The news: Consumers are turning toward Bitcoin alternatives, including stablecoins, to make crypto payments, per PYMNTS.
Crypto payments provider BitPay found Ether accounted for 15% of all payments made on its platform in 2021, and 13% were made using stablecoins like USDT or USDC. Bitcoin’s share of payments slid from 92% in 2020 to about 65%.
BitPay helps merchants accept cryptos at the point-of-sale (POS). The company also offers a Mastercard debit card that lets consumers spend in crypto. In 2019, BitPay facilitated $1 billion worth of crypto transactions between its card, wallet, and browser extension.
Why this matters: Stablecoins are pegged to the value of an underlying asset, like the US dollar or gold.
That makes their valuations less volatile, which is a major roadblock to using traditional cryptos like Bitcoin for payments. Consumers are also sometimes unwilling to pay in Bitcoin since most owners use the asset as an investment vehicle and want to hold onto the tokens in the hope they will be worth more in the future.
Central bank digital currencies (CBDCs) could also be strong payments contenders, but development is slow—the US is years away from launching a digital dollar. In the meantime, stablecoins are the most practical option to encourage crypto payments adoption: Gartner argued in February that financial companies should turn their attention away from Bitcoin trading and toward supporting stablecoin transactions on blockchains.
The bigger picture: Twenty-four percent of small businesses surveyed across nine countries plan to accept crypto payments, including Bitcoin, according to data from Visa’s Global Back to Business Study cited by NFCW. And 75% said adding new forms of payment was “fundamental to their business growth.” The rising popularity of stablecoins could further move the crypto payment adoption needle for both consumers and merchants.
Large merchants are already preparing for such a future:
Other retailers or payment providers could follow Walmart and Amazon’s lead in developing a native stablecoin. This could further dampen Bitcoin’s future as a payment method, but based on Meta’s progress with Diem, there’s likely a long regulatory road ahead before company-backed cryptos achieve mass adoption and implementation.