Bitcoin is closing out the month near $8,500 USD. Surging more than 60% since the beginning of the month, its revival has caused a global stir. However, in the midst of the excitement, blockchain researcher Chainalysis is discovering a problem that perhaps most of us already know: hardly anyone is actually spending it.
Chainalysis Inc Chimes In
Further, that “hardly anyone is using the world’s largest cryptocurrency for anything beyond speculation.”
Services that allow customers to pay for goods and services with Bitcoin are out there, but very few merchants actually want to use them. The reason remains the same as before—price volatility. A digital asset’s price may surge another 50% in a matter of weeks, and no one is ever sure of its true “value” because of this.
This is a double-edged problem that Bitcoin has always faced. It needs to gain mass appeal and so needs the hype; however, in doing so, it has “developed a culture of “hodlers” who advocate accumulation rather than spending.”
Yes, there are millions of dollars worth of Bitcoin out there, but it’s staying put on exchanges it seems.
Kim Grauer, a senior economist at Chainalysis, said the following to Bloomberg:
“Bitcoin economic activity continues to be dominated by exchange trading […] This suggests Bitcoin’s top use case remains speculative, and the mainstream use of Bitcoin for everyday purchases is not yet a reality.”
One example of this is Chainalysis’ tracking of service provider BitPay Inc. The crypto transaction processor processed $1 billion worth of Bitcoin in both 2017 and 2018. However, this figure is minute when compared to Visa. By comparison, Visa processed almost half a billion transactions every day last year. Further, the total transactions it handled in 2018 amounted to a whopping $11.2 trillion.
Bitcoin’s $1 billion expenditure, by comparison, is tiny.
What are your thoughts on this? Were you expecting Bitcoin spending to be so diminutive?
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