Does Bitcoin have a future in payments despite stablecoins push?

Technology is moving towards a point where everything contributes to expanding the financial markets and automation turns every machine process into a means to a cash flow.

There could quite possibly be, rarely, any cases of processes that do not lead to money moving from point A to point B.

This is such a significant factor of our future because it changes a lot of things.

Traditionally, the word “payments” is only used when money goes towards paying for a good or service. Now when we are dealing with blockchains, every transaction is either a payment in itself or triggers a payment, making it valid to count it as such.

When I move assets on-chain, I pay gas fees to miners or validators, so the assets that move out of point A to point B and what remains at point A (if any), are actually change (outstanding balance) for the payments I've issued to those securing the network to be able to secure a blockspace.

The part about triggering a payment has to do with when miners earn block rewards for adding our transactions to the chain of blocks.

Certainly, most people don't look at it this way and many could argue against this, yet the facts are that every transaction is a payment, even on a feeless chain like Hive.

It's so important to understand this because traditionally, we cannot make the same argument for all transactions because many internal transactions are just record changes without actual money movements and zero fee costs means that nobody makes money from it.

Payments in numbers

Between 2017 and 2020, non-cash payments per the average person grew from 91 to 135, according to data from World bank global payments survey.

That said, reports from McKinsey claim that the global payments industry processed transactions totaling 3.4 trillion in 2023, to the value of $1.8 quadrillion.

Both data sources suggest that roughly, over 33,604 to 107,813 payments are processed per second, globally.

Bitcoin in payments

The only blockchain today that has claimed achieving over 100k transactions processed per second is Solana.

Bitcoin's TPS is generally reported to be between 3-7, meaning that it would take Bitcoin nearly 4 hours, 30 minutes to process payments that are today, processed in a second across traditional channels.

This is no news to most crypto enthusiasts. Bitcoin is slow and expensive, everybody here knows this.

Yet, the question of its future in payments remains a topic consistently debated as institutional adoption rises and stablecoins earns a spotlight for major TradFi firms and businesses.

Does Bitcoin have a future in payments despite this stablecoins adoption push?

The answer is yes, but that doesn't mean what you think.

No, Bitcoin will not dominate global payments, especially not in its current state, the tech doesn't permit this, so it isn't achievable without changes that are frown upon being made.

That said, generally when Bitcoin payments are mentioned, many Bitcoin maximalists (extreme supporters) run to talk about the lightning network but the thing about lightning is that it needs a centralized layer to scale and that goes against everything Bitcoin stands for.

Lightning, like any other blockchain’s L2 network for scaling, requires a centralized intermediary to be useful, otherwise, it's an attempt at solving a mass problem but only being able to ease the cost for a few whilst introducing third-party risks of capital.

For assets to move to an L2, it needs to be bridged and that process still costs fees and are slow. So unless an individual is moving a significant value to which future payments will be made out of, an L2 doesn't help reduce fees and improve transaction speed.

The reason L2s appear to solve these things today is because most people leverage exchanges and other centralized platforms to acquire the L2 assets, effectively skipping the manual bridging part where the system would be proven to be a failed attempt at scaling, in a decentralized manner.

Every argument for Bitcoin Lightning putting Bitcoin in any favorable position to dominate global payments simply ignores that this can't happen without centralizing Bitcoin supply, through which users of the network would effectively be in no better financial environment than traditional finance.

The bottom line is: Bitcoin doesn't have a future in payments where it dominates volumes by transaction counts, revenue and even potentially value unless transactions are abstracted to a centralized layer. That said, it will remain an accepted payment method in many cases, just as many other crypto assets will be, whilst the real dominators of volumes by counts and value will be stablecoins.

Posted Using INLEO