Bitcoin is the most used cryptocurrency as money, but its rivals are more usable.
It’s no secret that most mainstream economists don’t think too highly of cryptocurrencies. Not only have Bitcoin, Ethereum and the rest produced the “greatest bubble in history,” but they’re “neither a serious method of payment nor a good way to store capital” — at least according to the Bank of America and Nouriel “Dr Doom” Roubini, respectively.
However, while traditional financial experts have spent countless hours complaining that the volatility of cryptocurrencies renders them unviable as actual currency, it is possible to use them as money in a wide variety of places and to spend them on everything from pizzas to shoes.
But which cryptocurrency is the most usable as money? Well, perhaps unsurprisingly, the answer to this question is Bitcoin, simply because it’s accepted as a payment more widely than any other cryptocurrency. But as this analysis will show, other currencies are being increasingly accepted by retailers and companies, and given their superior scalability, they may end up overtaking the original cryptocurrency in the coming months and years.
Bitcoin accepted here
There’s no single authoritative list of all the companies in the world that accept cryptocurrencies as payment, although there are a number of aggregators and websites that offer a general overview of who is accepting what. The most helpful is arguably Virtual Coin Squad, since even though it doesn’t quite boast the most extensive catalogue of merchants now accepting cryptocurrencies, it actually lists companies together with all the cryptocurrencies they accept. As such, it provides a clear insight into which cryptocurrency is the most widely used as a means of payment.
54 major companies currently accept cryptocurrencies, according to Virtual Coin Squad (although the real number is much higher), and only two of them — MazeFit (sportswear) and Shiny Leaf (cosmetics) — don’t accept Bitcoin. The other 53 – including Microsoft, Expedia, Mozilla, and Shopify – all accept BTC, while 25 accept Litecoin, 13 accept Ethereum, 14 accept Bitcoin Cash, 12 accept Monero, and 15 accept Dogecoin. In other words, Bitcoin is the most usable cryptocurrency as a method of payment, for the simple reason that any merchant that accepts any crypto is almost certain to accept Bitcoin, while the same can’t be said for other coins.
Of course, a list of only 55 companies isn’t exactly exhaustive, but there are other, more extensive resources which corroborate this picture. UseBitcoin is a directory of over 5,000 businesses and retailers that accept Bitcoin (and other cryptocurrencies), and while these aren’t viewable in a table that displays which merchants accept which currency, dipping in and out of specific listings reveals much the same principle: virtually all of them accept Bitcoin, but most of them don’t accept other cryptocurrencies.
The same goes with the information provided by Coinmap, which enables users to search a map of the world for businesses that accept cryptocurrencies. Here, a search of New York City, for example, reveals 136 such businesses within the central area of the city — overlapping Manhattan and Brooklyn. Many of these deal exclusively in Bitcoin, such as a number of delicatessens — e.g. Brooklyn’s Tony Deli, Big Boy Deli, and G Line Deli — that house their own Bitcoin ATMs.
Admittedly, a growing number of businesses worldwide are now accepting more than just Bitcoin, as explained to Cointelegraph by Bach Nguyen, the community manager at the Prague-based SatoshiLabs, which runs the Coinmap website:
“If I can speak for Prague and Czech Republic, we have been witnessing wider acceptance of cryptocurrencies. Places that have accepted Bitcoin before started accepting Litecoin or Ethereum. There are even ATMs which offer Bitcoin Cash. Though, Bitcoin is still dominant — it is the cryptocurrency that gets implemented first.”
Not only does this growth in acceptance of altcoins testify to the growing public familiarity with crypto, but it also results from the increasing prominence of cryptocurrency payment services tailored for businesses — such as Coinbase Commerce, which launched in February and which enables merchants to accept payments in multiple digital currencies. However, such merchants still remain in the minority — for the most part — once again signalling that if you want to pay your way though the world using only one cryptocurrency, your best bet is still Bitcoin.
Image source: Warm ME
Cross-border settlements and paying your taxes
There’s a variety of other less direct evidence that also reveals the superior popularity of Bitcoin in comparison to other cryptocurrencies. For instance, Cambridge University published its Global Cryptocurrency Benchmarking Study in April 2017, which for the first time provided a systematic study of alternative payment systems. While it didn’t focus exclusively on payments by consumers to companies, it nonetheless discovered that 86 percent of cryptocurrency payment companies use Bitcoin as their primary payment rail for cross-border payments.
Such payments cover a variety of uses — from international money transfers to business-to-business payments and merchant services — so they don’t directly equal evidence that, say, Bitcoin is accepted by 86 percent of the companies that let customers pay using cryptocurrency. Still, they indicate that Bitcoin is the most used cryptocurrency for payments, which in turn would indicate that anyone wanting to buy something with crypto would be best advised to hold on to some Bitcoin, since the system is currently geared more for dealing with Bitcoin payments than with those in any other digital currency.
