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Satoshi Nakamoto would be proud. Adolescent bitcoin may finally be repaying its creator’s faith.
The 15-year-old cryptocurrency has filled many roles – from source of speculation to hedge against inflation – but has struggled to find a clear identity. Now there are growing signs it’s edging towards its intended purpose: payments.
“The development in terms of building out crypto payments has continued apace, even if it’s gone somewhat unnoticed because of the volatility in the broader market,” said Richard Mico, US CEO of Banxa, a payment-and-compliance infrastructure provider.
The amount of bitcoin stored on the Lightning Network – a payment protocol layered on top of the blockchain – has jumped by two-thirds over the past year to hit an all-time high of 5,580 coin, according to crypto data firm The Block.
Crypto payment specialists have also seen strong volumes.
US-based BitPay said transaction volumes jumped 18 percent last year versus 2021. CoinsPaid said volumes in the fourth quarter of 2022 rose 32 percent compared with a year before.
So why has crypto failed to fulfill pseudonymous inventor Nakamoto’s dream, spelt out in a famed 2008 white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”?
Price volatility, slow processing speeds and persistent regulatory uncertainty are among the factors that have rendered cryptocurrencies unwieldy as a means of payment. Few merchants price good or services in crypto.
Nonetheless, proponents say bitcoin offers lower transaction costs and quicker speeds than traditional cash, especially for cross-border transfers. Aside from bitcoin, other cryptocurrencies including stablecoins, which are pegged to the value of traditional currencies, have emerged as popular options, particularly for cross-border payments, remittances, plus in emerging markets where the value of local currencies have been hit by inflation. – Reuters
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