Block-backed Bitcoin development group Spiral has warned that Bitcoin is struggling to gain traction as everyday money despite seven years of improvements to its payment technology, calling for ambitious proposals that could help it compete with increasingly popular stablecoins.

According to Spiral’s new report, The Long Road to Bitcoin Payments, more than one million U.S. merchants can now accept Bitcoin through Square, while the Lightning Network has become easier to integrate into payment applications. Yet consumer spending remains limited, prompting the group to seek ideas capable of changing Bitcoin’s adoption trajectory within five years.

The report comes as Stripe, Shopify and other payment providers incorporate stablecoins into their services, with dollar-backed tokens gaining traction in online commerce and automated payments. 

Spiral argues that the industry’s challenge increasingly concerns consumer demand and incentives, even as payment infrastructure continues to improve.

Spiral says Bitcoin payments face a demand problem

The report draws on Jack Dorsey’s long-standing argument that Bitcoin should serve as money people regularly spend. Speaking in January 2025, the Block co-founder said, “If bitcoin ends up just being digital gold, I think it’s failed,” arguing that daily currency use should determine its success.

Spiral acknowledges that Bitcoin has largely established itself as a store of value, although supporters disagree over whether limited spending represents a serious problem. Some believe payment demand will develop as Bitcoin matures, while others worry that financial applications are adopting competing technologies before Bitcoin establishes a presence.

Over the past seven years, Lightning infrastructure has become capable of supporting production applications, while wallet developers have simplified payment addresses, account recovery and liquidity management. The report notes that custodial Bitcoin payments are now comparable to custodial stablecoin integrations in technical complexity, although self-custodial services remain harder to operate at scale.

Merchant availability has improved considerably. As crypto.news previously reported on Square’s rollout, approximately one million U.S. sellers gained access to Bitcoin acceptance, with Lightning processing transactions while merchants could receive dollars.

The availability of that infrastructure has not translated into comparable consumer spending, according to Spiral. Most holders prefer keeping Bitcoin as savings, while merchants generally want stable prices and see little reason to introduce another payment method without customer demand.

Stablecoins gain ground in payments and AI transactions

Spiral identifies stablecoins as the strongest competition because businesses and consumers can transfer dollar-denominated value without assuming Bitcoin’s price volatility. The report points to Shopify’s USDC checkout integration, PayPal’s PYUSD services and Stripe’s acquisition of stablecoin infrastructure provider Bridge.

The competition has reached emerging machine-to-machine payments, where applications automatically purchase data, computing resources and other digital services. Spiral estimates that approximately 99% of payments through Coinbase’s x402 protocol use USDC, citing the early preference for dollar-backed settlement.

In September, Block added Lightning to x402, giving developers a Bitcoin payment option within the protocol. The integration demonstrated technical support, but Block had not disclosed transaction volumes or announced its deployment across Square and Cash App.

Other payment developers have continued introducing Bitcoin-based alternatives. Lightning Labs recently opened Wavelength on mainnet, allowing AI agents to send Bitcoin payments without managing their own Lightning nodes or channels.

The service remains in alpha, with an initial balance ceiling of 300,000 satoshis and a 0.25% service charge on Lightning payments, excluding routing fees. Stablecoin support remains planned, leaving its current public payment functionality focused on Bitcoin.

Bitcoin faces spending incentives and regulatory obstacles

Beyond competition, Spiral identifies several problems that discourage everyday Bitcoin transactions. Consumers typically acquire Bitcoin through exchanges or financial applications before spending it, adding a step that conventional cards and dollar-based services generally avoid.

Price volatility presents another obstacle because consumers may hesitate to spend an asset they expect to appreciate. Merchants seeking predictable revenue often prefer immediate conversion into dollars, while stablecoins already provide a familiar unit for pricing goods and services.

U.S. tax treatment creates further friction. Under existing federal rules, spending Bitcoin generally constitutes a disposal of property, potentially creating taxable gains or losses even when the purchase involves a small amount.

Proposals to exempt qualifying low-value transactions have not become law. Spiral identifies the stalled CLARITY Act as another source of uncertainty for payment developers seeking clearer federal rules.

The report distinguishes paying directly with Bitcoin from using Bitcoin infrastructure to transfer other currencies. A dollar payment routed through Lightning may demonstrate the network’s utility, but it does not establish that the customer chose to spend Bitcoin.

Spiral calls for five-year moonshot payment proposals

With those constraints identified, Spiral is seeking proposals that could materially change Bitcoin payment adoption within five years. The group suggests exploring shared Lightning infrastructure capable of carrying both Bitcoin and dollar-denominated payments through the same applications.

Another proposal focuses on people facing unstable national currencies or restrictions on moving capital. Spiral argues that self-custodial Bitcoin payments could offer advantages in those circumstances because users would not depend on a stablecoin issuer’s permission to transfer funds.

The group wants developers to experiment with discounts, rewards and other reasons for existing holders to spend their Bitcoin. It proposes measuring whether users continue making payments after incentives expire, alongside the number, value and frequency of transactions.

Micropayments present another potential application, particularly services charging small amounts for creator content, computing or AI inference. Spiral encourages developers to examine new experiences in which users pay continuously or per request instead of making conventional checkout purchases.

In a post on X, Spiral lead Steve Lee said Dorsey believes Bitcoin payment adoption remains below its potential. Lee invited developers to suggest ways that Block, Spiral and other participants could improve adoption over the next five years.

Bitcoin developer Matt Corallo separately described the debate as important, arguing that transferring value through Bitcoin remains a central purpose of the technology. 

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). https://t.co/FUtdM2DBZA

— Matt Corallo 🟠 (@TheBlueMatt) October 27, 2026

Spiral has opened a GitHub discussion for proposals and supporting data, including merchant payment volumes, repeat usage and transaction success rates.