Chainalysis Shows Under 2% Of Transactions Are From Merchants In 2019, Speculation Still Main Use
Chainalysis Research Shows Under 2% Of Transactions Coming From Merchants In 2019
- Chainalysis reports that only 1.3% of all Bitcoin activity is linked to merchants.
- Blockchain may no longer be useful if investors continue to HODL with their cryptocurrency assets.
Establishing use cases for Bitcoin is the key to widespread adoption, which has been well publicized by the cryptocurrency industry. While there have been many major retailers that have become welcoming to Bitcoin and other cryptocurrencies, they are hardly taking on the majority of transactions. Chainalysis Inc, a blockchain intelligence firm, shows that only 1.3% of the transactions for Bitcoin was from merchants for the beginning of 2019, according to Bloomberg on May 31st.
The report from Bloomberg states that the dwindling number is likely due to the speculative nature of Bitcoin, which is keeping cryptocurrencies from being used as the payments that the industry aims for. Bitcoin, despite going up in price lately, still holds a lot of volatility, and it is holding on as a speculative asset, which means that fewer users decide to adopt it for spending.
Accumulation, which is also known as HODLing in the crypto industry, is a major problem for cryptocurrency, keeping it from becoming the replacement for fiat currency that it could be. A senior economist with Chainalysis, Kim Grauer, emailed Bloomberg, saying that the current activity for Bitcoin is predominantly taken over by exchange trade. In doing so, Grauer says,
“This suggests Bitcoin’s top use case remains speculative, and the mainstream use of Bitcoin for everyday purchases is not yet a reality.”
In order for Bitcoin to truly thrive, investors need to keep activity alive. Many investors are worried that BTC is too valuable right now, which would essentially create a paradox. One Twitter user pointed out the big issue that could arise – without using Bitcoin, there are no transactions, which means there is nothing for miners to do on the blockchain. With no miners to validate anything on the blockchain, it ceases to function.
According to the data collected by Chainalysis, crypto payment service provider BitPay reportedly processed $1 billion in merchant transactions for 2017 and 2018. The majority of the merchant activity will increase around the times of a bull market. When Bitcoin started moving towards the $20,000 price level, merchant services reached 1.5%, dropping down to 0.9% when the bear market began at the beginning of 2018.
As 2019 has been a time of recovery for the market, merchant activity is starting to take up more of the total Bitcoin activity again. Exchange-based activity took up 89.7% of all Bitcoin activity so far this year, though the numbers were at 91.9% for all of 2018, according to Chainalysis.
Presently, Bitcoin is valued at $8,430.47, according to data from CoinMarketCap. In the last 24 hours, the token has lost 2.40% of its value.