Bitcoin’s dominance in crypto payments is beginning to fade

The company told Bloomberg that last year, the use of bitcoin among merchants using BitPay fell to about 65% of processed payments, down from 92% in 2020. Ether purchases accounted for 15% of the total, stablecoins accounted for 13% and new coins added to BitPay in 2021 – Dogecoin, Shiba Inu and Litecoin – accounted for 3%.

The use of alternative coins increased partly as more businesses began to use stablecoins for cross-border payments. When crypto prices fall, and they have been falling since early November, consumers also turn to stablecoins – the value of which should remain stable. Coins like Doge also made a splash last year, thanks to fans like Tesla Inc Chief Executive Elon Musk, who said on Friday that the tokens could be used to buy the company’s merchandise.

Despite the volatility in the fourth quarter, with the price of bitcoin up 60% last year, many investors would have opted to hold onto the world’s largest cryptocurrency rather than spend it. Many remember the first commercial transaction of bitcoin, in which a programmer spent billions of bitcoins on what is now two pizza pies.

When they spent their crypto, many bought jewelry and watches, cars, boats — and even (covering their ears) gold, known as bitcoin — digital gold — according to Bitpay. , should be replaced. The Atlanta-based private company’s luxury goods-related transaction volume grew 31% last year in 2020 from 9% last year, Chief Executive Officer Stephen Payer said. The company’s overall 2021 payments volume grew 57% year over year.

Bitpay was founded in 2011, when few companies accepted digital coins. Today it processes an average of around 66,000 transactions per month. That’s a tiny fraction of Visa’s volume: the credit-card network processed 206 billion transactions in the year ended June 30, 2021.

BitPay, with its $1 billion annual transaction volume and 80 employees, Microsoft Corp. From AT&T Inc. Helps companies accept cryptocurrency payments.

It can also serve as an industry barometer. The pair said that at least so far, the recent recession has not affected the spending habits of crypto investors as much as it did in the crypto winter of 2018. While luxury spending has been affected, the overall decline has been minimal, he said – perhaps a sign of confidence that the current slowdown may be short-lived, or that crypto has a broad base of users.

“Our business tends to fluctuate somewhat with price, and when the price goes down, people spend less,” Payer said. “We haven’t experienced such a drop in volume with this recent pullback. It’s probably just a reflection of more and more companies needing to use this as a tool to get paid.”

More merchants are now accepting crypto payments. Last year Bitpay began working with VeriFone to accept digital coins at its terminals across various stores.

For its part, Bitpay is also showing signs of confidence. It appointed Jim Lester as its first chief operating officer to expand the business. Lester previously headed startup ThingTech, and was also the senior vice president of product management, strategy and marketing in Fisher Inc.’s electronic billing and payments division.

A growing list of companies including PayPal Holdings Inc. are also making moves into crypto payments, showing the growth potential of the payments market.

“PayPal’s entry into this area has been great for our business, as it causes companies to begin to question whether they should accept crypto payments,” Payer said. Bitpay’s revenue growth last year was around 50%, he said.

The company has raised $72 million from the likes of Index Ventures and Founders Fund. It does not expect to go public, raise another funding round, or sell in the near term, although it has talked about an IPO internally, the pair said.

“We really like where we are strategically,” the pair said. “This space is still very young. Much of it is what we think about over time. We are likely to see a lot of growth over the next few years.”