The creator of Bitcoin intended the cryptocurrency to be used just like cash—to buy and sell goods and services. And for a while, it was. (The first purchase was two Papa John’s pizzas—for 10,000 Bitcoin.)
Today, though, Bitcoin is quickly turning into a commodity, and that’s starting to affect how it’s used. Consider this: Investors have been sinking money into the gold market for years, but you don’t see a lot of people plunking the rare metal down when they buy a new sofa.
Bitcoin transactions, on the whole, are certainly on the rise, and have been steadily going up for the past several years. But much of that is traders buying and selling the coins themselves. Using them for services (and we’ll bypass the questionable transactions on the dark web) has been complicated by high user fees.
Bitcoin transaction fees for peer-to-peer transactions spiked sharply beginning in October of last year, jumping from an average of $1.13 on Oct. 1 to a peak of $34.10 on Dec. 23. That discouraged people from using the cryptocurrency and led some businesses, including Steam, the popular digital distribution service for games, to stop accepting Bitcoin.
Those fees have since fallen back down to Earth, settling at just 20 cents Thursday, according to Bitinfocharts. That’s their lowest point in a year.
Will that revive the market? It remains to be seen. Bitcoin’s down today, but with its recent rebound in value, holders—even the enthusiasts who want to bypass banks—could find it hard to resist the potential to hold onto their Bitcoin in hopes of seeing substantial cash returns.