The first cryptocurrency, Bitcoin (BTC), was created in 2009 and it was not long before this and other digital currencies that came later revolutionized the payment market worldwide.l. This new payment method, which competes with others such as credit and debit cards, is already accepted by companies around the world, including giants such as Microsoft, Etsy, Twitch, PayPal and Whole Foods.
The adoption of BTC as legal tender by the government of El Salvador in 2021, along with other important projects in the crypto ecosystem, has increased the interest of both large and small companies in making financial transactions (payments and collections) through digital currencies.
Movement is important because people are starting to see cryptocurrencies as substitutes for official money, of the banknotes printed on paper money that represent the dollar, the euro, the real and many others issued by their respective central banks. Until 2021, the general population viewed cryptocurrencies as an investment asset, like shares on the Stock Exchange, rather than a means for everyday purchases.
“And this should have a huge impact on the international monetary system, since central banks do not issue cryptocurrencies. They are decentralized currencies, although they may be backed by other assets. By analyzing the use of the top five cryptocurrencies for payments in the first months of 2022, we can already see how the evolution and changes take place within the segment itself.” stated Rubens Neistein, business manager at CoinPayments.
According to Neistein, the first point to highlight has to do with the payment culture. More people want to spend their crypto the same way they use fiat currencies. From January 2021 to March 2022, the monthly number of transactions through cryptocurrencies grew by 32.52 %. The financial volume traded doubled, considering the same period. Of course, the big brands and even the small merchants are on the lookout and are starting to prepare to capture this new group of customers.
“It is also interesting to choose the type of cryptocurrency to make the payment. Always a leader, Bitcoin (BTC) maintains the first place, but lost a lot of space in 2022. In the first quarter of last year, BTC accounted for almost three quarters of the total volume processed, exactly 74.1%. However, in the first three months of 2022 it reduced its position to 35.6%, which represents almost a third of the total volume. The same happens when the analysis is based on the number of transactions: BTC represented 53.6% of the total and this year the percentage has dropped to 30.2%”, he highlighted.
Rubens points out that the second most used cryptocurrency was Tether (USDT). Between January and March 2021 it represented 10.4% of the total volume and, in the same period this year, it jumped to 46.7%. Last year USDT accounted for 4.1% of transactions and now it accounts for 35.3%. Interestingly, Tether is a cryptocurrency from the fiat-backed stablecoin group. A Tether token is pegged to the US dollar and stands at a one-to-one ratio in terms of value.
For many years, Ethereum (ETH) was the second most used currency. However, in 2021 it started to lose ground against Tether as a means of payment and fell to third place. Last year it represented 10.3% of the total volume of payments and 17.1% of the total transactions. This year, however, it fell, registering, respectively, 7% and 13.3%.
Litecoin (LTC) comes in next, with 7.5% of total volume in Q1 2022, well up from 2% last year. As for the number of transactions, it was 9.5% and jumped to 13.5% this year. Finally, The fifth most used virtual currency in the world for payment is Dogecoin (DOGE), which represented 0.9% of the total volume and fell to 0.4%. DOGE also contracted in transactions: from 10.2% to 3.9%.
Agility, security, and lower operating cost are some of the reasons why consumers and businesses are beginning to accept cryptocurrencies in their financial transactions.. There is a clear disruption in the financial market and even the preference for BTC is starting to change. Perhaps because the general public has already understood the goals of creating each crypto asset.
“While USDT was born to function in a similar way to the traditional currency, BTC, for example, which, due to its scarcity, can be considered more of an investment asset than a currency for daily transactions. The fact is that you can no longer stay out of this marketRubens concluded.
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