Bitcoin’s daily transaction volumes are surprisingly strong and could soon rival Paypal in the US
Bit by bit Bitcoin is eating away at the market share of other payment networks. According to recent analysis by Coinometrics, the virtual currency’s average daily transaction volumes in $US dollar terms now exceed Western Union, are rivaling Discover, and they are closing in on PayPal.
But of course this being Bitcoin, there’s a complication.
In part its transaction volumes are powered by the speculative blinder that Bitcoin investors are playing which has seen its value surge from $15 to $1000 dollars since January.
You might think Bitcoin’s supporters would be thrilled by this surge – but you might be wrong.
As we have reported before the secret sauce with virtual currencies is the cash register not the coins. Opencoin CEO Chris Larson put it simply in a seminar at Stanford earlier this year, “20 years into the internet and payments have not changed – it is still the old fractured, country by country system that it was 20 years ago. And that’s a huge drag on the global economy today.”
When you reframe your thinking around Bitcoin as a payment system rather than just a currency, its clear why speculation creates equal measures of greed and fear.
Consumers (as opposed to speculators) like to know when they put their money into a system that it will have approximately the same value tomorrow as it does today. Double digit swings in value in both directions are not the bedrock of a credible market place.
The jury is still out on whether Bitcoin is the brave new world, an emerging niche transactional service, or simply Napster-for-ecommerce where it disrupts incumbency but ultimately is undone by second generation insurgents.
You will find more statistics at Statista
Smart money, and lots of it, is chasing virtual currency so for now ignore the headlines about the value spikes, the mafia and the drug dealers and focus on the ecosystem building up behind it – that’s ultimately where the game will be won and lost.