Bitcoin and Ethereum on pace to settle a combined $1.3 trillion in transactions in 2020

Many people think blockchains have failed as payment systems. The typical argument goes something like, “you can’t buy a cup of coffee with Bitcoin, therefore it has failed as a payment system.” Along this line of argument cryptocurrencies like Bitcoin and Ether also suffer from extreme volatility making them unable to serve as payments mediums. Both premises aren’t entirely inaccurate, but the conclusion definitely is. In fact it is about $1.3 trillion wrong.

While it's true most people do not want to transact in a volatile currency and most would prefer to hold their cryptocurrencies for investment purposes, it’s not necessarily true they’re not used for payments at all. In each of the past 3 years, Bitcoin and Ethereum have settled a combined $1 trillion annually. This year they’re on pace to settle $1.3 trillion - their most ever.

Stablecoins are a major driver of this growth and now regularly account for 40% of the combined total settlement value of Bitcoin and Ethereum. Already this year, we’re on pace to see just under half a trillion dollars in stablecoin transactions settled on public blockchains. For perspective, PayPal did $712 billion in payments volume in 2019.

But that comparison isn’t perfect because not all payments systems are the same. And clearing up misconceptions around what kinds of payment systems public blockchains are will prevent people from drawing premature conclusions about public blockchains as payment systems.

What kinds of payments systems are public blockchains?