Bitcoin payments processing is witnessing a slow but steady decline.
TThe use of Bitcoin for commercial payments has decreased dramatically this year, even if the original digital currency begins to meet one of the key features of any payment currency: stability.
The value of the Bitcoin managed by the main payment processors has decreased by almost 80% in the year to September, as shown by the data of the researcher Chainalysis. This suggests that the crypto-currency is struggling to mature from a speculative asset to a serious alternative to money issued by the state.
Months of relative calm in Bitcoin prices after previous swings have fueled hopes that it would become widely used for payments, its intended purpose.
But its collapse in use as a payment currency has left large funding and encrypted insiders looking at a better technology infrastructure to help Bitcoin take off as a way to pay.
"There should be a stability requirement if it wants to become another form of money," said Joni Teves, a UBS strategist in London.
"But one thing that would bring the bitcoin into the mainstream is scalability: is it able to process the value or volume of transactions that money tends to do?"
Blockchain technology, in which all Bitcoin activities are recorded and validated, can process only a fraction of the transactions per second that may be the main credit card companies. This makes mass use unworkable.
Bitcoin continues to experience vertiginous price swings, as shown by the 30% decline this week. For a while last month, however, the crypto-currency was more stable than US stocks.
Despite this growing stability, the value of Bitcoin payments has plummeted to $ 96 million in September from a December high of $ 427 million, data from Chainalysis shows.
The company interviewed 17 Bitcoin payment processors, including BitPay, one of the largest. Most merchants who accept Bitcoin do not do it directly, but use brokers like BitPay to convert Bitcoins to legal currencies.
The complete data on Bitcoin used for payments are fragmented, as negotiations with other currencies tend to be included together with its use for commercial payments.
That said, the separate figures for individual payment processors reflect the downward trend. For example, at Coinpayments, incoming and outgoing transactions plunged by more than half between January and October, according to the OXT blockchain analysis site.
Coinpayments did not respond to requests for comment.
"Bitcoin payment processing is seeing a slow but consistent decline," said Lex Sokolin, global director of the fintech strategy at the Autonomous Next research company, of the Coinpayments data.
During its first decade, Bitcoin attracted a mix of investors, some convinced they could redesign global finance by shifting traditional payment methods and others attracted by quick gains that brought it close to $ 20,000 in December.
Since then it has lost three quarters of its value, falling below $ 4 500 on Tuesday, burning businesses along the way that they hoped to profit from the growing interest of investors.
Chip designer Nvidia, for example, saw his shares crash sharply last week after blaming disappointing results on unsold chips that accumulate after the evaporation of the cryptocurrency mining boom.
The relative stability of Bitcoin this year, however, has raised expectations of the diffusion of payments by individuals and companies.
"The lack of volatility is a good step in the right direction that begins to make it viable for some of the non-retail use cases," said Zeeshan Feroz, British CEO of Coinbase, one of the largest cryptocurrency exchanges.
But both the major financial corporations and the cryptocurrency entrepreneurs say that stability is not enough.
To get traction, Bitcoin must be faster and cheaper, they say. The clearer rules on a resource that has irritated financial regulators around the world would also contribute to giving users a sense of legitimacy, said Teves from UBS.
While coordinated regulation remains distant, some developments designed to address the so-called "scalability" problem (how many transactions per second can manage the Bitcoin network) are ongoing.
Although in its infancy, the lightning network (code that can be added to the Bitcoin blockchain designed to make payments faster and cheaper) is growing in use and capacity.
The network this week reached a record of 4 101 "nodes" or computers that run its software, according to the 1ML data aggregator, an increase of over a quarter since August.
Lightning is popular, users say, because it allows users to send money to each other instead of having to complete long blockchain operations.
"Lightning solves some of Bitcoin's scalability problems," said Ed Cooper, who oversees the cryptocurrencies at the fintech start-up Revolut. "He is receiving payments in kind in the Bitcoin network".