Chainalysis, a blockchain intelligence firm that analyzes Bitcoin and blockchain transactions to build trust and provide transparency, has found that only 1.3% of all BTC transactions in 2019 came from merchants, while the remaining 98.7% of transactions came from exchanges.
That means most people are holding Bitcoin rather than using it to buy things, indicating that Bitcoin is still very much about speculation rather than being used as a global payments system.
As reported by Bloomberg, the senior economist at Chainalysis Kim Grauer said:
“Bitcoin economic activity continues to be dominated by exchange trading. This suggests Bitcoin’s top use case remains speculative, and the mainstream use of Bitcoin for everyday purchases is not yet a reality.”
Will Bitcoin Ever Be Used as a Currency?
Unlike fiat currencies, Bitcoin follows the new economics of a vigorously deflationary currency that entices people to hold and accumulate BTC rather than spend it.
The US Dollar, on the other hand, is designed to lose an average of about 3% of its value each year because the Federal Reserve steadily expands the supply.
On the contrary, Bitcoin has a fixed supply of 21 million bitcoins, and during the early stages of this revolutionary currency it’s common to hodl and accumulate while you still can.
However, it’s speculated that as Bitcoin’s market cap grows larger and larger, it becomes more viable to be used as a currency, as volatility will decrease and its deflationary aspect will be better priced in.
Perhaps Bitcoin will be more widely used as a currency in the future. But for now, it’s clearly more of a speculative investment vehicle and store of value.
Do you ever spend your Bitcoin or simply hold it for investment purposes? Let us know in the comment section below.
