TechCentralTechCentral
    Facebook Twitter YouTube LinkedIn
    Facebook Twitter LinkedIn YouTube
    TechCentral TechCentral
    NEWSLETTER
    • News

      Where to next for Dimension Data

      5 July 2022

      Zapper is said to seek fundraising at huge valuation

      5 July 2022

      Big step forward for Cell C as debt deal approved

      5 July 2022

      Eskom unions accept 7% wage offer

      5 July 2022

      Neels Coetzee appointed as Mustek MD

      5 July 2022
    • World

      Bitcoin hints at a bottom – but it may be different this time

      5 July 2022

      China, US war of words erupts over lunar missions

      5 July 2022

      Tether fails to calm jittery nerves

      4 July 2022

      EU to impose wide-ranging new rules on the crypto industry

      3 July 2022

      Crypto hedge fund Three Arrows files for bankruptcy

      3 July 2022
    • In-depth

      The bonfire of the NFTs

      5 July 2022

      The NFT party is over

      30 June 2022

      The great crypto crash: the fallout, and what happens next

      22 June 2022

      Goodbye, Internet Explorer – you really won’t be missed

      19 June 2022

      Oracle’s database dominance threatened by rise of cloud-first rivals

      13 June 2022
    • Podcasts

      How your organisation can triage its information security risk

      22 June 2022

      Everything PC S01E06 – ‘Apple Silicon’

      15 June 2022

      The youth might just save us

      15 June 2022

      Everything PC S01E05 – ‘Nvidia: The Green Goblin’

      8 June 2022

      Everything PC S01E04 – ‘The story of Intel – part 2’

      1 June 2022
    • Opinion

      South Africa can no longer rely on Eskom alone

      4 July 2022

      Has South Africa’s advertising industry lost its way?

      21 June 2022

      Rob Lith: What Icasa’s spectrum auction means for SA companies

      13 June 2022

      A proposed solution to crypto’s stablecoin problem

      19 May 2022

      From spectrum to roads, why fixing SA’s problems is an uphill battle

      19 April 2022
    • Company Hubs
      • 1-grid
      • Altron Document Solutions
      • Amplitude
      • Atvance Intellect
      • Axiz
      • BOATech
      • CallMiner
      • Digital Generation
      • E4
      • ESET
      • Euphoria Telecom
      • IBM
      • Kyocera Document Solutions
      • Microsoft
      • Nutanix
      • One Trust
      • Pinnacle
      • Skybox Security
      • SkyWire
      • Tarsus on Demand
      • Videri Digital
      • Zendesk
    • Sections
      • Banking
      • Broadcasting and Media
      • Cloud computing
      • Consumer electronics
      • Cryptocurrencies
      • Education and skills
      • Energy
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Motoring and transport
      • Public sector
      • Science
      • Social media
      • Talent and leadership
      • Telecoms
    • Advertise
    TechCentralTechCentral
    Home»News»Bitcoin’s use in commerce keeps falling

    Bitcoin’s use in commerce keeps falling

    News By Agency Staff1 August 2018
    Facebook Twitter LinkedIn WhatsApp Telegram Email

    Who’s using bitcoin to buy and sell goods and services?

    A lot fewer people than you probably would have guessed. After peaking at US$411-million in September 2017, the amount of money the largest 17 crypto merchant-processing services received in the best-known cryptocurrency has been on a steady decline, hitting a recent low of $60-million in May, according to research startup Chainalysis conducted for Bloomberg News.

    While the amount merchant services such as BitPay, Coinify and GoCoin received increased slightly in June to $69-million, it was still a far cry from the $270-million received a year ago, Chainalysis found.

    Bitcoin advocates have long suggested the virtual money would one day replace fiat currencies as a means of doing business, but after a rise in use last spring, the cryptocurrency has lost what little appeal it had as a way to buy goods or services.

