A Brief History of Crypto Payments

BitPay been doing crypto payment processing since 2011, just two years after Bitcoin itself started. They were Bitcoin only until 2018 when they added support for Bitcoin Cash and Ethereum, and over the successive years added other alts and stablecoins. Bitcoin remained the dominant method, not just the number 1 payment method, but had more share than all the altcoins combined. BCH and ETH hovered around 10-12%, fighting for second. This trend continued until 2021.

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BitPay stats thru Nov 2021 w/ Bitcoin visible

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BitPay stats thru Nov 2021 w/o BTC so you can see altcoin share changes

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What happened in 2021? Litecoin happened. In the middle of 2021, the first BitPay retailer, Newegg, turned on support for litecoin. 3 months later, LTC was in 2nd place in BitPay stats and never ranked lower than 2nd place again. 2 years later, Litecoin had more share than all other altcoins combined and exceeded bitcoin's share for the first time in June 2023. The first altcoin to ever do so. It just took the top spot again for November, but this time, something else changed.

BitPay so didn't expect any altcoin to replace bitcoin at the top slot, that they hardcoded 'Bitcoin is the top crypto for payments' above their chart. When the top spot flipped over the summer, that title didn't change. But now they're starting to expect Litecoin's challenge to Bitcoin's payment dominance, so the title is now capable of changing month to month. The title over this chart has changed for the time ever this month.

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BitPay stats for July-Nov 2023 src: bitpay dot com slash stats

The shift in dominance has been extraordinary, especially given bitcoin's massively larger mcap, volumes, and market awareness. People pay with Bitcoin largely because they already have some. People are going out of their way to get and use Litecoin despite higher friction, and they're doing so more and more. I wouldn't be surprised to see BTC and LTC continue to dogfight for the number one spot here, but the trend is clear.

There actually is use in cryptocurrency.

It's nascent. But don't believe the lies on CNBC/Bloomberg/YFi that this is all speculation and no use case. There are a small number of coins really being used. If you compare onchain stats (easy to fake) with offchain stats (hard to fake) you can start to sort the signal from the noise, the genuine articles from the fakes. Bitcoin and Litecoin are being used and adopted heavily. Ethereum has a lot of use. Dogecoin is on the move up and has even exceeded BCH, which is still being used more than most cryptos, but is being used less and less according to infrastructure they used to dominate like BitPay.

Network effects are on the move on a long term highly sustained trend and they're telling a story. They are, to me, the most important thing in the space. Network effects are like bunnies, they make more of themselves and fast.

Multiyear PA/NE Divergence

Litecoin's price action is horrendous. On a multiyear basis. It underperformed even in the last raging bull market in '21. If price action and momentum is your north star, stay far away from Litecoin. Network effects are my north star. I like them even more when they're moving up 1) in the opposite direction of the price action (this almost never happens) and 2) network effects outperform the market while price underperforms on a long term basis. When network effects keep up with price action, there's nothing to get excited about, they're being priced in normally as usually occurs on btc. When network effects vastly exceed price action, indeed, when they go in opposite directions, well, that almost never happens. This might be the last time you ever see it.

Bitcoiners really shouldn't feel attacked by this. You won store of value. That's a great prize. But you're deluding yourself on Medium of Transaction for no reason. You should celebrate that the medium of transaction winner shares your values. A hard capped supply, no premine, algo dominant PoW, truly decentralized and truly secure. Together Bitcoin and Litecoin are both triumphs of Satoshi's values over the vulture capitalists launching 50-100% premines since, centralized companies masquerading as decentralized crypto.

Litecoin will continue to be a friend to bitcoin, not only acting as the tip of the spear for segwit/lightning in 2017, but also for CTs through MWEB more recently. A lot of bitcoiners won't recognize what an ally Litecoin is, maybe ever, but the networks themselves are mutually reinforcing. The best and brightest bitcoiners and litecoiners will always value each other's network.

Litecoin is the only coin that has the beautiful and rare mix of multiyear network effect outperformance and multiyear price action underperformance now. Believe it or not, I don't want to convince you to buy Litecoin. This post is something that I want to point back at and say "I told you so." The more of you actually buy it, the less gloating I can do. I like gloating, so whatever you do, don't buy litecoin.

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