It’s no secret that the vast majority of investors, whether from the world of traditional or crypto finance, see Bitcoin (BTC) as a long-term store of value that’s similar to “digital gold.” And while this may be the dominant narrative surrounding the asset, it is worth noting that in recent years, the use of the main cryptocurrency as a medium of exchange has been on the rise.
So far, the Central Bank of El Salvador recently revealed that its citizens living abroad have sent more than $50 million in remittances to their friends and family. To illustrate, Douglas Rodriguez, President of the Central Reserve Bank of El Salvador, announced that $52 million worth of BTC transfers were processed via the country’s national digital wallet service Chivo during the first five months of the year alone, registering a 3.9%, $118 million increase in value over the same period. from the year 2021.
Bitcoin as a payment method has been on the rise, as evidenced by the significant increase in the adoption of Layer 2 payment protocols such as the Lightning Network. Up to this point, BTC transaction volumes have currently increased by a whopping 400% over the past 12 months.
Therefore, it is worth delving into the question of whether Bitcoin’s usefulness as an everyday transaction medium is actually possible, especially from a long-term perspective, as when compared to other networks such as Ethereum, Solana or Cardano, Bitcoin still lags behind in key areas including scalability and productivity transactions.
Is the benefit of Bitcoin as a payment method overrated?
According to Corbin Fraser, Head of Financial Services for Bitcoin Exchange and developer of the cryptocurrency wallet Bitcoin.com, Bitcoin has lost its first advantage of moving as peer-to-peer (P2P) cash. This is due to the fact that since 2016, the Bitcoin community has done everything in its power to explain to its users that they should never use Bitcoin for payments or remittance related purposes. he added:
“P2P cash transfer and payments use cases have moved to other blockchains with higher throughput and lower fees. Bitcoin will be hard-pressed to reintroduce the concept of everyday payments to its users and other communities focused on these use cases have found a home under various other banners.”
Fraser stated that when one takes into account the difficulty side of things, such as the hassle of ordinary crypto users deploying Layer 2 solutions like the Lightning Network to process payments, the situation becomes more complex. “Competition in low-fee production chains has increased dramatically in the past two years. Bitcoin is on the alert when it comes to refocusing on its use in everyday payments.”
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On a technical note, he explained that Bitcoin’s limited transfer rate of five transactions per second means that when people start streaming into the blockchain for daily transactions, its storage will fill up, causing the fee market to expand, pricing in more and more users. And creating a negative experience for users who intend to use it for daily payments. He said:
“Even in the event of a mass exit from Layer 1 BTC to Layer 2 BTC protocols, the system will struggle with deposits and withdrawals to and from the Lightning Network. However, Bitcoin core developers can make some changes to enhance the utility of payments. If the BTC community can manage to The rush behind the issue of the use of payments, it is possible to reach a consensus. ”
A somewhat similar view was shared by Toya Zhang, chief marketing officer at Bit.com, who told Cointelegraph that although Bitcoin was initially designed as a payment currency, the development of different protocols and stablecoins made it very unlikely that it would happen. that. ever as a push token anytime soon, even with the implementation of layer two solutions. She further explained:
“In the long run, restrictions related to confirmation times or price volatility are not an issue. The reason why Bitcoin cannot fulfill its role as a medium of exchange is very simple, Bitcoin is very free of origin. It will only fulfill its original mission if all payment-centric cryptocurrencies fail, which is the Likely to have sailed.
BTC transaction numbers are showing shaky
Andrew Weiner, vice president of VIP services for crypto exchange MEXC Global, told Cointelegraph that while BTC tends to use large payments, technically and philosophically, it is difficult to make small payments with Bitcoin-1 blocks, which is precisely the reason why so many developers pay. Micropayments on the Bitcoin layer-2 network.
To this point, he notes that from 2018 to 2021, bitcoin micropayments have remained quite flat, with an overall capacity of just under $5,000. However, things took to a whole new level last year, when the network went from 10 million users to nearly 80 miles away.