The new green Blockchain is Bitcoin’s biggest threat

Using bitcoin for payments may not spark as much talk as it did at the beginning of the year, but a lot has happened under the hood in 2022.

Payment technology companies like Stripe, Block, and PayPal have expanded their cryptocurrency offerings and capabilities. Strike has announced a partnership that will bring its cryptocurrency payments to NCR’s point-of-sale terminals, as well as partnerships with Shopify and prepaid payment provider Blackhawk Network.

Read more: By firmly bringing Bitcoin into payments, Strike partners with NCR, Shopify, Blackhawk

Beyond that, Lightning Network’s Layer 2 service has finally begun to take the work of transactions out of the Bitcoin blockchain, making them much faster and cheaper, and taking a lot of energy from the arguments that it can’t handle transactions. payments. And the use of cryptographic debit cards is also growing.

More here: Stripe launches crypto payment feature, sign Twitter as first user

At the same time, bitcoin payments have come under increasing pressure from stablecoins, which now make up about a quarter of the payment technology provider BitPay, its CEO Karen Webster told PYMNTS in August. And that’s in addition to a deepening winter of cryptocurrencies that has made Bitcoin holders less likely to spend it.

See also: BitPay CEO says Stablecoin payment volumes doubled in 2022

But the biggest hurdle bitcoin will face as a payment currency could be erected this week, by something mostly unrelated: blockchain No. 2, Ethereum, is on the verge of moving to a more environmentally friendly Ethereum 2.0 blockchain that will cut more than 99% of its national energy needs. It will remove a Chilean in size amount of power consumption.

And that will double and double the strength of the case of the most vigorous opponents of bitcoin payments: environmentalists and ESG investors who say the staggering amount of electricity required by bitcoin mining makes it a threat that cannot be ignored.

Related: Bitcoin’s new headwind: ESG investors double its “staggering” pollution.

You’re next

There are more than a few pros and cons arguments about the security, centralization, and fairness of bitcoin’s Proof-of-work (PoW) consensus mechanism – mining – compared to the Proof-of-stake (PoS) version of Ethereum 2.0, called staking.

Read more: PYMNTS Crypto Basics Series: What is a consensus mechanism and why is it destroying the planet?

Bitcoin almost uses as much power like Pakistan. The European Commission had to reject a powerful move to add a ban on both bitcoin mining and bitcoin itself to the Markets in Crypto-Assets (MiCA) regulatory regime for digital assets.

See more: The European Parliament votes against the ban on cryptocurrency mining

Most legislative proposals in the United States include at least one study on the pollution it causes, and the first government agency report due to President Joe Biden’s executive order on cryptocurrencies stated that if the impact cannot be mitigated, it should a mining ban be considered.

While “direct comparisons are complicated”, the report from the White House Office of Science and Technology Policy (OSTP) said: “Visa, MasterCard and American Express combined … consumed less than 1% of the electricity used by Bitcoin and Ethereum. [in 2020]despite processing far more on-chain transactions and supporting their larger business operations. “

He added that “responsible development of digital assets includes ensuring operations with significantly lower energy intensity as digital assets are adopted.”

Which is a pretty clear question, if not: if Ethereum can do it, why can’t Bitcoin?

The problem is that it’s been a seven-year process for Ethereum, and there’s a lot more centralization of thought and influence in the Ethereum Foundation, starting with the person who was the main creator and co-founder, Vitalik Buterin.

Bitcoin is not only missing Satoshi Nakamoto, its adherents don’t even know who he is or was. And without Ethereum’s need to appeal to business users and developers of a smart contract platform, Bitcoin doesn’t have the momentum or consensus to tackle such a huge task.

Adoption is happening

Despite everything, adoption is happening. According to PYMNTS ‘2022 US cryptocurrency consumer study, more Americans have a negative view of cryptocurrencies as a payment method than a positive one, from 28% to 36%.

Read this: The cryptocurrency consumer in the US: using cryptocurrency in online and in-store purchases

There are two “buts” with that data. The first is that 28% is a big, big number.

Secondly, however, is that if you bring out Baby Boomers and Seniors, those numbers change dramatically. Gen Z has 42% positives and 22% negatives, Millennials are 44% to 18% on the positive side, Bridge Millennials are 39% to 20% in favor, and Gen X is roughly linked to 30% at 31%.

Has it changed over the course of the year? Yes, according to BitPay CEO Stephen Pair. Bitcoin has dropped from 40% to 50% of its transaction volumes as committed bitcoin owners withdraw from using the cryptocurrency they believe will rise in price sooner or later.

But they are still there, they are still spending and bitcoin remains by far the largest and best known cryptocurrency. Whether it can remain so while pollution erupts is a question that will be answered.

New PYMNTS study: how consumers use digital banks

A PYMNTS survey of 2,124 U.S. consumers shows that while two-thirds of consumers have used FinTech for some aspects of banking, only 9.3% call them their main bank.

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