The Long Road to Bitcoin Payments

Jack Dorsey has argued that true success for bitcoin comes when it becomes a daily-use currency rather than simply a store of value. While technical advancements have made paying with bitcoin more feasible than ever—through improvements in infrastructure such as Lightning and self-custodial wallets—the transition from technological promise to widespread, routine usage has not materialized.

Over the past seven years, the development landscape for bitcoin payments has changed dramatically. Previously, building a bitcoin payment application required significant time and expertise, but recent tools, including AI coding assistants, have dramatically lowered the barrier to entry. Integration of custodial bitcoin is now on par with stablecoin solutions, though scaling self-custodial options remains complex. More than a million US merchants technically can accept bitcoin via platforms like Square, yet consumer adoption remains negligible. This points to a demand gap rather than a technical one: most holders prefer to keep their bitcoin as an investment, while merchants overwhelmingly opt for stable, dollar-based transactions. The current situation is further complicated by bitcoin’s volatility, competition from stablecoins, and regulatory concerns such as tax treatment in the United States.

The global financial system is currently being reshaped as major payment providers update their underlying technologies and rails. Companies such as Stripe, Shopify, Coinbase, Visa, American Express and Google are prioritizing stablecoin integration and even launching new initiatives like OUSD. Developers naturally gravitate toward the payment rails supported by these platforms, which perpetuates bitcoin’s exclusion from emerging ecosystems. Even in areas where bitcoin’s technology would seem advantageous—such as programmable micropayments for AI agents—stablecoins are favored due to ease of use and existing support. These early choices may become entrenched, making it difficult for bitcoin to gain relevance in mainstream payments if adoption does not accelerate soon.

Potential solutions to this impasse require bold, transformative ideas. Shared payment rails could enable users to pay with either dollars or bitcoin seamlessly over networks like Lightning, increasing accessibility and convenience. Innovative products might address the needs of populations facing capital controls or unstable local currencies, positioning self-custodial bitcoin payments as a lifeline. New incentives and use cases—such as spending rewards for holders or entirely novel payment experiences like per-use microtransactions for creators and AI services—could spur activity. However, the path forward remains experimental, and there is a call for contributions from builders, payment providers, and funders. The broader community is encouraged to propose, test, and refine moonshot ideas that could reshape the adoption landscape for bitcoin payments. Further reading and participation are invited through the full report on GitHub and the associated GitHub discussion.

Beyond grand innovations, removing small practical barriers may also play a crucial role in fostering broader adoption. A frequent challenge observed in user support is payment confusion: many users struggle to distinguish between on-chain and Lightning transactions, leading to unexpected fees and delays. Such confusion during a first payment experience can discourage continued use. Ensuring clarity—by labeling payment types distinctly, displaying all applicable fees upfront, and providing comprehensive recovery instructions including for Lightning funds—can make initial transactions straightforward and unremarkable. While these measures may not generate demand directly, they are vital in preventing early abandonment and supporting a smoother onboarding process for new users.