Chainalysis, a U.S. based blockchain intelligence firm’s research revealed that between January and April 2019, only 1.3 percent of Bitcoin economic transactions were carried out by merchants and as such, speculation remains Bitcoin’s major use case and it has retarded the cryptocurrency’s massive adoption as means of payment, reports Bloomberg on May 31, 2019.

Based on the report, Chainalysis’ research revealed that out of the economic transactions carried out with Bitcoin in the first four months in 2019, only 1.3 percent could be attributed to merchants. On the contrary, cryptocurrency exchanges’ Bitcoin transaction within the same period is about 89 percent.

The low figure indicating merchant activity shows a speculative trend and a low-level adoption of Bitcoin for payments. In the case of the latter, people will rather accumulate the asset than spend it. As a result, it conflicts with the industry’s vision that the virtual asset could potentially become a means of payment and even replace fiat currencies.

Bitcoin’s volatile nature and recent price surge have also deterred people from spending it since they will rather accumulate or hodl in order to reap immense profits. These are people who are less willing to make payments with their Bitcoin because they are speculating that its price could spike within a week later or overnight.

It is, however, worthy to note that a number of companies around the world are now accepting Bitcoin as a method of payment. For instance, AT&T Inc. recently allowed its customers to pay with cryptocurrencies. There are also car dealerships, jewelry stores, food portals, and other platforms that are accepting Bitcoin.

Kim Grauer, a senior economist at Chainalysis in an email to Bloomberg 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.”

On the other hand, Chainalysis obtains its data by monitoring payment processors such as BitPay which was able to process $1 billion for merchants in both 2017 and 2018. The firm’s dataset reveals that merchant activity rises when a bull run occurs in the Bitcoin market but declines during the bear market.

An instance of this is the case of late 2017 where merchant activity rose to 1.5 percent during the crypto bubble but declined to 0.9 percent during the 2018’s bear market. However, when 2018’s merchant activity is compared with 2019, it can be said that there has been a slight recovery.

The post Chainalysis Report: Bitcoin’s Major Use Case is for Speculation appeared first on ZyCrypto.

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