Bitrefill Realizes the Error of Its Bitcoin Maximalist Ways

Bitrefill is the go-to place to buy gift cards with cryptocurrencies. It now analyzes what users have been paying with in the past few years.

Bitrefill gift card sales show that users increasingly prefer Ethereum (ETH) and stablecoins over Bitcoin (BTC) for their cryptocurrency payments.

The gift card platform, which now accepts payments in 11 different cryptocurrencies, has analyzed how users' payment habits have changed over the past four and a half years. The results, shared in a Twitter (now X) thread by Bitrefill market researcher Matt Ahlborg, show that while BTC usage has largely stagnated, ETH has seen massive adoption.

Ahlborg first presents the absolute volume of all payment methods, which has increased tenfold since January 2020. Notably, BTC volume has stagnated since early 2021, and even Lightning usage has increased only slightly. The growth in volume comes exclusively from other coins.

The biggest winner among these is ETH. In January 2020, it accounted for only a fraction of the volume, but today it represents the highest of all payment methods — a surprising fact given that ETH is not typically known for being a sought-after payment method.

Stablecoins USDC and USDT are also performing well. Bitrefill accepts them on-chain on Ethereum, the Polygon side chain, and Tron. Combined, they likely generate even more volume than ETH.

Legacy coins like Dash, Dogecoin (DOGE), and Litecoin (LTC) also play a role. They remain active but have not grown significantly. Similarly, Binance Pay, a dollar-denominated service from Binance, shows modest activity.

The chart looks somewhat different when considering the number of monthly active users. Here, BTC not only stagnates but declines, while Lightning already has more users than BTC.

The differences between the two charts are easily explained: The average volumes between payment methods differ. They are highest for ETH and lowest for Lightning and Binance Pay.

However, the significant rise in Lightning users has a reason that may disappoint many: It is primarily due to Bitrefill's cooperation with the Argentine app Belo. Users hold pesos and buy dollar-denominated gift cards directly in the app. The payment is processed in the background through Lightning.

Ahlborg explains that 90% of Lightning growth stems from the Belo integration. The users themselves are not directly involved with Lightning. The number of other users grows much more slowly; Ahlborg estimates that „less than half come from wallets where users control their keys.“

Ahlborg attributes this loss primarily to two reasons: First, the hype around Ordinals, BRC-20, and Runes, combined with the sharp price increase, temporarily caused fees to explode. Second, by the end of 2023, Bitrefill had to stop accepting unconfirmed transactions because „miners changed their behavior.“ Both factors made BTC payments significantly less attractive.

On the other hand, ETH is more successful. Already 28% of all payments use ETH, and they average the highest volume. Ahlborg explains this by the fact that a lot of money is made in the ETH ecosystem through tokens, initial coin offerings, nonfungible tokens, decentralized finance, and users then spend this money using the base token, ETH.

The „legacy coins“ LTC, DOGE, and Dash are also noteworthy. These are old coins that have been in the market for a long time, have „gathered substantial network effects over time,“ and are available on most exchanges and wallets. They serve as „great payment methods that replace other methods, for example, when Bitcoin fees become too expensive.“

LTC, in particular, shows a continuous upward trend and has never been used as much as it is today, both in absolute and proportional numbers. However, two other trends are more crucial in the last few years.

The most striking developments among payment options are stablecoins and Layer 2, which for Bitrefill, means the Polygon side chain.

Since Bitrefill introduced the stablecoins Tether (USDT) and USDC (USD Coin) in 2022, their volume has increased significantly. They are likely the most used payment method by customers. USDT is more popular than USDC, especially on the Tron blockchain.

However, fees on Tron have massively increased since early 2023, from about 35 cents to $1.50, causing Tron-USDT to lose some shares. The Polygon side chain is growing the fastest, integrated only in spring 2023 but already processing more stablecoin transactions than the ETH main chain.

2024 is also the first year that the overall share of Bitrefill users who use stablecoins has stagnated. Ahlborg attributes this to „growing pains,“ where users adapt to changing fees, the popularity of protocols, and regulatory environments.

For Ahlborg, the most exciting insight that generally receives too little attention is that ETH, BTC, and Tron operate at their limits. Ahlborg notes that fees consistently exceed a dollar. This leads to fragmentation of payment methods and makes it crucial to