Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

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

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      MultiChoice is working on a wholesale overhaul of DStv

      10 July 2025

      Spam call epidemic: operators say their hands are tied

      10 July 2025

      Britehouse unit breaks free from NTT Data

      10 July 2025

      Samsung’s bet on folding phones faces major test

      10 July 2025

      OpenAI to launch web browser in direct challenge to Google Chrome

      10 July 2025
    • World

      Grok 4 arrives with bold claims and fresh controversy

      10 July 2025

      Bitcoin pushes higher into record territory

      10 July 2025

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025

      Grammarly acquires e-mail start-up Superhuman

      1 July 2025

      Apple considers ditching its own AI in Siri overhaul

      1 July 2025
    • In-depth

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025
    • TCS

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025

      TCS+ | First Distribution on the latest and greatest cloud technologies

      27 June 2025

      TCS+ | First Distribution on data governance in hybrid cloud environments

      27 June 2025
    • Opinion

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » News » Bitcoin’s use in commerce keeps falling

    Bitcoin’s use in commerce keeps falling

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

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

    Related Posts

    Bitcoin pushes higher into record territory

    10 July 2025

    Burning millions on the blockchain: how hackers used bitcoin to send a message

    30 June 2025

    Crypto shakeout: bitcoin soars, altcoins crater

    30 June 2025
    Company News

    AI in project management: a new era of efficiency and transformation

    10 July 2025

    Samsung unfolds the future with thinnest, lightest Galaxy Z Fold yet

    9 July 2025

    Huawei supercharges South African SMEs with over 20 new eKit products

    9 July 2025
    Opinion

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    Subscribe to Updates

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

    © 2009 - 2025 NewsCentral Media

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