While Bitcoin remains the most valued cryptocurrency at the moment, consumers and businesses are increasingly turning to alternative digital tokens for purchases, according to one of the largest cryptocurrency payment processors in the world.
Bitcoin adoption as a payment method decreased to 65% in 2021 from 92% in 2020, according to BitPay.
Meanwhile, BitPay's biggest buy tokens were altcoins (currencies other than Bitcoin, including the Ethereum token Ether), stablecoins, and memecoins.
Ether made up 15% of the total. Stablecoins, whose prices are fixed to fiat currencies such as the dollar, accounted for 13% of the total, while Dogecoin, Shiba Inu, and Litecoin contributed for 3%.
Why are altcoins gaining popularity?
There are various reasons for the increased use of cryptocurrencies for payment purposes.
To begin, the cryptocurrency markets have been extremely volatile since early November. Bitcoin's price increased 60% last year, and despite the volatility, many investors continue to retain the cryptocurrency as a long-term investment rather than trading or spending it.
Given the volatility of Bitcoin's price, researchers say stablecoins have been viewed as a safer trading option.
In terms of memecoins, Tesla CEO Elon Musk has favoured Dogecoin over Bitcoin, mostly for environmental concerns, as Dogecoin mining consumes less energy than Bitcoin mining.
Musk stated on Friday that Doge can be used to purchase corporate merchandise.
What did people do with their cryptocurrency tokens?
According to BitPay, many crypto investors spend their tokens on luxury products such as watches, vehicles, boats, jewellery, and even gold, which comes as a surprise given that many consider Bitcoin as the twenty-first century's gold.
BitPay assists businesses in accepting cryptocurrency payments and has done so since 2011, when few businesses accepted digital currencies. The company now claims to conduct over 66,000 cryptocurrency transactions per month.
More mainstream corporations, including as PayPal, are entering the crypto payments industry, as are fintech and wallet startups.
"This space is still in its infancy," BitPay CEO Stephen Pair told Bloomberg.
"A lot of it has to do with our perceptions of time. We are expecting to see extremely significant growth over the next number of years."