has reduced by 28% since 2020. In 2020, Bitcoin payment was at its peak with an average of 93%. However, the average reduced to 65% only in 2021. Bitpay is of the view that this reduction is because of other ‘not very expensive’ cryptocurrencies joining the payment arena.
In addition, several stablecoins obtaining the capability of being used as payment settlement is also one of the causes of reduction. Similarly, some meme coins also joined the arena which also impacted heavily upon the Bitcoin payment option. Bitpay is of the view that currently, Ethereum is the number one crypto that is being widely adopted as a payment settler. In the estimation of Bitpay, 15% of global crypto payments are being settled on the basis of Ether coins. Thereafter, it is the stablecoin sector which is covering 13% of overall purchases while meme coins are covering 3% of the purchases.
However, overall crypto payment is rising with the passage of time but the dominance of Bitcoin has been fading away. At the same time, fluctuations in the values of cryptocurrencies also impact crypto payments. When there is a price surge then there is an increase in crypto payment as well. Similarly, if the values are going down then crypto payment also declines.
Bitpay has been one of the most prominent platforms where purchases on the basis of cryptocurrencies take place. However, the platform is lagging behind payment giants such as PayPal and Visa Inc.