A crypto analyst on Twitter named Yassine Elmandjra posted some interesting charts which show the growth of Bitcoin’s USD transaction volume throughout the years, showing that Bitcoin has surpassed Discover, a major credit card, and PayPal.
A brief initial fact check on this analysis finds that Bitcoin does appear to have processed more USD transaction volume than Discover. However, while briefly having more volume than PayPal, it probably has not surpassed it on average.
Look 👀 at the transaction *value*, NOT the transaction *volume*. $3-4 B worth of bitcoin has been transacted daily in the last year. At ~ $1.3T annually, Bitcoin’s base layer transactional value is within an order of magnitude away from Visa’s. pic.twitter.com/KhGva4I1rB
— Yassine Elmandjra (@yassineARK) August 22, 2018
Before 2017, Bitcoin’s daily transaction volume was USD 100 million and even lower, and in 2017 Bitcoin’s USD transaction volume skyrocketed as Bitcoin’s price went up by an order of magnitude. In December 2017 and January 2018, Bitcoin volumes exceeded USD 5 billion on some days and averaged USD 4 billion for about a month. However, as Bitcoin’s price crashed downwards throughout 2018, so did its USD transaction volume. During the summer months of 2018, Bitcoin’s transaction volume averaged USD 500 million with some days as high as USD 1 billion, still far higher than before 2017.
This is far lower than Bitcoin’s exchange volume which is more than USD 4 billion per day on spot markets and perhaps double that when including derivatives markets like BitMEX and the futures in Chicago. Bitcoin exchange trading occurs off chain and isn’t being used for payments for goods or services. This article is specifically trying to explore Bitcoin’s real transaction volume for goods and services.
At the least, in 2018 Bitcoin’s transaction volume is USD 500 million a day, which would yield USD 182.5 billion of Bitcoin transactions per year. That is the most conservative estimate. This exceeds Discover, a major credit card, which in the most recent quarter had a volume of USD 36.3 billion which yields USD 145.2 billion per year, slightly more than the USD 128 billion in Elmandjra’s chart. The fact that Bitcoin has more transaction volume than a credit card like Discover is a major milestone.
As far as the claim that Bitcoin has more transaction volume than PayPal, that isn’t quite true. During the month when Bitcoin had daily transaction volumes of USD 4 billion, it likely did exceed PayPal. In the most recent quarter, PayPal had a transaction volume of USD 139.4 billion, translating to about USD 1.5 billion per day or USD 558 billion per year. At the current average transaction volume of USD 500 million per day, which is a rough estimate, PayPal is far ahead of Bitcoin.
When averaging in the rally of late 2017 and the high transaction volumes of early 2018, perhaps Bitcoin could be considered on par with PayPal, depending on which estimate used but saying Bitcoin exceeds PayPal’s transaction volume seems to be an overstatement. On the other hand, it seems Bitcoin is poised to overtake PayPal again the next time there is a major rally.
As Elmandjra concludes, Bitcoin is still way behind the biggest payment services in the world, Visa, MasterCard, and China’s UnionPay which each transact many trillions of USD per year. It will probably take another order of magnitude price rally for Bitcoin to get to Visa’s level without considering adoption growth.
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