Spiral Says Bitcoin Payments Need Consumer Demand to Compete With Stablecoins

Spiral says Bitcoin payments need more than better tools to compete with stablecoins

Bitcoin’s payment infrastructure has improved, but everyday spending remains limited, according to Block-backed development group Spiral. In its report, The Long Road to Bitcoin Payments, Spiral argues that the challenge now goes beyond making Bitcoin payments work. People and businesses need a reason to use them, too: giving people and businesses a reason to use them.

• Lightning and wallet tools have improved over the past seven years.
• Stablecoins’ dollar-linked value can make payments easier to price.
• Volatility, spending incentives and U.S. tax rules remain obstacles.
• Spiral wants proposals that can show measurable results within five years.

Better tools, limited spending

Bitcoin payment technology has come a long way over the past seven years, Spiral says. The Lightning Network, built on Bitcoin, can handle payments without recording each one on the base layer. It can now support production applications. Wallet developers have also made payment addresses, account recovery and liquidity management easier.

Spiral says custodial Bitcoin payments, where a service provider holds or manages users’ funds, are now about as complex to implement as custodial stablecoin integrations. Self-custodial services, where users keep control of their funds, are still harder to run at scale.

Better infrastructure matters, but it does not automatically create a consumer payment habit. Spiral says demand is becoming a bigger constraint. Users need a reason to acquire and spend Bitcoin, and merchants need a reason to accept it. Research on U.S. consumers’ use of cryptocurrency for payments offers another way to assess that demand.

According to Spiral, more than one million U.S. merchants can accept Bitcoin through Square. That figure shows how many merchants have access to the option, not how many actually receive Bitcoin or how often customers pay with it. It also does not tell us whether payments settle in Bitcoin or are converted to dollars.

Why stablecoins appeal to payment users

Stablecoins are digital tokens designed to track the value of an asset, often the U.S. dollar. That dollar link can give customers and businesses more predictable prices and settlement than an asset whose value fluctuates.

Predictability can help with automated payments, where software pays for services such as data or computing resources. Spiral estimates that approximately 99% of payments through Coinbase’s x402 protocol use USDC, a dollar-denominated stablecoin. The reported figure gives no timeframe and does not say whether it measures payment count or value. It should not be treated as a measure of stablecoin use across commerce as a whole.

x402 is an internet payment protocol that can handle transactions initiated by software or people. In September, Block added Lightning support to x402. Block has not disclosed transaction volumes for the integration or announced a rollout across Square and Cash App. The addition makes Bitcoin payments possible within the protocol, but it does not show how widely people are using them.

Lightning Labs has also launched Wavelength on Bitcoin’s mainnet, the live network rather than a test environment. The service is in alpha. It lets AI agents make Bitcoin payments without running their own Lightning nodes or payment channels, the connections used to send funds over Lightning. Wavelength’s initial balance ceiling is 300, 000 satoshis. A satoshi is the smallest unit of Bitcoin. The service charges 0.25% on Lightning payments, excluding network routing fees. Stablecoin support is planned.

These projects test payment infrastructure. They do not prove broad consumer demand. Stablecoins have risks of their own, including reliance on an issuer and its supporting systems. But their dollar-linked value is useful when people want predictable prices.

What makes spending Bitcoin difficult?

Bitcoin’s price can make spending feel costly. A purchase made today may look more expensive if Bitcoin’s price rises later. That uncertainty can also make pricing and revenue planning harder for merchants. Customers may need to take extra steps to acquire Bitcoin before spending it.

U.S. tax rules add another layer of friction. Under the federal rules Spiral describes, spending Bitcoin generally counts as disposing of property and can create a taxable gain or loss, even on a small purchase. Proposals to exempt qualifying low-value transactions had not become law. The report does not say what any proposed exemption would cover. This general description is not individual tax advice.

Spiral is inviting proposals for ideas that could materially increase adoption within five years. Suggested approaches include rewards for spending, micropayments for content or computing, and shared infrastructure for Bitcoin and dollar-denominated payments.

That last distinction matters. Sending a dollar payment over Bitcoin-related infrastructure may show that the rails are useful, but it does not necessarily mean the customer chose Bitcoin as money. In places facing unstable national currencies or restrictions on moving capital, self-custody may offer an alternative to relying on a stablecoin issuer. That potential use is different from proving that Bitcoin is widely used for everyday spending.

Measure repeat use, not just integrations

Spiral lead Steve Lee has invited developers to suggest ways Block, Spiral and others could increase Bitcoin payment adoption over the next five years. The group wants to assess proposals using measures such as merchant payment volumes, repeat usage, transaction success rates and whether users keep paying after incentives end.

These measures help distinguish availability from adoption. A merchant integration, a successful technical demonstration or a temporary burst of transactions can show that a system works. Continued use after rewards end is better evidence that it solves a problem people care about.

Block co-founder Jack Dorsey has argued that Bitcoin should do more than serve as a store of value. Speaking in January 2025, he said:

“If bitcoin ends up just being digital gold, I think it’s failed.”

Bitcoin developer Matt Corallo has also argued that transferring value remains central to Bitcoin’s purpose. The practical test is whether people choose Bitcoin for payments when alternatives may offer simpler pricing or more predictable value.

Key questions about Bitcoin payments

• What is Spiral concerned about?

  Bitcoin’s payment tools have improved, but everyday consumer spending remains limited. Spiral says creating demand is now as important as improving the technology.

• Why are stablecoins attractive for payments?

  Their dollar-linked value can make prices and settlement more predictable. Spiral estimates that USDC accounts for approximately 99% of payments through Coinbase’s x402 protocol, but the reported figure has no specified timeframe or measurement basis.

• Does Square’s merchant reach prove widespread Bitcoin use?

  No. Spiral says more than one million U.S. merchants can accept Bitcoin through Square, but access alone says nothing about actual payment volume or repeat use.

• What barriers to Bitcoin payments does Spiral identify?

  They include price volatility, weak incentives to spend, the steps needed to acquire Bitcoin and U.S. tax treatment.

• How does Spiral want payment projects evaluated?

  It points to payment volumes, repeat usage, transaction success rates and whether users keep paying after incentives end.

• What remains unknown about Block’s Lightning integration with x402?

  Block has not disclosed transaction volumes or announced a rollout across Square and Cash App. The integration’s existence does not show how widely it is used.