More and more people and businesses seem to be using Bitcoin

If transaction volume will drive up the price, then trends in both transactions and merchant adoption bode well for the value of Bitcoin.

Overall daily transaction volume has increased over time, as shown in this chart fromBlockchain.


And data from Bitcoin merchant processor BitPay, launched in 2011, when the Bitcoin ecosystem was new, shows a general trend toward increased merchant transactions.


Though in the short term, transaction volume will not have a significant impact on price — in fact, as you can see, over 2015-16, transaction volume has increased as the price has remained roughly the same — over the long term it will, says BitPay CEO Stephen Pair. “And that’s the reason for the nearer term speculative activity in bitcoin,” Pair wrote in an email. “If people didn’t think the adoption would be there in the long term, they wouldn’t be investing in bitcoin.”

While only 2% of merchants currently accept Bitcoin, another 25% expects to offer it within the next two years, according to a recent survey by Goldman Sachs and the Electronic Transactions Association. ARK estimates that 160,000 merchants already accept Bitcoin, and that by 2017, that number could rise to 1.8 million.

BitPay is also seeing a shift in the types of businesses interested in using its service that could be good news for the value of Bitcoin. Previously, sole proprietorships owned by people who were Bitcoin enthusiasts but didn’t necessarily have a business need for the cryptocurrency were signing up. Now, “we are finding businesses that find real utility and real value in the platform,” Pair said in an interview. “Those, to me, are the early signs of a tipping point. It’s businesses that don’t really care much about Bitcoin itself or the idea of Bitcoin. They just know it solves a problem or saves them money.”

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One example: If hackers hit a bank with a distributed denial of service (DDOS) attack, taking its website offline, the bank may hire a DDOS mitigation service in another country and would need to pay this anti-hacking team fast. Many of them are now using BitPay to conduct this international transaction within a few minutes, rather than using time-consuming wire transfers. In general, Pair says a lot of IT services companies such as web hosting companies and VPN providers are turning to BitPay for payments.

Already, everyday people in countries that have volatile currencies like Argentina, or countries like Indonesia, Russia, the Philippines and India where banking infrastructure and credit cards are not well developed but people have smart phones and would like to buy online, are using Bitcoin for practical purposes. Wences Casares, CEO of Xapo, a Bitcoin bank and digital wallet, says, “Our customers in the U.S. and the rest of the developed world are holding Bitcoin as an investment. They don’t do any transactions. They’re not using Bitcoin for payments. The customers we have in emerging markets use Bitcoin almost exclusively for payments, and they are high, high volume transactors. They are using the debit card six times a week.”

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