Bitcoin is Small Relative to Traditional Payment Processors Says Fitch

Bitcoin is Small Relative to Traditional Payment Processors Says Fitch
Bitcoin is Small Relative to Traditional Payment Processors Says Fitch

Bitcoin is Small Relative to Traditional Payment Processors Says Fitch

Fitch Ratings, a global leader in financial information services with operations in more than 30 countries, says that though Bitcoin has expanded and its reach has widened over the years, its use as a payment system and attention in the marketplace, is small relative to both traditional payment processors and global currencies.

In its Fitch Ratings Why Forum commentary published a day ago, the organization says that Bitcoin is small in comparison to traditional payment processors like VISA and MasterCard and other global currencies. However, it has not surprised many as it is quite obvious a fact and even the blind supporters of Bitcoin admit that.

With reference to transactions Fitch Ratings Why Forum says that total Bitcoin transactions averaged $68 million per day in February 2014 which when though compared with the same time last year is more than 10 fold higher. On the other hand, payment processors Western Union and PayPal averaged $225 million and $492 million respectively.

Thus, according to the Fitch Ratings, Bitcoin’s transaction volumes are less significant compared to the major credit card companies. At the front of trading, the agency says that Bitcoin transaction volumes relative to the stock of outstanding Bitcoins resemble those of equity securities.

Low Market Capitalization and Higher Instability

It says that there was about $68 million in average daily transaction volume in Bitcoin in February 2014 relative to its $6.75 billion money supply, or approximately 1% of total market capitalization was traded per day. This when compared with the largest US equity securities shows that daily trading volumes were approximately 0.6% of total market capitalization.


According to Fitch, Bitcoin’s market capitalization is less than 1% of total US Dollars. It compared Bitcoin with the smaller currencies such as the Guatemalan Quetzal. Coming from Fitch Ratings, a global leader in credit ratings and research, the study gives a concrete idea about the digital currency.

The agency says that Bitcoin’s historical price volatility is more similar to that of an investment than a payment mechanism or currency. Commenting on the recent policy decision to treat Bitcoin as property, Fitch Ratings says that it will then be seen more as an investment than a currency or mode of payment.

The exaggerated price rise of Bitcoin from $13 in the beginning of 2013 to over $1200 per coin in December 2013, and then a steep fall shows that Bitcoin is extremely volatile. Price stability according to Fitch is the major concern. Comparing Bitcoin price fluctuations with the USD and the Argentine Peso, it says that even this pair was more stable than Bitcoin.

To contact the reporter of this story: Deepak Tiwari at