A report recently published by NYDIG revealed that the Bitcoin network had a higher transaction volume in Q1 2021 than “some of the best-known card networks.”
According to new research, in 2021, the annual transaction volume on the Bitcoin network significantly surpassed internationally acclaimed credit card networks like American Express (AmEx), and Discover.
The NYDIG Research Weekly report, published on January 29, found the Bitcoin network processed payments worth $3 trillion in 2021. This places it significantly above some of the most popular credit card networks like AmEx ($1.3 trillion) and Discover ($0.5 trillion).
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The report was authored by Greg Cipolaro, NYDIG Global Head of Research, and Ethan Kochav, Research Analyst. According to their findings, the Bitcoin network settled “more transaction volume in the fourth quarter than all credit card networks combined for the entire year.”
The authors emphasized the significance of Bitcoin’s rapid growth, given its relatively short existence.
This is astonishing growth, in our opinion, for a payment network that just had its 13th birthday. The major card networks have multi-decade histories — Visa was launched in 1958, Mastercard in 1966, American Express issued its first card in 1958, and Discover in 1985. As such, they are some of the best-known consumer brands in the payments space.
That being said, the Bitcoin network did not have the highest transaction volume overall. It fell short compared to Visa and Mastercard, which processed $13.5 trillion and $7.7 trillion in transactions, respectively.
The study did not look into the actual number of transactions and only accounted for the $USD value of transaction volume. Thus, it’s likely that most of the recorded Bitcoin network transactions were clients buying, swapping, and selling their cryptocurrency rather than using it for payments.
It was noted that growth in Bitcoin’s transaction volume has not been linear in annual reports. However, it “has kept up at a torrid pace when looking at 5-year compound annual growth rates.”
At the end of 2021, transaction volumes have been growing by nearly 100% annually over the past 5 years.
The Bitcoin transaction volume measure in the NYDID report did not account for the raw volume of on-chain transactions, and “transactions without economic substance” were removed.
The report included intra-entity transactions, which are defined as “transactions between addresses within the same wallet or owned by the same organization.” This could apply to cryptocurrency exchanges that frequently transfer Bitcoin between different wallet addresses. Thus, there could be discrepancies with the reported $3 trillion worth of transaction volume.
A Blockdata report published in November 2021 analyzed when the Bitcoin network would match the dollar value transferred on Mastercard and Visa networks. Based on performance data of all three networks, it was estimated that Bitcoin could reach Mastercard’s transaction volume by 2026.
Blockdata’s study also revealed that the Bitcoin network has already surpassed PayPal in terms of volume by dollar value processed. According to the report, Bitcoin processed about $489 billion per quarter in 2021. In comparison, PayPal processed $302 billion during the same interval.
