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Chainalysis Research: Speculation Remains Bitcoin’s Main Use Case

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Research from United States-based blockchain intelligence company Chainalysis suggests that only 1.3percent of financial trades for bitcoin (BTC) originated from retailers from the first four weeks of 2019. The information was reported by Bloomberg May 31.

The very low figure is apparently symptomatic of a risky trend that Bloomberg indicates is preventing the cryptocurrency out of being embraced for payments: since bitcoin continues to see substantial volatility and revived valuation profits, its character as a speculative advantage purportely disincentivizes consumers from using it as a device for spending.

Accumulation — HODLing, since the business acronym goes — consequently seems to be in direct conflict with the cryptocurrency’s potential as a substitute for fiat currencies. Within an email to Bloomberg, Kim Grauer, a senior economist in the company, suggested that:

“Bitcoin economic activity is still dominated by foreign exchange trading. This implies Bitcoin’s best use instance remains insecure, and also the mainstream usage of Bitcoin for regular purchases isn’t yet a fact.”

Bitcoin Activity by Category

Included in its dataset, Chainalysis allegedly monitors crypto payment service suppliers like BitPay, which processed $1 billion for retailer in equally 2017 and 2018.

Chainalysis’ data demonstrates that retailer action for bitcoin peaks throughout a crypto market bull run — as in late 2017, when retailer services reach a high in 1.5percent of overall bitcoin action, before falling to 0.9percent in 2018 throughout the bear market and then increasing again in this year’s healing. BitPay CCO Sonny Singh told Bloomberg the company had observed the exact same trend.

Between January and April of the year, exchange-related trades nevertheless continued to account for 89.7percent of bitcoin action — down only a percentage from 91.9percent to the whole of 2018, Chainalysis’ data suggests.

Last month, leading U.S.-based cryptocurrency exchange Coinbase declared that Coinbase Commerce — its own crypto payment processor for retailers — would start encouraging Circle’s stablecoin USD Coin (USDC).

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