Bitcoin Payment Dominance Plummets 55% as Ethereum Ecosystem Rises: Bitrefill Study

The cryptocurrency market has experienced a short-term crash, but analysts remain bullish for the long-term, foreseeing an upcoming altseason.

A recent study by Bitrefill, one of the largest crypto-commerce platforms, has provided valuable insights into the shifting preferences of users making payments in cryptocurrencies. The analysis reveals a decline in Bitcoin's dominance and the rise of alternative cryptocurrencies and stablecoins in this domain.

According to the study, which was conducted by Matt Ahlborg and published on August 27, Bitcoin's (BTC) prevalence in payments on the platform has experienced a 55% relative drop compared to the previous quarter. Data from March shows BTC having a 33.8% dominance, which now stands at 15%.

This significant decrease showcases a changing landscape in the crypto payment ecosystem, where alternative cryptocurrencies and stablecoins are gaining ground.

While Bitcoin's share of payments has diminished, the Ethereum (ETH) ecosystem has experienced substantial growth in this area. Users of Ethereum-based currencies now constitute 28% of the total users on Bitrefill, also boasting the highest average purchase value among customers.

Ahlborg attributes this surge in Ethereum's popularity to the increasing value being returned to the base token from various DeFi projects, ICOs, and NFT ventures.

Interestingly, stablecoins on Ethereum's layer two solutions, especially Polygon (MATIC), have outpaced their mainchain counterparts. This shift highlights the growing importance of scalability and lower transaction costs in the crypto payment space.

The study also highlights the enduring popularity of "Legacy coins" like Litecoin (LTC), Dogecoin (DOGE), and Dash (DASH) in this domain. Litecoin, in particular, is experiencing a steady uptrend on Bitrefill. According to Ahlborg, these coins have benefited from being widely available on exchanges and wallets, making them effective mediums of exchange.

Among stablecoins, USDT on the TRON network (TRX) has emerged as a major player in the crypto payment landscape. Despite a 350% increase in network fees since early 2023, USDT_TRC20 remains the world's most preferred crypto payment rail, even outperforming Bitcoin and Ethereum.

However, this fee hike has caused a slight decline in its payment share on Bitrefill, especially for transactions under $10.

As transaction costs for major cryptocurrencies like Bitcoin, Ethereum, and USDT on TRON consistently exceed $1, users are increasingly turning to alternative chains and protocols—some of which are not yet directly supported by the platform.

Hence, Matt concludes his study by highlighting the growing importance of compatibility and interoperability between chains and protocols.

…become consistently expensive and have caused a fragmentation of crypto activity onto many chains and protocols. Compatibility and interoperability between chains/protocols is now critical to the underlying value of each base asset.

The study also reveals that the Lightning Network has seen an increase in market share as a direct alternative to Bitcoin's blockchain. However, Ahlborg notes that most of these payments are from custodial wallets and usually have very low values.

Overall, the study showcases a marked decrease in Bitcoin's payment dominance, while the broader crypto payment landscape is becoming more diverse and competitive. As the industry matures, platforms and users will need to adapt to these changing preferences and technological advancements.