BitPay: BTC usage plummeted to around 65% in 2021

Consumers and businesses are increasingly turning to digital tokens other than bitcoin for purchases, according to BitPay Inc., one of the world’s largest crypto payment processors. The percentage of merchants accepting bitcoin for payments fell to about 65% last year from 92% in 2020, according to BitPay.

In addition, Ethereum payments accounted for 15% of total purchases, stablecoins accounted for 13%, and the cryptocurrencies newly added by BitPay in 2021 - Dogecoin, Shiba Inucoin and Litecoin accounted for 3%.

Zhitong Finance APP noted that the use of stablecoins is surging, partly because more and more companies are beginning to use stablecoins in cross-border payments. When cryptocurrency prices fall, consumers also tend to turn to stablecoins (whose value should remain stable), and stablecoin prices have been falling since early November. Currencies like Dogecoin also made a splash last year, thanks to companies like Tesla. Its CEO Musk once said that Dogecoin can be used to purchase the company's goods.

Despite volatility in the fourth quarter of last year, Bitcoin's price is still up 60% in 2021, and many investors may have chosen to hold the world's largest cryptocurrency rather than spend it.

When investors use cryptocurrencies, many choose to buy luxury goods such as jewelry, watches, cars, boats, and even gold. According to BitPay, Bitcoin, which is touted as digital gold, is expected to replace gold. The company's CEO Stephen Pair said that the volume of luxury-related transactions processed by the company soared from 9% in 2020 to 31% last year. The company's total payment volume in 2021 increased by 57% year-on-year.

BitPay, which has an annual transaction volume of $1 billion, helps companies such as Microsoft (MSFT.US) and AT&T (T.US) accept cryptocurrency payments.

It can also serve as an industry barometer. Pair said that, at least so far, the recent market downturn has not had as much impact on the spending habits of cryptocurrency investors as the winter of 2018. While luxury spending has taken a hit, the overall decline has been much smaller, perhaps a sign of confidence that the current downturn may be short-lived or that cryptocurrencies have a broader user base, he said.

“Our business kind of ebbs and flows with the price of cryptocurrencies, and when prices go down, people tend to spend less,” Pair said. “During this recent pullback, we didn’t experience as big of a drop in volume. That may just reflect that more companies are needing it as a payment method.”

Now more and more merchants are beginning to accept crypto payments. Last year, BitPay began working with VeriFone to accept digital currencies at terminals in different stores.

More and more companies, including PayPal (PYPL.US), are also getting involved in crypto payments, which shows the growth potential of the cryptocurrency payment market.

“PayPal’s entry into this space is very good for our business because it causes some companies to start thinking about whether they should accept crypto payments,” Pair said.

The company, which has raised $72 million from Index Ventures and Founders Fund, among others, doesn’t expect to go public anytime soon, raise another round of funding or seek a sale, though an IPO has been discussed internally, Pair said.

“We really like our strategic position,” Pair said. “The field is still young. A lot of that has to do with how we think about timing. We could see very substantial growth over the next few years.”

Zhitong Finance