Ripple CTO David Schwartz Explains Why Bitcoin Lost Its Transactional Edge

Ripple CTO David Schwartz recently joined a conversation sparked by longtime Bitcoin advocate Bruce Fenton about why Bitcoin isn’t really used for day-to-day transactions anymore.

Fenton, CEO of Chainstone Lab, pointed out that about ten years ago, you could actually use BTC for regular purchases. He mentioned that back in 2015, over 130 restaurants in Portsmouth, NH, were accepting Bitcoin. Even at the Satoshi Roundtable, a major crypto conference, more than 70% of ticket sales were paid in Bitcoin back then. But now, those numbers are close to zero.

Fenton sees this decline as a failure. He argues that money must be used for transactions, not just held as an investment. “Using Bitcoin for purchases is a great way to grow the network,” he said.

Why Are Fewer People Spending Bitcoin? Ripple CTO Explains

Many believe Bitcoin’s high fees and slow transaction speeds have made it impractical for payments. Mandrik, a Bitcoin user, suggests that people now view it as a long-term asset. “They don’t want to look back in five years and regret spending $5,000 on a cheeseburger,” he said.

Ripple CTO David Schwartz argued that Bitcoin worked for payments when people didn’t consider it real money. He added that Bitcoin was mostly used for payments when the early adopters got it super cheap. Once its value went up, fewer people wanted to spend it.

“Once the supply of early miners who got Bitcoin nearly for free dried up, there was no longer any reason to pay with Bitcoin,” Schwartz said.

Meanwhile, Jack Mehof, an early Bitcoin supporter, echoes Schwartz’s perspective. He stated that while he once paid for beer, tacos, and coffee with BTC. But eventually, the rising costs and slow speeds made it too much of a hassle.

Schwartz also pointed out that there are many other cryptocurrencies out there with lower transaction costs and faster speeds. But, as he pointed out, “You don’t see much retail payment use of those either. At least not yet.“

There are a lot of cryptos with lower costs and higher speeds. You don’t see much retail payment use of those either. At least not yet.

— David “JoelKatz” Schwartz (@JoelKatz) March 19, 2025

Related: Donald Trump Makes History by Embracing Bitcoin Payments for Campaign

Regulations and Banking Rules Made Bitcoin Payments Tough

Some experts believe Bitcoin’s decline as a payment method is more about regulations than technical limitations. Wayne Vaughan argues that tax laws and banking restrictions have made Bitcoin payments difficult.

“The tax treatment of Bitcoin is a major barrier. Companies accepting Bitcoin faced significant accounting burdens, and banks have been incredibly hostile,” he said.

Dave Weisberger agrees, saying that capital gains taxes make spending Bitcoin too expensive. “Every purchase effectively costs 24% more due to capital gains taxes,” he explained.

Sam Jones added that a tax exemption for small Bitcoin transactions—similar to foreign currency rules—could encourage more spending.

Some blame the Lightning Network for failing to deliver on its promise of cheap and fast transactions. Meanwhile, some argue Bitcoin’s primary role has shifted to being a store of value, similar to gold.

Related: Veteran investor Breaks Down Bitcoin’s Bull Run: Miners, Investors, and What to Expect Next for the Price

Even with regulatory fixes, some question whether Bitcoin payments will ever compete with traditional methods. Anders, a financial advisor, believes fiat remains the more convenient option. “People aren’t going to use Bitcoin if it creates a worse payment experience,” he said.

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