Over the past decade, Bitcoin has grown as a store of value and undergone upgrades to improve its transaction processing capabilities. Various businesses now accept Bitcoin (BTC) as a payment method, both in-person and online.
Despite having higher fees than many other cryptocurrencies, BTC can be helpful for larger transactions — especially considering its impressive security. For a large part of its existence, the Bitcoin community placed a lot of faith in the cryptocurrency becoming a viable alternative to many centralized payment systems existing in the market. However, BTC is currently primarily used as a long-term investment, an asset much like gold or stocks.
The main problem is the number of transactions that the network can process: Bitcoin's absolute maximum capacity is a mere seven transactions per second. Meanwhile, Visa handled more than 185 billion transactions in 2019.
It should be noted that credit card transactions are not settled right away. Those transactions are queued for days in some cases, while Bitcoin gets criticized for queueing transactions for hours during times of congestion. Like with credit cards, Bitcoin has pending transactions and completed transactions; people frequently conflate the two.
As more and more people start to use Bitcoin and send transactions, the network becomes bloated. Along with the number of transactions, waiting times and — most importantly — transaction fees soar during times of network congestion and fall when usage wanes.
A classic example of this was when BTC's transaction fees soared due to increased usage and trading in 2017, a period where the token's price skyrocketed. That made people question Bitcoin's viability, and several major companies stopped accepting it as a payment method.
Bitcoin has a scaling solution that aims to change that: it's called the Lightning Network, and it uses state channels to conduct transactions almost instantly, with nominal fees. This network updates the state of Bitcoin's blockchain after transactions are complete.
Lack of user-friendliness limits the adoption of the Lightning Network. Users currently have to create and deposit to their Lightning channels before they can conduct a transaction. They also have to keep the channel open until the transaction is complete.
The Lightning Network will benefit from Taproot, a Bitcoin update that improves privacy by making Lightning transactions indistinguishable from conventional BTC transactions. There will also be wallets that aim to make it easier for people to buy things with BTC using Lightning, a promising prospect for Bitcoin's future.
The most significant problem that Lightning solves is making BTC viable for tiny transactions such as a cup of coffee. If Lightning is not used for these small, frequent transactions, high Bitcoin fees could multiply prices.
The second most vital issue is transaction time in brick-and-mortar stores. For example, standing behind a Bitcoin user in the cashier line and waiting over 10 minutes for a transaction to go through would be very annoying.
Lightning may potentially eliminate both of the above issues if it becomes more user-friendly. Once fully implemented, its supporters hope that Bitcoin may actually give Visa a run for its money.
On the other hand, transactions conducted online are still easily done with Bitcoin due to the lack of waiting in line — especially if you're paying via QR code using your mobile wallet. The growth of online shopping could impact the viability of BTC payments, especially as brick-and-mortar stores are on the decline.
Online stores that accept Bitcoin
Most major online retailers still do not accept BTC as a form of payment, but there is a way of buying products from them using digital currency: You can shop with Bitcoin by using gift cards.
Indeed, significant portions of Bitcoin-related transactions are gift card purchases. Gift cards are the simplest way of using the cryptocurrency to buy products from global companies and small local businesses, online and offline.
Service providers that accept Bitcoin
Bitcoin's acceptance as a payment option varies from company to company. Hence, there are no specific markets where BTC is universally accepted. Instead, there are various companies in different sectors looking to expand their client bases by introducing digital currencies as a new payment option:
Buying video games with Bitcoin
In the past, you had to visit a physical store to purchase a video game. These days, however, most gamers shop online. Video games are becoming a digital possession, much like digital currencies themselves. So, it is only natural that more and more leading game-selling platforms are accepting Bitcoin.
Travel companies that accept Bitcoin
There are a lot of competing travel-related services, and most of them offer very similar toolkits. Providing alternative ways of payment is a great way to attract new customers. Some services where you can book your dream holiday and pay for it with your Bitcoin include:
Nonprofit organizations that accept Bitcoin
Donating money to charity often incurs huge fees. Moreover, some people would prefer to keep their donations anonymous for one reason or another. Donating money using Bitcoin provides a way to avoid both of those concerns.
Restaurants and supermarkets that accept Bitcoin
Taxis
Several taxi dispatch and airport transportation services in various parts of the world accept Bitcoin as a payment method.
Education
In 2013, the University of Nicosia, a private school in Cyprus, became the first university to offer a Master's in Blockchain and Digital Currency program. Naturally, you can pay your tuition fees in Bitcoin.
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