Published:
January 20, 2020 10:10 AM UTC

Bitcoin Made Early Investors Stinking Rich but It’s No Mastercard Killer

Charlie Bilello highlights returns of Mastercard and Visa in attempt to bash bitcoin. Bitcoin outpaced in returns but not in transactions.

  • Charlie Bilello highlights the performance of Mastercard and Visa in an attempt to shoot down bitcoin.
  • In terms of returns, bitcoin has dramatically outperformed the two financial companies.
  • When it comes to transaction volume, Visa and Mastercard have significantly outpaced the cryptocurrency.

Bitcoin has no shortage of critics. Some of them love to cherry pick statistics to rip the top cryptocurrency. I have yet to see someone slam bitcoin in an area where it undoubtedly dominates until today.

Charlie Bilello, CEO of Compound Capital Advisors, took to Twitter take a swipe at the number one cryptocurrency. It appears that the chief executive of the investment firm did not do his homework. His erroneous tweet quickly backfired.

Bad Mouthing Bitcoin By Questioning Its Returns Is a Bad Idea

As an investment advisor, part of your job is to know which assets are doing exceptionally well. There’s no question that the largest cryptocurrency is the top performing asset class of the decade. According to trader Crypto Rand, bitcoin’s 10-year return is close to 100,000 percent.

Bitcoin has handsomely rewarded investors throughout the years | Source: Twitter

Thus, it is puzzling to see Charlie Bilello, a respected figure of the Financial Twitter (FinTwit) community, deriding bitcoin regarding its gains since 2009.

Charlie Bilello insulting bitcoin in a really confusing way | Source: Twitter

It is true that both Visa and Mastercard have done well in the last decade. Those who invested in the two financial giants have been enjoying steady gains over time with little downside risks. Nevertheless, bitcoin is still the king of the hill. No individual asset comes close to the cryptocurrency’s gains.

Visa and Mastercard Transactions Light Years Ahead of Bitcoin

In fairness to Charlie Bilello, bitcoin is far from disrupting the entrenched payment industry. A 2019 Nilson Report reveals that the combined purchase transactions of Mastercard and Visa in both debit and credit cards amount to nearly 100 billion. That number represents a 100 percent growth from the close to 50 billion purchase transactions of Mastercard and Visa in 2009.

Mastercard and Visa purchase transactions from 2004 – 2018 | Source: GlobalNewsWire

In contrast, bitcoin is processing over 300,000 transactions per day or an estimated 109.5 million transactions per year. Back in 2009, the highest number of transactions that the cryptocurrency processed is eight. In a ten-year period, bitcoin’s daily transaction volume grew by 3,749,900 percent.

History of bitcoin’s daily transaction | Source: BitInfoCharts

While the growth of bitcoin’s transaction volume is impressive, the orange coin is not in a position to disrupt the payments industry. Mastercard and Visa are not threatened by bitcoin. Both companies are light years ahead of the cryptocurrency.

Cash Is Still King

Despite the stellar growth of Visa, Mastercard, and bitcoin in terms of transaction volume, cash still dominates payments. Contrary to the myth that the use of cash is dwindling, research shows that it is still the most commonly used payment method in the world.

The 2018 World Cash Report shows that 75 percent of nations with available cash survey reveals that cash is used in one out of two transactions. In Europe, close to eight out of ten transactions are conducted with cash. In the U.S., Australia, and the Netherlands, the use of cash appears to be in decline. One of the reasons why cash remains the top payment medium is because roughly two billion people do not have a bank account.

While cash is still widely-used, the volume of non-cash transactions continues to grow. Capgemini estimates that the number of non-cash transactions worldwide is 684.1 billion, up by over 27 percent from 2017. The French consulting firm expects that number to balloon to 1.045 trillion by 2022.

This article was edited by Samburaj Das.

Last modified: January 22, 2020 11:38 PM UTC

Kiril Nikolaev @kirilnikk123

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has a bachelor's degree with a specialty in finance and lives in Canada. Kiril’s current focus is on cryptocurrencies. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. He owns Bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading. Follow the author on Twitter @kirilnikk kirilnikk123@gmail.com

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