Bitcoin was supposed to be digital money. But now it is rarely used as an intermediary for payment. Currently, most members of the Bitcoin network hold this digital currency for speculative purposes only. In the following, using an essay From the Decrypt site, we will examine the reasons why the original purpose of Bitcoin, namely the replacement of Fiat currencies for everyday payments, was not achieved.
Bitcoin is the largest digital currency in terms of market value and has been introduced since its inception as a digital currency and an alternative to Fiat currencies such as the US dollar, the Chinese yuan and the British pound. In fact, Satoshi Nakamoto in Bitcoin’s early white paper describes it as a “peer-to-peer electronic money system.”
However, more than a decade after the launch of the Bitcoin network, the promise to use Bitcoin addresses to pay for regular in-store payments has not been fulfilled.
It is worth noting that some people use bitcoin and other digital currencies to buy goods and use various services, but the available data show that the amount of this use is very small compared to the use of bitcoin as a trading investment tool.
In a recent report entitled “Geography of Cryptocurrency 2020,” Chainalysis Research Company (Chainalysis) stated that one percent of this digital currency between June 2019 and July 2020. Shipped to Africa by July 99, sent by business owners. The figure was 0.7 percent for China, 0.84 percent for Eastern Europe, 0.96 percent for Latin America, 0.65 percent for the Middle East, 1.04 percent for North America and 1.08 percent for Europe.
In May 2019, data from Chinalis showed that between January and April of the same year, only 1.3% of bitcoin transactions were sent by business owners.
A look at bitcoin from Chinalisis’s Market Intel platform shows that during one week in September 2020, $ 62.5 million of bitcoins went to exchanges from various services and $ 53.9 million It has flowed from Bitcoin wallets to services. By comparison, $ 1.3 billion in bitcoins have been transferred between wallets.
However, Ryan Reiffert, a Texas-based business lawyer representing startups and investors, said in an interview:
Basically, it is not possible to tell the difference between buying and investing transactions just by looking at the Blockchain General Office. Even scrutinizing businesses that claim to accept bitcoin can ignore other standalone projects that accept bitcoin on request or businesses that do but do not advertise it.
Why not use Bitcoin to make payments?
However, based on the available data as a benchmark, the question should be considered why Bitcoin is not a popular payment method and why Bitcoin has not been widely used in various businesses to date?
This does not mean that business owners do not accept Bitcoin as a payment method. A Zogby Analytics platform survey on behalf of HSB found out of 500 small and medium-sized businesses in the United States that 36 percent of these businesses accept digital currency. In addition, large organizations such as Wikipedia, Microsoft, and telecommunications service provider AT&T also accept Bitcoin payments.
Also, people still buy goods with bitcoins. A spokesman for the Utah-based trading platform CoinZoom, which offers digital currency-based credit cards, said in an interview that for the past three months, customers have spent about $ 200,000 a month on bitcoins.
Atlanta-based payment service provider BitPay, which allows business owners to make transactions using Bitcoin, said the company processes $ 1 billion a year in bitcoin transactions.
However, the gap between bitcoin and public acceptance is huge. By comparison, in the first quarter of this year, Visa processed about $ 2.3 trillion in transactions. But what is holding back Bitcoin in the area of financial payments?
Bitcoin is still confusing
Akram Tariq Khan, co-founder of YourLibaas, an online fashion store in Pakistan, said that bitcoin was added to the platform as a payment method during the outbreak of the Corona virus. However, the following month, out of 12,200 orders, only 16 used Bitcoin, for a total of $ 2,100. Also, 127 other orders chose the option of paying with Bitcoin, but did not complete it. Tariq Khan added:
The increase in user outflows due to the introduction of the Bitcoin payment method has forced us to stop using this method.
Perry Toone, founder of Thexyz, a Canadian-based e-mail hosting company that accepts bitcoins, said in an interview:
Using bitcoins is not easy for our buyers; Of course, the use of this digital currency has increased among the small number of people who use it.
Abuse for illegal uses
Ethan Taub, CEO of Loanry Lending in California, said:
The use of bitcoin in the online black market is still a threat to the credibility of this digital currency. Hence, businesses that use bitcoin are often considered suspicious and unreliable.
In fact, one of the first real uses of bitcoin was to buy illegal goods and services in Dark Web markets, such as Silk Road, which is now closed.
Hope for widespread acceptance of bitcoin
For all that, Bitcoin still holds its hopes from 2008 with a slight leeway. A survey of four bitcoin-accepting sellers found that people pay twice as much when they use digital currencies as they use their credit cards and are more willing to buy.
Projects such as the Lightning Network seek to address weaknesses such as transaction speed and fees. But for now, most digital currency companies still do not accept Lightning transactions.
Finally, Bitcoin is still a speculative investment. According to Chinalis, 17.2 million of the 18.5 million bitcoins in circulation, or 93 percent of all bitcoins, remain in wallets for more than two weeks and 57 percent for more than a year. But now, what can stop bitcoin from being HODL?