Spiral Reports Weak Demand For Bitcoin Payments Amid Stablecoin Rise

Spiral Identifies Weak Consumer Demand for Bitcoin Payments – Why Stablecoins Are Gaining the Upper Hand

Key Takeaways

• Spiral reports that Bitcoin payment technology is functional, but consumer demand for spending the asset remains persistently low.
• Only two percent of American adults used cryptocurrency for payments in 2025, according to data from the Federal Reserve.
• Major platforms like Shopify and Stripe are building new payment infrastructure around stablecoins rather than Bitcoin.
• Artificial intelligence agent payments heavily favor stablecoins, with Coinbase’s x402 protocol settling 99 percent of transactions in USDC.
• The development team is soliciting new strategies to boost Bitcoin payment adoption within a five-year timeframe.

Functional Technology Fails to Drive Consumer Spending

The Bitcoin development team at Jack Dorsey’s Block, known as Spiral, has concluded that the primary hurdle for Bitcoin payments is a lack of user demand rather than technological limitations. The technology gap that previously hindered cryptocurrency transactions has largely closed over recent years. The Lightning network, which operates as a layer on top of Bitcoin to facilitate fast and affordable transfers, is currently running in full production.

More than one million United States merchants possess the capability to accept Bitcoin through Square. Consumers rarely choose to spend their holdings despite this widespread infrastructure availability. Market behavior shows a clear divide between how people treat the asset and how developers intended it to function.

Holders consistently prefer to save their cryptocurrency rather than spend it on everyday purchases. Merchants show a parallel reluctance, generally preferring to hold traditional dollars in their accounts. This fundamental mismatch leaves Bitcoin out of many modern commerce platforms as businesses prioritize fiat currency.

Data from the Federal Reserve confirms this behavioral trend among consumers. Federal surveys from 2025 indicate that nine percent of American adults bought or held cryptocurrency as an investment. Only two percent utilized it to pay for goods or services, a payment share metric that has remained stagnant between one and two percent every year since 2021.

Volatility and Tax Burdens Drive Platforms Toward Stablecoins

Price swings create significant friction for everyday transactions, discouraging everyday people from using money that can lose value before essential bills are due. United States tax regulations compound this issue by treating every individual cryptocurrency purchase as a taxable sale. These combined factors make routine spending administratively burdensome and financially unpredictable for average users.

Major payment firms are actively responding to these consumer preferences by building their new transaction rails around stablecoins instead of Bitcoin. Companies including Stripe, Shopify, and Coinbase are currently integrating stablecoins into their systems to provide the stability that merchants and consumers demand. This shift addresses the core desire for price stability against the dollar, which users identify as a critical requirement for a functional currency.

The market reality is visible even in regions that have legally embraced Bitcoin at a national level. El Salvador currently backs a stablecoin remittance application for practical transactions while continuing to hold Bitcoin primarily as a state reserve asset. This real-world application mirrors the broader trend of separating volatile store-of-value assets from daily transactional currencies.

Artificial Intelligence Protocols Favor Stablecoin Settlements

The transition toward stable assets is highly pronounced in the emerging sector of artificial intelligence payments. New infrastructure being built for automated transactions relies almost entirely on fiat-pegged digital assets. Circle is actively pitching its digital dollars specifically for use in artificial intelligence applications and automated services.

Early tools designed for agent payments demonstrate this industry shift clearly. Coinbase has developed a protocol for agent payments known as x402, which is fundamentally built around stablecoins rather than volatile cryptocurrencies. Data from Spiral’s report shows that approximately 99 percent of x402 payments currently settle in USDC.

The dominance of stablecoins in this emerging sector creates urgency for development teams. The current market dynamic frames the stakes as a choice between irrelevance or a long, difficult grind for Bitcoin as a medium of exchange. Spiral warns that if stablecoin rails successfully lock in their dominance first, holders may find themselves owning an asset that very few people actually spend.

Developers Seek New Strategies to Prevent Bitcoin Marginalization

Jack Dorsey established a clear benchmark for the project’s success in January 2025. He stated that if Bitcoin ends up functioning merely as digital gold, it has fundamentally failed in its primary mission. The asset will only achieve true success if it becomes a currency that people utilize on a daily basis.

Recognizing the urgency of the situation, Spiral is now requesting moonshot ideas from builders, payment providers, and funders. The organization is actively seeking concepts that can significantly increase Bitcoin payment adoption within a strict five-year timeline. Several proposals are currently circulating within the development community to address this structural adoption challenge.

One proposed solution would allow users to pay in either dollars or Bitcoin over the existing Lightning network infrastructure. Tether is currently working on bringing its USDT stablecoin back to the Bitcoin network to leverage the established system. Other community proposals suggest introducing direct spending incentives for holders or implementing per-use payment models tailored for digital creators.

Our Assessment

The data presented by Spiral highlights a critical transition phase for cryptocurrency as a medium of exchange. Technological readiness is no longer the primary barrier to adoption, as demonstrated by the functional Lightning network and extensive merchant integration through Square. The challenge now lies almost entirely in consumer behavior, regulatory environments, and basic market economics.

Stablecoins are rapidly capturing the market share for daily transactions and automated protocols because they directly solve the volatility and tax reporting issues associated with Bitcoin. The integration of stable assets by major financial platforms establishes a formidable infrastructure advantage that will be difficult to overcome. The next five years will be decisive in determining whether Bitcoin can evolve beyond a store of value or if stablecoins will permanently dominate the digital payments landscape.