Bitcoin’s [BTC] upward surge on the cryptocurrency charts has led many people in the space to speculate that the world’s largest currency was back in action and that mass adoption was just over the horizon. The latest report by Bloomberg, however, was contrary to this notion, with the title “Bitcoin’s Rally Masks Uncomfortable Fact: Almost Nobody Uses It”.
According to Bloomberg, data from Chainalysis, a New York-based blockchain research company, showed that only 1.3 percent of all Bitcoin transactions came from merchants from January 2019 to April 2019. The articles stated:
“Even though marque companies such as AT&T Inc. now let customers pay with cryptocurrencies, the problem is that few speculators want to use the digital coins to pay for wireless services when the digital asset’s price might surge another 50% in a matter of weeks. That’s become the main dilemma with the cryptocurrency: Bitcoin needs the hype to attract mass appeal to be considered a viable electronic alternative to money but it has developed a culture of “hodlers” who advocate accumulation rather than spending.”
Kim Grauer, a senior economist at Chainalysis was also of the opinion that Bitcoin’s economic activity was dominated by exchange trading, which, according to her, meant that Bitcoin’s top use-case remained speculative and that mainstream use was “not yet a reality”.
The report focused on how transactions dominated Bitcoin activity in the January-April time period, which could potentially hurt the longevity of the ‘king coin’. This was mentioned in conjunction with Satoshi Nakamoto’s vision that BTC would be used as a daily unit of exchange rather than a store of value.
The article, however, did receive some criticism from Bitcoin supporters, with Samson Mow, the CSO of Blockstream, criticizing Bloomberg for the article. Mow tweeted:
“So many things are wrong in this article about #Bitcoin. “Hardly anyone is using the world’s largest #cryptocurrency for anything beyond speculation.” Storing value IS usage, just like purchasing gold or property. If you’re going to define usage to be payments, say it explicitly.”
“Sure, there is speculation, but the bulk of it is essentially HODLing property to store value. Also, Bitcoin supply is inflating at the rate of 1800 coins a day. Seeing even a flat price at 8k would indicate ~$14.4 million dollars being stored in Bitcoin every day.”
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Engineering graduate,crypto head and Arsenal fan. Is fascinated by technology and all its marvels. Strictly against pineapple on pizza.