Bitcoin has dominated the digital payment space for the longest time and continues to do so. However, this dominance is declining as more and more altcoins are being chosen as the preferred digital currency for payments. This is mainly due to cheaper charges resulting from network congestion when the price becomes too high. Instead, traders now favor cryptocurrencies whose fees can range from a few cents to a fraction of a cent.
Altcoins are taking over market share from Bitcoin
The crypto payment processor BitPay recently released a report stating the percentages by which each crypto is ordered in the crypto payment area. As expected, Bitcoin dominated the list, but what was important to note from the report was how much the dominance of pioneering cryptocurrency over this area fell within a year. Between 2020 and 2021, bitcoin lost about 27% of its dominance.
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As early as 2020, the company reported that bitcoin accounted for 92% of all digital payments made on the platform. In 2021, this number was at 65% and is expected to continue to decline as merchants switch to altcoins for payments.
Bitcoin market dominance down below 40% | Source: Market Cap BTC Dominance on TradingView.com
The use of Ethereum as a method of payment has increased, accounting for 15% of total transactions made on the platform. Stablecoins made a big hit with 13% of all transactions.
Coin memes, which became popular during the period and were added by the payment processor amid growing demand, accounted for a small but impressive percentage of all transactions. Dogecoin and rival Shiba Inu, along with Litecoin, accounted for 3% of the digital payments processed by BitPay during the year.
Stablecoins on the rise
One of the factors influencing how much users pay with cryptocurrencies is price fluctuations. For cryptocurrencies like bitcoin, when the price of digital assets rises, the frequency in which they are used as a method of payment increases drastically. And vice versa during the bear market.
But with stable coins, whose values more or less remain the same through the bull and bear markets, traders can eliminate this problem. BitPay noted that the use of stable coins as a method of payment when using digital currencies has increased significantly.
However, the tide seems to be changing when it comes to correlations between the bull / bear market and how much users spend their cryptocurrencies. BitPay CEO and founder Stephen Pair said the recent reduction in cryptocurrency prices has not affected payments as much as in previous markets.
“We haven’t experienced such a drop in volume with this recent withdrawal,” Paid said. “It’s probably just a reflection of the growing number of companies that need to use this as a payment tool.”
The company, which processes about 66,000 transactions a month, is one of the largest crypto payment processors in the world. It handles crypto transactions for prominent companies such as AMC Theaters and the Dallas Mavericks.
Featured image from Ethereum World News, chart from TradingView.com