Bitcoin Payments Decline While Ethereum Gains Ground, According to Bitrefill Study

The cryptocurrency market has recently faced a short-term downturn, yet analysts remain optimistic about a potential altseason on the horizon. A study by Bitrefill, a leading crypto-commerce platform, has highlighted a notable shift in user payment preferences, revealing insights into the demand for various cryptocurrencies.

According to research conducted by Matt Ahlborg, Bitcoin's (BTC) dominance in payments on Bitrefill has dropped dramatically by 55% compared to the previous quarter. In March, Bitcoin held a 33.8% share of payments, which has now fallen to just 15%.

Shift in Crypto Payment Preferences

This decline indicates a changing landscape in the crypto payment ecosystem, with alternative cryptocurrencies and stablecoins gaining popularity.

While Bitcoin's payment share has decreased, the Ethereum (ETH) ecosystem has experienced significant growth. Ethereum users now represent 28% of total users on Bitrefill, with the highest average purchase value among customers. Ahlborg attributes this rise to the increasing value derived from various DeFi projects, ICOs, and NFT ventures associated with Ethereum.

Notably, stablecoins on Ethereum's layer two solutions, particularly Polygon (MATIC), have outperformed their mainchain counterparts, emphasizing the importance of scalability and lower transaction costs in the crypto payment space.

Legacy Coins and USDT's Role

The study also highlights the continued popularity of "legacy coins" such as Litecoin (LTC), Dogecoin (DOGE), and Dash (DASH), with Litecoin showing a steady uptrend on Bitrefill. These coins benefit from their widespread availability on exchanges and wallets, making them effective mediums of exchange.

Additionally, USDT on the TRON network (TRX) has emerged as a significant player in the crypto payment landscape. Despite a 350% increase in network fees since early 2023, USDT_TRC20 remains the preferred crypto payment option, surpassing both Bitcoin and Ethereum, although the fee hike has slightly impacted its payment share for transactions under $10.

The Rise of the Lightning Network

As transaction costs for major cryptocurrencies like Bitcoin, Ethereum, and USDT on TRON exceed $1, users are increasingly exploring alternative chains and protocols. The Lightning Network has gained market share as a direct alternative to Bitcoin's blockchain, although most payments are from custodial wallets and tend to be of low value.

Ahlborg concludes that the growing importance of compatibility and interoperability between chains and protocols is critical for the underlying value of each asset, as fragmentation of crypto activity continues across various platforms.

In summary, while Bitcoin's dominance in payments has significantly declined, the crypto payment landscape is evolving, with Ethereum and other alternatives gaining traction as the industry matures.

FAQ: Bitcoin Payments Decline While Ethereum Gains Ground, According to Bitrefill Study

1. What does the Bitrefill study reveal about Bitcoin payments?

   • The study indicates that Bitcoin's share of payments on Bitrefill has dropped by 55%, falling from 33.8% to just 15% in the recent quarter.

2. What is Bitrefill?

   • Bitrefill is a crypto-commerce platform that allows users to make purchases using various cryptocurrencies, providing insights into payment trends in the crypto market.

3. Which cryptocurrency has seen an increase in payment share?

   • Ethereum (ETH) has gained ground, now representing 28% of total users on Bitrefill and showing the highest average purchase value among customers.

4. What factors are contributing to Ethereum's rise in popularity?

   • The growth of Ethereum is attributed to the increasing value derived from decentralized finance (DeFi) projects, initial coin offerings (ICOs), and non-fungible tokens (NFTs) associated with the Ethereum ecosystem.

5. How are stablecoins performing in the crypto payment landscape?

   • Stablecoins, particularly those on Ethereum's layer two solutions like Polygon (MATIC), are gaining traction due to their scalability and lower transaction costs.

6. What are "legacy coins," and how are they performing?

   • Legacy coins refer to established cryptocurrencies like Litecoin (LTC), Dogecoin (DOGE), and Dash (DASH). The study shows that Litecoin, in particular, is experiencing a steady uptrend on Bitrefill.

7. What role does USDT play in crypto payments?

   • USDT on the TRON network (TRX) has become a significant player in the crypto payment landscape, surpassing both Bitcoin and Ethereum in usage, despite a recent increase in network fees.

8. What is the Lightning Network, and how is it being used?

   • The Lightning Network is a second-layer solution for Bitcoin that allows for faster and cheaper transactions. It is gaining market share as an alternative to Bitcoin's main blockchain.

9. How are transaction costs affecting user behavior in crypto payments?

   • As transaction costs for major cryptocurrencies exceed $1, users are exploring alternative chains and protocols, leading to a shift in payment preferences.

10. What does the study suggest about the future of crypto payments?

    • The study suggests that the crypto payment landscape is evolving, with a growing importance of compatibility and interoperability between different chains and protocols as fragmentation continues across platforms.