Spiral warns Bitcoin loses payments race to stablecoins, seeks 5-year adoption boost

Despite advancements in its payment technology over seven years, Bitcoin is reportedly struggling to become everyday money, according to the Block-backed development group Spiral, which is calling for bold concepts to propel its adoption within the next half-decade.

The report, titled The Long Road to Bitcoin Payments, notes that while approximately one million U.S. vendors can now accept Bitcoin via Square, and the Lightning Network has become simpler to weave into payment applications, actual consumer spending remains quite limited. This situation prompts the group to actively seek ideas capable of altering Bitcoin's adoption path within five years.

The industry's challenge, Spiral contends, is increasingly rooted in consumer incentives and demand, even as the underlying payment infrastructure continues to improve. This perspective aligns with Jack Dorsey's long-held belief that Bitcoin ought to function as a currency for regular daily use. Speaking in January 2025, the Block co-founder asserted, "If bitcoin ends up just being digital gold, I think it's failed," suggesting that its success should be judged by its use as a daily medium of exchange.

While Spiral acknowledges that Bitcoin has largely solidified its status as a store of value, this point is not universally accepted, with some disagreeing whether limited spending constitutes a significant issue. Certain parties maintain that payment demand will naturally materialize as Bitcoin matures, whereas others worry that competing financial applications are adopting alternative technologies before Bitcoin can establish a firm foothold.

Over the past seven years, the Lightning infrastructure has matured to support production applications, and wallet developers have streamlined aspects like payment addresses, liquidity management, and account recovery. The report observes that the technical complexity of custodial Bitcoin payments now rivals that of custodial stablecoin integrations, although scaling self-custodial services proves more challenging.

Merchant participation has seen considerable growth; as crypto.news previously reported regarding Square's rollout, around one million American sellers gained the ability to accept Bitcoin, with Lightning facilitating transactions while merchants received fiat dollars. However, Spiral points out that this infrastructure availability has not translated into equivalent consumer spending. Most Bitcoin holders appear inclined to keep their holdings as savings, and merchants generally favor stable pricing, viewing little compelling reason to introduce another payment option without customer backing.

Stablecoins stand out as the most formidable competitor because both businesses and consumers can move dollar-denominated value without having to contend with Bitcoin's price fluctuations. The report highlights instances such as Shopify integrating USDC for checkouts, PayPal offering PYUSD services, and Stripe acquiring the stablecoin infrastructure provider Bridge. This competition has extended into sophisticated machine-to-machine payments, where digital services, computing power, and data are automatically procured by applications.

Citing an early preference for dollar-backed settlement, Spiral estimates that nearly 99% of transactions processed through Coinbase's x402 protocol utilize USDC. In September, Block incorporated Lightning into x402, offering developers a Bitcoin payment choice within that protocol. While this integration showed technical viability, Block had not shared transaction volumes or announced its deployment across Square and Cash App. Other payment developers have concurrently introduced Bitcoin-based alternatives; for example, Lightning Labs recently launched Wavelength on mainnet, enabling AI agents to execute Bitcoin payments without needing to manage their own Lightning nodes or channels. This service, currently in alpha, imposes an initial balance cap of 300,000 satoshis and carries a 0.25% service fee on Lightning payments, excluding routing charges, though stablecoin support is still slated for the future, leaving its current public payment function focused solely on Bitcoin.

Beyond the competitive landscape, Spiral pinpoints several hurdles that discourage routine Bitcoin transactions. Typically, consumers acquire Bitcoin via exchanges or financial platforms before spending it, adding an extra step that conventional card and dollar-based services routinely bypass. Furthermore, price volatility acts as a deterrent, causing consumers to hesitate about spending an asset they anticipate will increase in value. Merchants prioritizing predictable income often prefer immediate conversion to dollars, a certainty that stablecoins already provide when pricing goods and services.

The existing U.S. tax framework adds another layer of difficulty; under current federal regulations, spending Bitcoin generally counts as a disposal of property, which could trigger taxable gains or losses even for minor amounts. Proposals aimed at exempting certain low-value transactions have not been enacted into law. The stalled CLARITY Act is also identified by Spiral as a source of uncertainty for payment developers seeking clearer federal guidelines.

The report makes a key distinction between making a payment directly with Bitcoin and using Bitcoin infrastructure to facilitate the transfer of other currencies. While a dollar payment routed through Lightning might illustrate the network's usefulness, it does not confirm that the customer consciously chose to spend Bitcoin. Given these recognized limitations, Spiral is actively soliciting proposals that could substantially change Bitcoin payment adoption within five years.

The group suggests exploring shared Lightning infrastructure that could handle both Bitcoin and dollar-denominated payments within the same applications. Another concept under consideration involves individuals residing in nations with unstable currencies or facing restrictions on capital movement; Spiral argues that self-custodial Bitcoin payments could offer advantages in such scenarios because users would not rely on a stablecoin issuer's approval to move funds. The group also urges developers to experiment with incentives, such as rewards or discounts, to encourage current holders to spend their Bitcoin, proposing a method to track if payments continue after these incentives cease, alongside monitoring the volume, frequency, and value of those transactions. Micropayments represent another potential use case, particularly for services charging small fees for creator content, AI inference, or computing power. Spiral encourages developers to investigate novel user experiences where payments occur continuously or on a per-request basis rather than through standard checkout processes.

In a post on X, Spiral's leader, Steve Lee, mentioned that Dorsey believes Bitcoin payment adoption is still below its potential, inviting developers to suggest ways Block, Spiral, and other stakeholders could boost adoption over the next five years. Separately, Bitcoin developer Matt Corallo deemed the discussion vital, stating that transferring value via Bitcoin remains a core function of the technology. He remarked, "An important discussion. I hate the term 'payments' for this but it’s true that if people aren’t transferring value using bitcoin then what we’ve built is pretty uninteresting (even if financially valuable)." Spiral has established a GitHub discussion for receiving proposals and supporting data, which includes metrics like merchant payment volumes, transaction success rates, and repeat usage.

Why it matters

This highlights a key tension in the market: infrastructure improvements are not translating into mass consumer adoption. Readers should watch how quickly Bitcoin can overcome stablecoin competition and regulatory friction to achieve daily use.