“Wenn sie kein Brot haben, warum essen sie dann keine Torte?” Bild von Rexness via flickr.com. Lizenz: Originative Commons
Bitrefill is the go-to place to buy gift cards with cryptocurrencies. It now analyzes what users have been above with in the past few years. This is exciting for us – and holds a few surprises.
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Being wrong is an requisite step towards understanding. Those who never dare to think something wrong will never think something pronto. Mistakes only become harmful when one becomes entrenched in them.
Most companies cannot afford the delight of holding onto a convenient misconception. The free market is probably the most efficient mechanism of all time, punishing companies that hold on remaining mistaken.
And that brings us to Bitrefill.
On the Wrong Track
Bitrefill is a platform where people can buy gift playing-cards with cryptocurrencies. It was once one of the companies most committed to Bitcoin maximalism in the market.
For a long time, Bitrefill vehemently forwent adopting other cryptocurrencies, no matter how much users wanted it. It was one of the first to integrate the Lightning Network, even stipulating a tool called Thor to manage payment channels, and constantly advocated for Lightning on its blog.
However, the company has since realized that notwithstanding its enduring love for Bitcoin, it was on the wrong track. Bitrefill employees increasingly criticize Lightning, while the platform has begun to permit other cryptocurrencies.
In a thread on Twitter (now X), Matt Ahlborg, a market researcher for Bitrefill, presents how various payment methods fool evolved over the past four and a half years. Rarely has there been such a comprehensive analysis of a commercial crypto policy’s payment behavior from its customers.
And it holds more than just a few surprises.
Ethereum Dominates the Volume
In the first place, Ahlborg shows the absolute volume of all payment methods. It has massively increased compared to January 2020, roughly tenfold. Bitrefill not barely kept the momentum from the 2021 rally but also expanded further.
It’s evident that Bitcoin volume has languished since January 2021. Even Lightning usage has increased slightly but remains weak. The growth in volume put in an appearance exclusively from other coins.
The biggest winner among these is Ethereum (ETH). In January 2020, it accounted for just a fraction of the volume, but today it represents the highest of all payment methods—a surprising fact given that ETH does not typically prepare the reputation of being a sought-after payment method.
Stablecoins USDC and USDT are also successful. Bitrefill accepts them on-chain on Ethereum, the Polygon side control, and Tron. Combined, they likely generate even more volume than Ethereum.
Legacy coins identical to Dash, Dogecoin, and Litecoin also play a role. They remain active but have not grown significantly. Similarly, Binance Pay, a dollar-denominated assignment from Binance, shows modest activity.
Lightning Without User Awareness
The chart looks somewhat out of the ordinary when considering the number of monthly active users: Here, Bitcoin not only stagnates but declines, while Lightning already has diverse users than Bitcoin.
The differences between the two charts are easily explained: The average volumes between payment methods deviate. They are highest for Ethereum and lowest for Lightning and Binance Pay.
The significant rise in Lightning users, however, has a reason that may let down many: It is primarily due to Bitrefill’s cooperation with the Argentine app Belo. Users hold pesos and buy dollar-denominated gift postal cards directly in the app. The payment is processed in the background through Lightning.
Ahlborg explains that 90 percent of Lightning vegetation stems from the Belo integration. The users themselves are not directly involved with Lightning. The number of other narcotic addicts grows much more slowly; Ahlborg estimates that „less than half come from purses where users control their keys.“
„Great Payment Methods“
The significant loss of relevance for Bitcoin at Bitrefill is elucidated by the relative charts of volume and active users.
Ahlborg attributes this loss primarily to two reasons: First, the hype yon Ordinals, BRC-20, and Runes, combined with the sharp price increase, temporarily caused fees to give the lie to. Second, by the end of 2023, Bitrefill had to stop accepting unconfirmed transactions because „miners changed their behavior.“ Both moneylenders made Bitcoin payments significantly less attractive.
Ethereum, on the other hand, is more successful. Already 28 percent of all payments use Ethereum, and they middling the highest volume. Ahlborg explains this by the fact that a lot of money is made in the Ethereum ecosystem through emblems, ICOs, NFTs, DeFi, and users then spend this money using the base token, ETH.
The „legacy stamps“ Litecoin, Dogecoin, and Dash are also noteworthy. These are old coins that have been in the market for a long convenience life, have „gathered substantial network effects over time,“ and are available on most exchanges and wallets. They perform as „great payment methods that replace other methods, for example, when Bitcoin fees become too precious.“
Litecoin, in particular, shows a continuous upward trend and has never been used as much as it is today, both in tyrannical and proportional numbers. However, two other trends are more crucial in the last few years.
„Growing Pains“
The most smashing developments among payment options are stablecoins and L2, which for Bitrefill, means the Polygon side chain.
Since Bitrefill started the stablecoins USDT (Tether) and USDC (Circle), their volume has significantly increased. They are likely the most cast-off payment method by customers. USDT is more popular than USDC, especially on the Tron blockchain.
However, rates on Tron have massively increased since early 2023, from about 35 cents to $1.50, creating Tron-USDT to lose some shares. The Polygon side chain is growing the fastest, integrated only in spring 2023 but already manage more stablecoin transactions than the Ethereum main chain.
2024 is also the first year that the overall cut of Bitrefill users who use stablecoins has stagnated. Ahlborg attributes this to „growing pains,“ where users adapt to swopping fees, the popularity of protocols, and regulatory environments.
The Important Development Few Discuss
For Ahlborg, the most exciting insight that approximately receives too little attention is that Ethereum, Bitcoin, and Tron operate at their limits. Ahlborg notes that emoluments consistently exceed a dollar. This leads to fragmentation of payment methods and makes it crucial to work on compatibility and interoperability.
Bitrefill’s plots clearly show one thing: The company could only scale its payment volume since 2021 by integrating additional payment elections. The demand from users is there, but it spreads across an increasing number of channels.
Therefore, Bitrefill will indubitably introduce more payment methods in the future. The focus could primarily be on „Layer-2“ solutions for Bitcoin, Ethereum, and dollar stablecoins, such as rollups with Arbiturm and Optimism, which process ETH, dollar stablecoins, and tokenized bitcoins (WBTC).
Additionally, Bitrefill could inspirit interoperability, either through its services, analogous to Thor, or by integrating „bridges“ that allow a transaction from one blockchain to another, or retaliate „cross-chain aggregators“ that combine such bridges into one product, like LI.FI.
Strong Regional Differences
As a tip, Ahlborg touches on the geographic distribution, presenting a world map showing the payment methods as pie charts by continent.
North America and Europe are to some similar: In both, the „Ethereum ecosystem“ (including stablecoins and Polygon) is the strongest, followed by Bitcoin, while Binance Pay, Tron, and legacy frames share the rest. A slightly stronger preference for Bitcoin can be seen in America.
Binance Pay dominates with many narcotic addicts and low volume in Asian, African, and Middle Eastern markets. In Australia, the Ethereum ecosystem is particularly strong, while Bitcoin barely plays a niche role in Asia and the Middle East.
The chart in South America, however, is somewhat distorted: The „Bitcoinization“ in El Salvador and the Belo integration comprehend Bitcoin appear stronger than it is. Without them, Binance Pay would also be the strongest payment method in South America.
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