Bitcoin has dominated the digital payments space for the longest time and will continue to do so. However, this dominance is declining as more and more altcoins are chosen as the digital currency of choice for payments. This is mainly due to cheaper fees due to network congestion when the price is too high. Instead, cryptocurrencies with fees ranging from a few cents to a few cents are now favored by merchants.
Altcoins are taking market share from Bitcoin
Crypto payment processor BitPay recently released a Report An overview of each cryptocurrency’s percentage of the crypto payments space. As expected, Bitcoin dominates the list, but what’s notable in the report is how much the pioneer cryptocurrency’s dominance in this space has declined over the course of a year. Between 2020 and 2021, Bitcoin lost about 27% of its dominance.
Related reading | Why Sovereigns May Start Buying Bitcoin in 2022
Back in 2020, the company reported that Bitcoin accounted for 92 percent of all digital payments made on the platform. In 2021, this figure was 65% and is expected to continue to decline as merchants turn to altcoins for payments.
Bitcoin market dominance down below 40% | Source: Market Cap BTC Dominance on TradingView.com
The use of Ethereum as a payment method has increased, accounting for 15% of the total transactions conducted on the platform. Stablecoins made a splash, accounting for 13% of all transactions.
Meme coins became popular during this time and were added by payment processors as demand grew, making up a small but impressive percentage of all transactions. Dogecoin and rivals Shiba Inu and Litecoin accounted for 3% of digital payments processed by BitPay this year.
One of the factors that affects how much users pay with cryptocurrencies is price volatility. For cryptocurrencies like Bitcoin, when the price of the digital asset rises, the frequency with which it is used as a payment method increases dramatically. And vice versa during a bear market.
But for stablecoins whose value remains more or less constant in bull and bear markets, merchants are able to eliminate this problem. BitPay pointed out that the number of people using stablecoins as a payment method has increased significantly when using digital currencies.
Related reading | What is the future of MicroStrategy?CEO Michael Saylor revealed
However, when it comes to the correlation between bull/bear and how much cryptocurrency users spend, the trend seems to be changing. Stephen Pair, CEO and founder of BitPay, said the recent pullback in cryptocurrency prices has not affected payments as much as in previous markets.
“With the recent pullback, we haven’t experienced such a big drop in volume,” Paid said. “It may just reflect the growing need for companies to use it as a tool to make payments”
The company processes around 66,000 transactions per month and is one of the largest crypto payment processors in the world. It handles crypto transactions for well-known companies such as the AMC Theater and the Dallas Mavericks.
Featured image from Ethereum World News, chart from TradingView.com