Bitcoin is losing its dominance over other cryptocurrencies in payments to merchants, crypto processor BitPay says

markets.businessinsider.com:

Yuichiro Chino

Bitcoin's dominance in making cryptocurrency payments appears to be fading.

Both people and businesses are using other crypto coins to make cross-border payments, bitcoin payment service provider BitPay recently told Bloomberg.

Transactions made in bitcoin towards merchants that use BitPay tumbled to about 65% of payments in 2021, a sharp drop from 92% in 2020, the company said. Ether made up 15% and stablecoins were 13%. The least-used tokens to make payments were those added only recently to BitPay's roster — dogecoin, shiba inu, and litecoin — which accounted for 3%.

This shift away from bitcoin happened partly due to a preference for stablecoins, while other cryptocurrencies were dropping, Atlanta-based BitPay said. Another factor might be users not wanting to spend bitcoin if they think its price could increase 10-fold within a year. 

Stablecoins are cryptocurrencies pegged (or have a fixed exchange-rate) to a real-world asset like gold or the dollar. These are designed in a manner to maintain a stable price over time. For instance, one USD Coin (USDC) is intended to always be worth one dollar. Meanwhile, bitcoin is a highly volatile crypto asset.

People used their cryptocurrency to buy luxury goods including cars, jewelry, boats, watches, and even gold, according to BitPay. The company's transactions for luxury goods soared 31% in 2021 from 9% in 2020, while overall payment volumes rose 57% year on year. It had 50% revenue growth last year.

10-year-old BitPay aids companies including Microsoft, Amazon, and Apple in enabling customers to make cryptocurrency payments. Its transaction volumes can serve as a reference for which types of tokens are being used most.

Cryptocurrencies have recently taken a hit