Bitcoin has dominated the digital payments space for the longest time and continues to do so. However, this dominance is on the decline as more altcoins are being chosen as the preferred digital currencies for payments. This has mainly been due to cheaper fees resulting from network congestion when the price gets too high. Instead, cryptocurrencies whose fees can range from a few cents to fractions of a cent are now favored by merchants.
Altcoins Are Taking Market Share From Bitcoin
Crypto payments processor BitPay recently released a report outlining the percentages each crypto commanded in the crypto payments space. As expected, Bitcoin dominated the list but what was important to note from the report was how much the pioneer cryptocurrency’s dominance over this space dropped in the space of a year. Between 2020 and 2021, bitcoin lost about 27% dominance.
Back in 2020, the company had reported that bitcoin made up for 92% of all digital payments being carried out on the platform. In 2021, this number was at 65% and is expected to continue to drop as merchants move to altcoins for payments.
The use of Ethereum as a payment method was up, accounting for 15% of the total transactions carried out on the platform. Stablecoins made a big splash with 13% of all transactions.
Meme coins, which grew to popularity within this time and were added by the payments processor amid rising demand, made up a small but impressive percentage of all transactions. Dogecoin and rival Shiba Inu, alongside Litecoin, accounted for 3% of digital payments processed by BitPay for the year.
Stablecoins On The Rise
One of the factors that affect how much users are paying with cryptocurrencies has been the fluctuations in price. For Cryptocurrencies like bitcoin, when the price of the digital asset moves up, the frequency in which it is being used as a method of payment increases drastically. And vice versa during the bear markets.
But with stablecoins, whose values more or less remain the same through bull and bear markets, merchants are able to eliminate this problem. BitPay noted that the use of stablecoins as a method of payment when using digital currencies has gone up tremendously.
However, the tide seems to be changing when it comes to the correlation between bull/bear markets and how much users are spending their cryptocurrencies. CEO and founder of BitPay, Stephen Pair, stated that the recent pullback in crypto prices has not affected payments as much as it did in previous markets.
“We have not experienced as much of a decline in volume with this recent pullback,” Paid said. “It’s probably just a reflection of more and more companies that need to use this as a tool to conduct payments”
The company which processes around 66,000 transactions a month is one of the largest crypto payments processors on the globe. It processes crypto transactions for prominent companies such as AMC Theaters and the Dallas Mavericks.