That said, it may not stay this way for long. Aside from the increasingly popular range of payment services that let companies charge using a number of cryptocurrencies, moves have been made in various nations that would promote the use of crypto more generally for use with payments. In South Korea, the country’s largest exchange, Bithumb, has been securing partnerships with a number of online platforms, including WeMakePrice and Yeogi Eottae. Under the terms of these deals, the platforms involved will be able to accept payments in a range of currencies (including Bitcoin, Ethereum, Ripple, Bitcoin Cash, and ICON), while Bithumb is also pushing hard for such deals and initiatives to be accepted elsewhere in South Korea.
In the U.S., a handful of states have also been considering legislation that would enable citizens to pay their taxes and license fees in cryptocurrencies. In Arizona, a bill was passed in May that compels the state to “study whether a taxpayer may pay the taxpayer’s income tax liability by using a payment gateway, such as Bitcoin, Litecoin or any other cryptocurrency.” A very similar bill was introduced in Georgia in late February and in Illinois in April, and while neither have been passed yet, their acceptance would be a considerable a boost for cryptocurrency in general as a means of payment — not just for Bitcoin.
Challengers to Bitcoin
Even though Bitcoin leads the pack when it comes to the number of merchants actually using it right now, this also doesn’t necessarily make it the most ‘usable’ cryptocurrency, at least not when its inherent technical properties are considered.
Take its scalability issues, which have been waiting for a lasting solution ever since the currency blew up 2017. Forgetting its Lightning Network upgrade — which has been launched only as a beta and so isn’t yet widely used — it can process a maximum of seven transactions per second, leaving it quite far behind Visa’s maximum of 24,000. Most recently, this led the Bank of International Settlements (BIS) to issue a report which concluded that cryptocurrency — specifically proof-of-work currencies such as Bitcoin — aren’t scalable enough to serve as money in a global economy.
It therefore can’t be guaranteed that Bitcoin will be usable at an appreciably large scale, and that one of its rivals won’t overtake it at a certain point as the most functional cryptocurrency. For example, Bitcoin Cash — which was born when developers forked away from the main Bitcoin blockchain on August 1, 2017 — now has a 32MB block size limit. This is 3200 percent bigger than Bitcoin’s block size of 1MB, giving it a maximum capacity of around 224 transactions per second.
It was largely in view of its superior speed that entrepreneur and Bitcoin-Cash cheerleader Roger Ver said in April:
“Bitcoin Core is having negative merchant adoption around the world. Bitcoin Cash is having positive merchant adoption around the world.”
However, Bitcoin Cash has a few drawbacks of its own — e.g. its transaction fees aren’t always cheaper than Bitcoin’s — and it isn’t the only rival to Bitcoin’s crown of being the crypto-payment method of choice. Ripple, for instance, doesn’t use mining in its consensus mechanism and can handle a maximum of 50,000 transactions per second, while Litecoin — which is a fork of Bitcoin Core — is four times faster than its older counterpart, due to its shorter block interval time. Similarly, May saw Ethereum release the first version of a system that will see it move to a proof-of-stake consensus mechanism, which could potentially see its scalability and transaction speed increase significantly.
Adoption steadily growing
While the foregoing shows that other cryptocurrencies may hold the key to the future, it doesn’t necessarily address the popular conception among some high-profile critics that Bitcoin and its rivals aren’t ‘real money.’ In a now (in)famous blog post trashing blockchains, for instance, Kai Stinchcombe wrote in April that the “number of retailers accepting cryptocurrency as a form of payment is declining,” basing this sweeping assertion on a single Morgan Stanley report which found that, out of 500 “top online merchants,” the number of them accepting Bitcoin as payment decreased — between 2016 and 2017 — from five to three.
However, Bach Nguyen of SatoshiLabs informed Cointelegraph that the overall number is actually increasing. “A year ago, there were 9085 venues registered [with Coinmap],” he states. “Today, there are 12,801 venues registered.”
This translates to a rise of 3,716 in a single year, and while 12,801 is probably a drop in the ocean compared to the total number of businesses in the world, it shows that crypto is being used — and increasingly used — as real money, regardless of its status in the eye of the law or among financial experts.
That said, widespread, mass adoption of crypto as a method of payment is still many years away, although some analysts believes it’s only a matter of time. EToro crypto analyst Mati Greenspan tells Cointelegraph:
“It is inevitable and is already happening in some parts of the world. Over time economies tend to go through periods of prosperity and hardships. As long as things are stable, there isn’t much need for an independent currency. But in places where trust in the government and banks is low, that’s where cryptocurrencies tend to thrive.”
This observation is born out in Turkey, for example, where inflation of the Turkish lira has reached double-digit figures this year and where more people own crypto than in any other major European nation. This goes to show that cryptocurrencies have the rare opportunity to succeed at the expense of ineffectual governments. And while their scalability issues would indicate that they aren’t completely prepared to make the most of this opportunity right now, their early use in payments already provides them with a secure foundation on which to grow in the future.
