The mainstream acceptance and acceptance of Bitcoin in recent years has resulted in good numbers. The cryptocurrency network reportedly outperformed the leading payments platform PayPal by completing 62% more transactions in terms of dollar value, according to a report by Blockdata.
While this was a significant milestone, the real test of Bitcoin lies ahead, conquering payment giants like MasterCard and Visa. In 2021, the Bitcoin network was processing about $ 489 billion per quarter. On the flip side, PayPal processed $ 302 billion per quarter, while Mastercard and Visa were well ahead at $ 1.8 trillion and $ 3.2 trillion per quarter, the report said.
The graphic above shows that Bitcoin has yet to deliver a significant performance in order to reach the level of established payment providers. However, Blockdata suggests that this is not impossible. In this context, the report found
“It’s impressive how Bitcoin, as a 12 year old decentralized network, is 27% of the way in terms of a metric (volume processed) compared to Mastercard, a company founded in 1966.”
It was also pointed out that their significantly different use cases should also be considered. Since Bitcoin is essentially a “saving technology” while the rest are “issuing technologies”. In any case, the report highlighted a few factors that could help bring Bitcoin to the processing level of the two established payment networks.
Among them, the first was the average amount of bitcoin sent per transaction. However, the network would have to scale 260% to process a daily volume equivalent to the Mastercard network, and 540% for Visa. The report found that the huge price hike over the past year did not detect an increase in the number of BTCs transferred, but caused a significant decrease in the same.
The price of Bitcoin itself could also add to the expansion, but that too would require a similar growth percentage. While Bitcoin can hit these price points like $ 245,000 and $ 435,000, it’s virtually impossible to determine, but the report noted that it could do so by 2026 if this year’s growth metric is factored in.
Most significant, however, is the number of transactions processed by the Bitcoin network. Its base shift processed around 25 million transactions per quarter over the past year. That corresponds to 280 thousand transactions per day.
In contrast, Mastercard processed an average of 33 billion transactions per quarter, 366 million per day, last year. Additionally, Visa processed an average of 53.7 billion transactions per quarter, or 597 million per day, last year.
This stark difference results from the scalability problems of the Bitcoin blockchain, which are to be solved with Layer 2 solutions. The Lightning Network, which operates off-chain transactions, experienced explosive proliferation within months of its release. While traffic is difficult to monitor at this level, it is estimated that 663,000 transactions were made in September 2021 alone.
The report also suggested that growing the protocol’s user base to one million, which is only 1% of total BTC users, could nearly double the daily throughput of the Bitcoin network.
In fact, a State of a Lightning report published by Arcane estimates that the Lightning Network would grow to 800 million users by 2030.