The opinion of the rating agency follows the trend of lowered usage of BTC payments in real life.
Bitcoin (BTC) has failed to live up to its task to serve as “peer-to-peer electronic cash”, and has, in essence, failed its task as a currency, commented Weiss Ratings in a recent tweet:
— Weiss Ratings (@WeissRatings) August 22, 2018
Weiss, which a few months ago launched a chart to rate crypto assets, focuses on real usability and the role a digital asset serves. At the same time, Weiss remains optimistic about the future of crypto assets, seeing them as a good potential addition to a stock portfolio.
“The asset with the lowest correlation with traditional asset classes — the S&P 500, the dollar, international equities, bonds, commodities and even gold — is cryptocurrencies,” wrote Tony Sagami in a recent blog for Weiss Ratings.
There are multiple reasons for the failure of BTC to be widely used as a means of payment. The volatile price is one problem, as BTC has fluctuated wildly over the past months. The other reason is that still very few merchants accept BTC payments, and then only as a novelty, most often phasing out the option.
The low usage of BTC has caused other altcoin networks to see solutions that make crypto payments easier, cheaper, or more intuitive. But Bitcoin purists claim that BTC serves mostly as a store of value, and does not really need the characteristics of a fast network for electronic payments.
There is a paradox in the low usage of Bitcoin, given that the hashrate has been close to its record peaks. But mining has nothing to do with how much real-world transactions the network carries. Mining and exchange speculation have principles of rewards and incentives that have little to do with spending actual BTC. Most miners merely sell the coins to cover costs.
Additionally, BTC has no real economy beyond niche goods, and so far, its limited supply is yet to be fitted to widespread, real-world usage. Because of its fixed supply and deflationary nature, BTC is quite different from fiat currencies, where the supply is altered by the central bank based on the needs of the economy, or plans to encourage activity by additional liquidity.