With a daily transaction volume of over $8 billion, Bitcoin (BTC) is on track to overtake Mastercard, the second largest credit card network in the world, in volume.
On October 30, Mastercard released its financial results of the third quarter of 2018. Year-to-date, the credit card company has processed around $4.4 trillion. On a daily basis, Mastercard has settled nearly $12 billion per day.
Bitcoin, the most valuable cryptocurrency in the global market, has been processing just over $8 billion every day. According to a chart published by Trustnodes, BTC has been able to clear 272,000 transactions per day valued at $8.14 billion.
Mastercard and other credit card networks like Visa primarily handle payments made to merchants in both online and offline ecosystems. Hence, comparing the entire transaction volume of BTC to Mastercard’s volume can be considered as inaccurate.
A more accurate comparison of Bitcoin’s volume would be against the volume of the offshore banking sector as both target individual and institutional investors that process large cross-border payments.
Simply put, the $8 billion daily volume of BTC is a combination of exchange transfers, cross-border payments, and merchant transactions, while Mastercard only represents the transfer of cash to and from merchants.
However, as a minor currency with a total market capitalization of less than $100 billion, nearing the volume of a leading credit card network is a major milestone for Bitcoin.
Previously, the volume of top cryptocurrencies was often compared with remittance outlets like Western Union as Visa, Mastercard, and large-scale financial institutions were out of reach.
The data shows that currently, cryptocurrencies are mainly used as a store of value and as a means to transfer large sums of money. In fact, large cross-border payments rremainas the only advantageous feature of cryptocurrencies over legacy systems in terms of efficiency and practicality.
Earlier this week, Binance, the world’s largest cryptocurrency exchange, sent $600 million with a $7 fee. To send a $1 million through a bank in an international wire transfer, it could cost institutions nearly $10,000 in fees. To send $600 million, a rigorous verification phase, approval period, and significant paperwork is required.
Merchant Adoption Will Materialize
Eventually, as cryptocurrencies like Bitcoin become adopted as a legitimate alternative to fiat currencies, more merchants will adopt the digital asset. Then, it would be possible to compare merchant transactions through crypto with the volume of major credit card networks.
In late 2017, the awareness of cryptocurrencies increased exponentially as BTC achieved an all-time high at around $19,500. Still, merchant adoption remains relatively low and it is difficult to utilize cryptocurrencies at offline shops.
In the long-term, strictly regulated organizations like Bakkt that are supported by leading financial institutions in the likes of ICE, Microsoft, and Starbucks could drastically improve merchant adoption by providing an easy method for merchants to deal with cryptocurrency payments with sufficient liquidity.
In consideration of the fact that the total volume of Mastercard addresses the volume of every local currency the credit card network supports and the comparison between BTC and Mastercard only takes the volume of BTC into account, BTC nearing the volume of Mastercard is still an important achievement for the asset class.