Since emerging from obscurity in early 2009, it has been a pioneer in the cryptocurrency space Bitcoin (CRYPTO: BTC) Introduced in an entirely new digital asset class. Tokens are the oldest and most well-known of all cryptocurrencies, and rely on blockchain technology to ensure the security of their transactions.
There has been an ongoing debate about the long-term value and stability of Bitcoin. However, with a growing cadre of well-known companies embracing the digital payment method, questions are slowly being asked.
Recent data shows that the Bitcoin network has passed an important milestone on the road to widespread acceptance.
The Bitcoin network now handles more payment volumes than an online payment company PayPal Collectibles (NASDAQ: PYPL), according to data provided by Blockdata, the blockchain provider of Insight. So far in 2021, the Bitcoin network has handled $489 billion in transactions per quarter, on average, dwarfing PayPal’s average $302 billion.
However, it is important to put these numbers in context. The Bitcoin rally has boosted the volume of payments since the price has more than tripled in 52 weeks (as of this writing). Furthermore, since PayPal transactions are made in government-backed currencies, they do not suffer from the volatility inherent in Bitcoin. So, while it’s not necessarily an apples-to-apples comparison, it does point directly to the increasing adoption of Bitcoin as a payment method.
Some perspective is needed
Additionally, even with the artificial increase in volume, transactions on the Bitcoin network still pale in comparison to the payments giants. Master Card Credit Card And Visa, which has processed an average of $1.8 trillion and $3.2 trillion per quarter, respectively, so far this year.
Then, there are the number of transactions, which makes the difference more visible. The Bitcoin network processes about 280,000 transactions per day, compared to approximately 366 million transactions per day by Mastercard and 597 million transactions per day by Visa. Even PayPal’s transaction numbers are higher than Bitcoin’s transaction numbers, averaging around 53 million per day in the third quarter. When viewed through this lens, it provides a much-needed perspective on Bitcoin’s place in the grand scheme of things.
Twins born to different mothers
There’s no denying that Bitcoin is all the rage these days, and while passing this milestone is undoubtedly significant, it’s also somewhat arbitrary, especially given the discrepancy between volume and transactions. It also does not diminish the fact that PayPal is still the king of digital payments.
PayPal was the original online payment system and has long been a pioneer in the field of digital payments. To illustrate the point, nearly 8 in 10 smartphone users had at least one payment app on their phone to close out 2020, according to research by Cornerstone Advisors. PayPal was by far the leader, installed on 65% of phones, while An apple Wages came second at 26%.
It’s also important to note that Bitcoin and PayPal have an alliance of sorts. In late 2020, PayPal launched a service enabling its users to buy, hold, and sell a variety of cryptocurrencies, including Bitcoin, EthereumAnd Bitcoin Cash, And Litecoindirectly from their PayPal digital wallet. PayPal sees this feature as “Explore and Invest in the Next Generation of Financial Services Infrastructure.”
The digital payments space is evolving
It’s hard to estimate the number of bitcoin owners – at least with any degree of accuracy. Some studies put the number near 100 million, while others put it close to 300 million. As users store their cryptocurrencies in digital wallets, on exchanges or in brokerage accounts, the task of appreciating bitcoin owners will not become easier.
For its part, PayPal closed the third quarter with 416 million active accounts, with approximately 44.2 transactions per account over the subsequent 12-month period.
The explosion of fintech in recent years has made it clear that there will be multiple winners in the digital payments arena. As the oldest and most ancient cryptocurrency, Bitcoin will likely have a place on the platform. Given its track record in digital payments, PayPal is likely to be around as well.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.