Payment system or investment asset: the dual nature of Bitcoin
This duality of Bitcoin — between the role of "digital gold" and a decentralized payment network — makes the asset unique and requires a more precise analysis of its true nature.
In the minds of many users, especially those not involved in the fintech industry, Bitcoin is viewed as an investment asset that can potentially transform even a small initial capital into substantial wealth. On the one hand, this is true: many early investors made millions of percent in profits. But what is Bitcoin really in a broader sense? This article explores that question.
What is a payment network, and does Bitcoin belong to this category?
A payment network or payment system is a set of technical solutions for the efficient and secure transfer of funds between system participants.
In 2023, BitPay reported that over $1 billion in Bitcoin payments had been processed through its system. This means that Bitcoin can be considered a payment network, as it enables direct, cryptographically secured value exchange between two parties without intermediaries. This aligns with the basic definition of a payment system, although implemented in a different architecture.
However, Bitcoin differs from traditional payment systems not only in terms of transparency and decentralization. The key difference is that Bitcoin is the only asset in its payment network.
In comparison, traditional payment systems such as Visa and PayPal are not limited to a single currency; they process transactions in various currencies, including U.S. dollars, euros, British pounds, and even stablecoins like USDC.
Bitcoin, however, cannot be used outside of its blockchain without special solutions such as Wrapped Bitcoin (WBTC) on Ethereum, bridges, or interoperable protocols — all of which require additional infrastructure and reduce its universality compared to centralized payment networks.
So, is Bitcoin an asset or a payment tool?
In its early development stages, Bitcoin was more commonly used for payments than investments, which indicates its original intended purpose.
However, the Bitcoin protocol is designed such that transaction costs increase as activity grows. This is due to the network's limited bandwidth: each block in the Bitcoin blockchain has a fixed size of 1 megabyte, allowing for about 3–7 transactions per second. When the number of transfer attempts exceeds this capacity, competition begins for space in the next block.
In such cases, miners, who confirm transactions and create blocks, prioritize transactions with higher fees. This creates a market-driven mechanism where the cost of a transfer is determined by demand for blockchain space.
As a result, as transaction activity increases on the Bitcoin network, transfer fees have reached several dollars. For instance, during the network congestion in April 2021, the average fee exceeded $60. According to blockchain explorer Blockchair, as of June 2025, the average Bitcoin transaction fee is approximately $ 1.50, reflecting a moderate current load on the network.
It is important to note that the fee does not depend on the transfer amount — sending $10 or $10,000 requires the same amount of block data, aside from the specifics of a particular wallet. This makes Bitcoin less efficient for micropayments, especially during times of high network congestion.
According to TheBlock data for June 2025, the average number of transactions on the Bitcoin network per day was around 317,000. From this, one can conclude that Bitcoin is indeed used as a payment solution: sending a transfer in BTC to another country is much cheaper than using traditional currencies.
In comparison, the cost of large international fiat transfers can range from several hundred to even thousands of U.S. dollars, depending on the amount, origin, and destination countries, exchange rates, and bank policies.
For example, in 2023, the World Bank reported that the average cost of an international money transfer was about 6.2% of the amount, and in some developing countries, this figure exceeded 10%.
However, historically, Bitcoin has not been the most popular means of payment, as many newer blockchains have emerged that allow transfers at much lower costs.
For example, the average transaction cost on the Solana network as of June 2025 is just a few cents, which is dozens of times less than that of Bitcoin. Moreover, Solana has over 3 million daily active users. This indicates that Solana and similar blockchains are more suitable payment systems than Bitcoin.
Summary: The Bitcoin protocol indeed has the characteristics of a payment network and is used for this purpose. However, more and more users view Bitcoin as a store of value and hedge against inflation — in other words, as an asset.
According to Glassnode, more than 60% of all Bitcoins are held as long-term investments (HODL), confirming their role as "digital gold." For example, some private investors, companies, and even countries hold Bitcoin as a reserve investment asset. Nevertheless, CoinMetrics notes that around 68% of all Bitcoin transactions in 2024 were related to transfers and payments rather than speculative trading.
However, at present, stablecoins remain the primary payment instruments, accounting for about two-thirds of all transactions, according to analytics service Chainalysis.
Conclusion
Bitcoin is a unique phenomenon at the intersection of two financial paradigms: on one hand, it is an asset whose value grows due to its limited issuance and investor demand; on the other, it is a decentralized payment network that enables direct cross-border transfers without intermediaries.
Despite rising fees and relatively low throughput, Bitcoin continues to be used as a means of settlement, especially where traditional transfers are expensive or inaccessible.
However, as the blockchain ecosystem evolves and more advanced payment solutions emerge, Bitcoin is increasingly seen as "digital gold" and a long-term investment tool. Thus, Bitcoin remains both an asset and a payment network — its role may shift depending on the context. This dual nature makes it a key element of the modern crypto economy.