The Long Road to Bitcoin Payments

Bitcoin’s role as a daily currency remains uncertain despite significant technological advances in payments infrastructure. Over the past seven years, there have been major improvements: Lightning Network solutions are now running in production environments, and self-custodial wallets have become far more user-friendly, hiding much of their underlying complexity. What once required teams of developers and months of effort—building a bitcoin payment app—can now be accomplished in a fraction of the time, even with the assistance of AI coding tools. Integration of custodial bitcoin solutions has reached parity in ease with that of custodial stablecoins, and major merchants, through platforms like Square, are technically able to accept bitcoin. However, routine use of bitcoin for everyday transactions remains rare, primarily due to low consumer and merchant demand rather than technical barriers.

The current moment is pivotal as the global financial system undergoes modernization. Large payment providers are updating their core technologies, often prioritizing stablecoin integration over bitcoin. Stripe, Shopify, and Coinbase are embedding stablecoins into their products, and influential players such as Visa, American Express, and Google are collaborating on launching a new stablecoin, OUSD. Payment infrastructures for AI agents—a rapidly growing use case—are being built almost entirely around stablecoins and cards, despite the fact that bitcoin’s Lightning Network would be well-suited for micropayments and programmable transfers. The early adoption of stablecoin-based rails by developers and wallet providers could make it increasingly difficult for bitcoin to gain ground as a mainstream payment method if these choices become entrenched.

Several factors continue to hinder widespread adoption of bitcoin payments. Demand is lacking from both consumers and merchants; holders prefer saving due to a culture that values accumulation, while merchants generally want to receive dollars rather than bitcoin, especially given the volatility. Regulatory policies, including US tax treatment on every purchase, add further friction. Meanwhile, stablecoins present an appealing alternative by offering price stability, making them easier for pricing goods and settling payments.

Despite these challenges, transformative or “moonshot” ideas offer potential avenues for change. One possibility is developing shared payment rails where users can seamlessly pay with either dollars or bitcoin over the same Lightning network, making bitcoin just one tap away in familiar contexts such as fintech apps, agent payments, and online checkouts. Another approach focuses on serving those most in need, such as individuals facing capital controls or unstable national currencies, by providing improved self-custodial bitcoin payment solutions. Incentivizing spending among existing bitcoin holders, and designing novel product experiences—such as enabling per-use payments for creators or AI services—could also ignite new forms of demand. The optimal application for bitcoin micropayments may not resemble traditional payments at all, suggesting room for creative experimentation.

A central question emerges: what bold ideas could lead to a credible and viable plan for accelerating the adoption of bitcoin payments? Achieving this would likely require participation from major platforms—such as Meta, Shopify, or OpenAI—in accepting bitcoin as a standard payment option. Builders are encouraged to propose and test innovative solutions, payment providers to share real-world data on payment behaviors, and funders to support promising experiments that might drive genuine demand.

For further details, the full report is available on GitHub, and contributions or discussions are welcomed in the GitHub discussion forum. The initiative remains active, and insights learned will continually inform ongoing updates to the report.