    It’s not actually usable. The net cost of a bitcoin transaction is far more than a credit card transaction

    “It’s not actually usable,” Nicholas Weaver, a senior researcher at the International Computer Science Institute, said in an e-mail. Often, he said, “the net cost of a bitcoin transaction is far more than a credit card transaction”. And bitcoin-based transactions can’t be reversed, an issue when a merchant or a consumer comes up against fraud.

    The decline in use for payments coincided with the spike in speculative investing that drove the price of the biggest virtual currency to a record high of almost $20 000 in December. While bitcoin’s price has steadied somewhat recently after crashing more than 50%, consumers still appear to be reluctant to use the digital coins for transactions.

    “When the price is going up so rapidly last year, in one day you could lose $1 000 if you spent it,” Kim Grauer, senior economist at Chainalysis, said in a phone interview. What’s more, high transaction fees have made paying for small-ticket items like coffee with bitcoin impractical, she said.

    In January, payment service Stripe stopped supporting bitcoin as usage declined and price swings intensified. A number of companies such as travel services provider Expedia stopped accepting the cryptocurrency as well.

    That’s a troubling sign for some fundamental investors, who maintain the belief that the cryptocurrency has to be in use in the real world versus just be a speculative instrument to have long-term value.

    ‘Moneyness’

    “Most people who are not bitcoin core maximalists argue that yes, you need people to use these things as means of payment to become money,” Kyle Samani, managing partner at Austin, Texas-based hedge fund Multicoin Capital, said in an e-mail. “Or as my co-founder Tushar likes to say, don’t think of money as a noun, but rather as an adjective. The more something is used as money, the more ‘moneyness’ it has.”

    The way bitcoin is being utilised is changing as well. Because the fees to process a transaction in bitcoin can be steep and varied — they peaked at $54 in December, but are down to less than $1 today — not many people are using the coins for small transactions, like buying a cup of coffee. They are spending the virtual currency more to pay vendors like freelancers located overseas. For those cases, using bitcoin can be cheaper and faster than using traditional financial services.

    “In the last six months, we’ve seen a large uptick in crypto companies paying their vendors in bitcoin, including law firms, hosting companies, accounting firms, landlords and software vendors,” according to Sonny Singh, chief commercial officer of processor BitPay. His company has seen a five-fold increase in crypto companies paying their bills from last year, he said.

    Bitcoin faithful continue to buy bigger-ticket items such as furniture, and still the occasional sports car. At Overstock.com, crypto-based sales are up two-fold in the first half of this year versus a year ago, the company said. Top items bought with cryptocurrency include living-room furniture, bedroom furniture and laptops, according to the site.

    Many people, however, are only speculating with bitcoin or selling off small amounts to convert it into a fiat currency, and use that to pay for goods and services. Long-time advocate Graham Tonkin said he converts his bitcoin and ether from time to time to cover credit-card bills.

    “I assume many people are like me, where you won’t be doing your everyday transactions in it,” said Tonkin, who is chief growth officer at crypto finance research company Mosaic. “I don’t believe it fits the characteristics of money very well.”  — Reported by Olga Kharif, (c) 2018 Bloomberg LP

    Bitcoin top
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email
    Previous ArticleAdapt IT to report higher earnings
    Next Article Huawei displaces Apple as world’s No 2 smartphone maker

    Related Posts

    Where to next for Dimension Data

    5 July 2022

    Zapper is said to seek fundraising at huge valuation

    5 July 2022

    Big step forward for Cell C as debt deal approved

    5 July 2022
    Add A Comment

    Comments are closed.

    Promoted

    Hot Ink certifies and diversifies to maintain competitive printing edge

    5 July 2022

    Increased flexibility with Dell Precision Mobile Workstations

    5 July 2022

    The 5 secrets of customer experience in the cloud era

    5 July 2022
    Opinion

    South Africa can no longer rely on Eskom alone

    4 July 2022

    Has South Africa’s advertising industry lost its way?

    21 June 2022

    Rob Lith: What Icasa’s spectrum auction means for SA companies

    13 June 2022

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2022 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.