In a report published by Blockdata, a blockchain analytics firm, Bitcoin was found to have processed more transactions than Paypal in 2021.
Bitcoin has flipped Paypal for number of transactions
Ever since its inception, people have wondered whether Bitcoin can process the same amount of transactions as Mastercard or Visa and credibly challenge credit card companies for market leadership in transactions. Blockdata, a blockchain research and analytics outlet, published a report about transaction volume on the Bitcoin network that looked into this question. The short answer to it? Yes, it may be possible, but it will take time regardless.
The researchers found that Bitcoin processed almost $700 billion AUD in transactions per quarter in 2021. Paypal processes 60% less while Mastercard processes 260% more and Visa even 540% more. That is an impressive feat for a decentralised network that is but 12 years old, considering that Mastercard has been around since 1966. Granted, Paypal is not much older than Bitcoin but the mere fact that Bitcoin was able to flip Paypal, and by no small margin, is an incredible achievement that few will have thought possible when Bitcoin first became popular.
When can Bitcoin flip Mastercard and Visa?
Blockdata also looked into whether Bitcoin could in fact overtake established credit card companies one day. They found that three factors go into the network growth of Bitcoin:
- An increase in the number of transactions
- An increase in the average amount of BTC per transaction
- An increase in the price of BTC
Roughly speaking, Bitcoin could flip Mastercard tomorrow if the average transaction would be 260% more valuable, implying only larger amounts are sent but just as frequently as today. However, there is no trend that indicates an increase in the dollar value of Bitcoin transactions. Rather the opposite seems to be the case. According to Blockdata, this trend may change in the future if fees on the Bitcoin network rise and Bitcoin becomes a settlement layer for big transactions.
A price increase by a factor of 2.5 would also do the trick, but considering that Bitcoin is already a trillion-dollar asset, it takes a lot more money to move the price from $70,000 AUD to $140,000 AUD and beyond than at lower valuations. Blockdata estimates that such a price increase could happen as early as in the next five years or take as long as another four decades, depending on how you model the data. Either way that would not even account for a possible increase in the volume of transactions processed by Mastercard.
Lastly, Bitcoin could increase the number of transactions it processes. However, that will only be possible with layer-two solutions like the Lightning Network. Although Bitcoin has made some progress in that sense, such as upgrading to Taproot recently, the Lightning Network is still a fairly little-used add-on to the core Bitcoin network. Although it may grow and improve to the extent needed to pull level with centralised payment providers, it will take significant time.
In conclusion, Bitcoin may have hunted one payment whale down, but the bigger fish will require a lot more effort.