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Bitcoin is no longer widely used as a payment method.
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David Schwartz, CTO of Ripple, shares his insights on Bitcoin’s declining usage for everyday transactions.
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Experts claim that Bitcoin’s primary function has evolved from being a payment method into a store value.
David Schwartz, Ripple’s CTO, recently took part in a discussion sparked off by Bruce Fenton, a longtime Bitcoin supporter. The conversation was about why Bitcoin isn’t used for everyday transactions anymore.
Fenton, CEO at Chainstone Lab, noted that BTC was used for regular purchases a decade ago. He said that in 2015, more than 130 restaurants in Portsmouth NH accepted Bitcoin. At the Satoshi Roundtable – a major crypto-conference – more than 70% tickets were sold in Bitcoin. Now, these numbers are almost zero.
Fenton views this decline as an inadequacy. He believes that money should be used to make transactions and not just as an investment. “Using Bitcoin to make purchases is a fantastic way to grow the Bitcoin network,” he said.
Why are fewer people spending Bitcoin? Ripple CTO explains
Many people believe that Bitcoin’s high transaction fees and slow speeds have rendered it unsuitable for payments. Mandrik, who is a Bitcoin user suggests that people are now viewing it as a long term asset. He said that people don’t want regrets in five years about spending $5,000 on a burger.
David Schwartz, CTO of Ripple, argued that Bitcoin was used for payments even when people did not consider it to be real money. He said that Bitcoin was mainly used for payments by early adopters when it was super cheap. Once its value increased, fewer people wanted it to be spent.
” Once early miners who received Bitcoin almost for free dried up, it was no longer a reason to pay in Bitcoin,“, Schwartz said.
Jack Mehof, who was an early Bitcoin advocate, shares Schwartz’s view. He said that he had paid for beer, coffee, and tacos with BTC. The rising costs and slow speeds eventually made it too difficult.
Schwartz also noted that there are other cryptocurrencies with lower transaction fees and faster speeds. But, he said, “You don’t see much use of retail payment for those either.” At least, not yet.”
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Bitcoin payments are difficult due to banking regulations and rules
Some experts believe that Bitcoin’s decline in popularity as a payment option is more due to regulations than technical limitations. Wayne Vaughan claims that tax laws and bank restrictions have made Bitcoin payment difficult.
“The tax treatment for Bitcoin is a major obstacle.” He said that companies accepting Bitcoin faced significant financial burdens and banks were hostile.
Dave Weisberger also agrees that capital gains taxes make Bitcoin purchases too expensive. “Every purchase costs 24% more because of capital gains taxes,” explained Weisberger.
Sam Jones added that a tax exemption for small Bitcoin transactions–similar to foreign currency rules–could encourage more spending.
Some criticize the Lightning Network for not delivering on its promise of cheap, fast transactions. Some argue that Bitcoin’s primary function has shifted from being a currency to a store value, similar to gold.
Related: Veteran investor breaks down Bitcoin’s bull run: Miners, investors, and what to expect next for the price
Some question whether Bitcoin payments can ever compete with traditional methods, even with regulatory fixes. Anders, a financial adviser, believes that fiat is still the most convenient option. He said that people won’t use Bitcoin if the payment experience is bad.
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