Bitcoin's dominance over crypto payments is starting to wane

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Bloomberg — Consumers and businesses are increasingly starting to use non-bitcoin digital tokens ( XBT ) for purchases , according to BitPay Inc, one of the world's largest crypto payment processors.

Last year, bitcoin usage at merchants using BitPay dropped to about 65% of payments processed, down from 92% in 2020, the company told Bloomberg. Purchases of ether (XET) represented 15% of the total, stablecoins were 13% and the new coins added to BitPay in 2021 - Dogecoin (DOGE), Shiba Inu (SHIB) and Litecoin (XLC) - represented 3%. .

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The use of altcoins has increased in part because more companies have started using stablecoins for cross-border payments. Consumers also tend to switch to stablecoins - whose value is supposed to remain stable - when cryptocurrency prices drop, something that has been happening since early November. Coins like Doge were also all the rage last year, thanks to fans like Tesla Inc. (TSLA) CEO Elon Musk, who on Friday said the token can be used to buy certain company products.

Bitcoin is up 60% last year. Despite the volatility of Q4, many investors may also have chosen to hold onto the world's largest cryptocurrency rather than spend it . Many remember the first bitcoin trading transaction, in which a programmer spent tokens now worth billions on two pizzas.

When they spent their cryptocurrencies, many bought luxury goods like jewelry and watches, cars, boats, and even (cover your ears) gold, which bitcoin — billed as digital gold — is supposed to replace, according to BitPay. The Atlanta-based private company's transaction volumes related to luxury goods rose 31% last year, up from 9% in 2020, CEO Stephen Pair said. The company's global payment volumes in 2021 were up 57% year-over-year.

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BitPay was founded in 2011, when few companies accepted digital currencies. Today it processes an average of about 66,000 transactions per month. That's a tiny fraction of, say, the volume of Visa (V): The credit card network processed 206 billion transactions in the year ending June 30, 2021.

BitPay, with its $1 billion in annual transaction volume and 80 employees, helps companies ranging from Microsoft Corp. ( MSFT ) to AT&T Inc. ( T ) accept payments in cryptocurrencies.

It can also serve as a barometer of the sector. At least so far, the recent downturn hasn't affected crypto investors' spending habits as much as it did in the crypto winter of 2018, Pair said. While luxury spending has taken a hit, declines across the board have been much smaller, he said — perhaps a sign of confidence that the current slowdown could be short-lived, or that crypto is much more grounded. wide number of users.

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“Our business ebbs and flows to some extent with price, when the price goes down people tend to spend less,” Pair said. “We haven't seen as big of a drop in volume with this recent pullback. It is probably just a reflection that more and more companies need to use this as a tool to make payments.”

Bitcoin's dominance over crypto payments is starting to wane

More and more merchants are accepting cryptocurrency payments. Last year, BitPay began working with VeriFone to accept digital currencies at its terminals in various stores.

For its part, BitPay is also showing signs of confidence. You just named Jim Lester your first COO to expand the business. Lester previously led startup ThingTech, and was also Senior Vice President of Product Management, Strategy and Marketing at Fiserv Inc's (FISV) Electronic Billing and Payments Division.

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A growing list of companies, including PayPal Holdings Inc. ( PYPL ), are also getting into crypto payments, showing the growth potential of the payments market.

“PayPal's entry into this space has been very good for our business, because it makes businesses start to question whether they should accept crypto payments,” Pair said. BitPay had close to 50% revenue growth last year, he said.

The company has raised $72 million from companies like Index Ventures and Founders Fund. It does not expect to go public, raise another round of financing, or sell any time soon, although it has discussed an IPO internally, Pair said.

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“We really like where we are strategically,” Pair said. “This space is still very young. Much has to do with how we think about time. In the next two years we are likely to see very substantial growth.”