Bitcoin has dominated the digital payments space for a long time and continues to do so. However, this dominance is on the decline as more and more altcoins are chosen as the preferred digital currencies for payments. This was mainly due to the cheaper fees resulting from network congestion when the price gets too high. Instead, cryptocurrencies whose fees can range from pennies to fractions of a cent are now favored by traders.
Altcoins are taking market share from Bitcoin
Crypto payment processor BitPay recently released a report outlining the percentages of each crypto commanded in the cryptocurrency payments space. As expected, Bitcoin dominated the list, but what was important to note from the report was how much dominance of the pioneering cryptocurrency in this space fell within a year. Between 2020 and 2021, Bitcoin lost around 27% of dominance.
In 2020, the company reported that bitcoins made up 92% of all digital payments made on the platform. In 2021, this number was 65% and is expected to continue to decline as traders move to altcoins for payments.
Bitcoin Market Domination Dropped Below 40% | Source: Market Cap BTC Dominance on TradingView.com
The use of Ethereum as a payment method has increased, accounting for 15% of total transactions made on the platform. Stablecoins made a big splash with 13% of all transactions. Meme coins, which grew in popularity during this period and were added by the payment processor following increased demand, made up a small but impressive percentage of all transactions. Dogecoin and rival Shiba Inu, along with Litecoin, accounted for 3% of digital payments processed by BitPay for the year.
Stablecoins on the rise
One of the factors affecting how much users are paying with cryptocurrencies has been the fluctuation in the price. For cryptocurrencies like bitcoin, when the price of the digital asset moves up, the frequency at which it is used as a payment method increases dramatically. And vice versa during bear markets.
But with stablecoins, whose values remain roughly the same across the bull and bear markets, traders are able to eliminate this problem. BitPay has noticed that the use of stablecoins as a payment method when using digital currencies has increased tremendously. However, the tide appears to be turning when it comes to the correlation between the bull / bear markets and how much users spend their cryptocurrencies. BitPay CEO and founder Stephen Pair said the recent pullback in cryptocurrency prices hasn’t affected payments as much as it did in previous markets.
“We haven’t experienced such a large drop 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 that processes around 66,000 transactions a month is one of the largest cryptocurrency payment processors in the world. Process cryptographic transactions for major companies like AMC Theaters and the Dallas Mavericks.
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