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Now more than ever, bitcoin as "digital gold" is the prevailing narrative fueling big-name adoption, writes Coindesk. Bitcoin is something to be bought and stored, not something to be spent or used.
Why it matters: Bitcoin as a store of value is trouncing bitcoin as a medium of exchange. While the price of bitcoin is near its all-time highs, usage of bitcoin for anything other than investing has slowed.
By the numbers: Roughly 60% of all bitcoins have not moved in at least a year. The average time bitcoin is being held in individual wallets recently surpassed 1,000 days for the first time.
Between the lines: That said, bitcoin does function as a currency in two key places: darknet e-commerce and countries with economic instability.
- Darknet volumes are still seeing a steady upward trend. Such marketplaces drew roughly $1.5 billion in revenue in 2020, up from just under $500 million in 2015. Overall, about 1% of crypto transactions last year were for illicit purposes.
- Kenya, Venezuela, Nigeria and Colombia lead the pack in peer-to-peer exchange volume, which is the sector’s best proxy for grassroots activity. Even among the leaders, however, volumes remain tiny. Nigeria, the leader, saw $353 million in P2P volume in 2020 — a number that’s been fairly flat for the past three years.
The bottom line: For now, bitcoin is more cryptoasset than cryptocurrency. Take it from Coinbase, the San Francisco crypto exchange prepping to go public:
- "The fact that wallet-count is outpacing the volume of on-chain transactions illustrates the market’s belief that Bitcoin’s primary application is as a store of wealth," Coinbase wrote in an annual report published last week. "In short, people are holding their Bitcoin rather than sending or spending them."
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