The Illusion of Decentralization

Bitcoin Is Not a Payments Platform

By Nic Carter

April 10, 2025

The debate over the role of bitcoin in the financial system has been ongoing for years. But as the cryptocurrency's market capitalization approaches $10 trillion, it's time to confront the reality: bitcoin is not a payments platform.

This may seem counterintuitive, given the widespread use of bitcoin for transactions. But let's be clear: the vast majority of these transactions are not payments in the classical sense. Instead, they are speculative transactions, driven by the desire to profit from the cryptocurrency's price fluctuations.

The data bears this out. According to the latest figures from Chainalysis, only a tiny fraction of bitcoin transactions – around 1% – are actually used to purchase goods and services. The rest are speculative, with users buying and selling bitcoin for profit.

This is not to say that bitcoin can't be used for payments. Of course it can. But to suggest that it is a payments platform in the classical sense – a system designed to facilitate the efficient and secure transfer of value – is a misnomer.

The reason for this is simple: bitcoin's transaction costs are prohibitively high. The average cost of a bitcoin transaction is around $30, making it a poor substitute for traditional payment systems like Visa or Mastercard.

Furthermore, the scalability of the bitcoin network is a major issue. With only a handful of transactions per second, it's not designed to handle the volume of transactions that a real payments platform would need to process.

So what is bitcoin, then? It's a store of value, a digital gold standard, a speculative asset class. And that's a valuable thing. But let's not pretend that it's a payments platform. That's a myth that's been perpetuated by enthusiasts and speculators, and it's time to put it to rest.