Bitcoin Moves From Commodity To Payment Currency

bitcoin as a paymentBitcoin is becoming an actual currency for everyday use among consumers more than a traded commodity, according to recently released BitPay research. The data indicated the total number of bitcoin transactions more than doubled last year.

The value of the average bitcoin order fell by almost half, the research found. This finding reflects increasing bitcoin use as a method of payment among merchants and consumers.

Technology acceptance drives consumer use

Wouter Vonk, BitPay’s European marketing manager, said BitPay expects more consumers to use bitcoin for currency as the technology becomes more established. He said investors are usually the first people to “hop on new technology, but as bitcoin circulates more, and as the amount of transactions increases, we should see bitcoin being used by more and more average consumers.”

The number of retailers accepting bitcoin payment has surpassed 100,000. Companies and organizations accepting bitcoin payment include Microsoft, Dell, Wikipedia, Twitch, Greenpeace, Expedia and PayPal, the report noted.

Among these 100,000 firms and organizations, 53 percent use BitPay’s payments platform, which represented $150 million in 2014.

The total number of bitcoin transactions was 563,568 in 2014 compared to 209,420, according to the data. The average order value was $281 in 2014 compared to $513 in 2013.

The number of transactions by industry in 2014 was: precious metals 3,242; food delivery, 24,128; e-commerce, 41,121; IT services, 69,832; gift cards, 88,288

North America represents 57 percent of the global bitcoin volume, making it the largest bitcoin market. The U.S. dollar led all currencies exchanged for bitcoin in 2014. A total of $87.7 million in bitcoin was converted to U.S. dollars, followed by $37 million converted to EUR, $3.1 million converted to CAD, and $3.0 million converted to GBP.

Also read: PayPal merchants can now accept bitcoin

Top emerging market: Brazil

The top emerging country in 2014 was Brazil, posting a 406 percent merchant signup growth for bitcoin over 2013. India posted a 212 percent growth while Indonesia grew 199 percent.

While only 3 percent of bitcoin transactions take place in South America and Africa, the Latin America and African markets are expected to post rapid growth on account of a large migrant population and lack of access to financial services.

Vonk said bitcoin is being used in emerging markets as a supplement to the current banking and monetary systems. Bitcoin breaks down the barriers to financial tools that many in these emerging countries face.

 Images from Shutterstock.

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Lester Coleman

Lester Coleman is a media relations consultant for the payments and automated retailing industries.

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