Silicon Valley's Bitcoin Apps are Now About Price Speculation, Not Cheaper Payments


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When Bitcoin first captivated the minds of tech executives back in 2013, it was mainly seen as a new way to make fast, cheap payments online. Roughly five years later, the number of big brands accepting bitcoin is falling, not growing.

Having said that, interest in bitcoin hit an all-time high in December, according to Google Trends. Instead of making payments, people are now interested in trading or hodling bitcoin and other cryptoassets.

Recently, it’s become clear that the popular bitcoin apps are going to be the ones that focus on speculating on cryptoassets rather than making payments with cryptocurrencies — at least for the foreseeable future.

Moving Away from Payments

Stripe, Steam, and Microsoft all announced their abandonment of bitcoin recently due to problems associated with network congestion, higher transaction fees, and price volatility. Microsoft ended up bringing bitcoin back after confirming with BitPay that payments lower than $100 can still be made via the bitcoin payment processor.

“[Bitcoin] transaction confirmation times have risen substantially; this, in turn, has led to an increase in the failure rate of transactions denominated in fiat currencies,” wrote Stripe’s Tom Karlo in a recent blog post. “Furthermore, fees have risen a great deal.”

In addition to the abandonment of bitcoin by merchants and payment processors, we’ve also seen bitcoin-focused companies change their focus.

For example, Coinbase was originally competing with BitPay as a bitcoin payment processor, but the company is now mainly a digital asset brokerage. In fact, they no longer accept new merchant signups.

Everyone Wants to Trade Cryptocurrencies

Although merchant adoption of bitcoin appears to be on the decline, people are still very much interested in bitcoin as a speculative asset. Coinbase was the most popular app in the Apple app store near the end of 2017, according to Recode.

It turns out people don’t want to have some bitcoin on their smartphones in order to buy coffee at Starbucks. Instead, people want to speculate on the price of bitcoin and other cryptoassets at the tap of a button.

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Shutterstock

When Bitcoin first captivated the minds of tech executives back in 2013, it was mainly seen as a new way to make fast, cheap payments online. Roughly five years later, the number of big brands accepting bitcoin is falling, not growing.

Having said that, interest in bitcoin hit an all-time high in December, according to Google Trends. Instead of making payments, people are now interested in trading or hodling bitcoin and other cryptoassets.

Recently, it’s become clear that the popular bitcoin apps are going to be the ones that focus on speculating on cryptoassets rather than making payments with cryptocurrencies — at least for the foreseeable future.

Moving Away from Payments

Stripe, Steam, and Microsoft all announced their abandonment of bitcoin recently due to problems associated with network congestion, higher transaction fees, and price volatility. Microsoft ended up bringing bitcoin back after confirming with BitPay that payments lower than $100 can still be made via the bitcoin payment processor.

“[Bitcoin] transaction confirmation times have risen substantially; this, in turn, has led to an increase in the failure rate of transactions denominated in fiat currencies,” wrote Stripe’s Tom Karlo in a recent blog post. “Furthermore, fees have risen a great deal.”

In addition to the abandonment of bitcoin by merchants and payment processors, we’ve also seen bitcoin-focused companies change their focus.

For example, Coinbase was originally competing with BitPay as a bitcoin payment processor, but the company is now mainly a digital asset brokerage. In fact, they no longer accept new merchant signups.

Everyone Wants to Trade Cryptocurrencies

Although merchant adoption of bitcoin appears to be on the decline, people are still very much interested in bitcoin as a speculative asset. Coinbase was the most popular app in the Apple app store near the end of 2017, according to Recode.

It turns out people don’t want to have some bitcoin on their smartphones in order to buy coffee at Starbucks. Instead, people want to speculate on the price of bitcoin and other cryptoassets at the tap of a button.

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