Jack Dorsey's Spiral warns Bitcoin is losing the payments race to stablecoins

The Block-backed Bitcoin development group Spiral has issued a warning that Bitcoin is struggling to become everyday money, even after seven years of enhancements to its payment technology, and it is calling for substantial ideas to boost its adoption within a five-year timeframe to compete with increasingly popular stablecoins.

Spiral's recent document, titled The Long Road to Bitcoin Payments, indicates that while approximately one million U.S. merchants can now accept Bitcoin via Square, and the Lightning Network has become simpler to integrate into payment applications, consumer spending remains constrained. This situation has led the group to solicit concepts that could alter Bitcoin's adoption curve within five years.

Jack Dorsey stated on X that the adoption of Bitcoin payments is not where it ought to be, and he requested ideas from @Blocks, Spiral, and others on how to increase adoption within 5 years, noting, "Our trajectory needs changing." Further details regarding their perspective are available at https://t.co/aY5yimjdgi and https://t.co/TItzNkSYBz.

This report surfaces as payment providers such as Stripe and Shopify begin incorporating stablecoins into their offerings, with dollar-backed tokens gaining momentum in both automated payments and online commerce. Spiral contends that the industry's main hurdle is increasingly related to consumer incentives and demand, even as the underlying payment infrastructure continues to advance.

The report references Jack Dorsey's long-held assertion that Bitcoin should function as a currency people use regularly. The Block co-founder remarked in January 2025, "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 currency.

While acknowledging that Bitcoin has largely cemented its status as a store of value, Spiral notes that some supporters disagree on whether limited spending constitutes a significant issue; some believe payment demand will naturally arise as Bitcoin matures, whereas others worry that competing technologies are being adopted by financial applications before Bitcoin can establish a presence.

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

Merchant acceptance has seen considerable improvement; as crypto.news previously reported regarding Square's implementation, about one million U.S. sellers gained the ability to accept Bitcoin, with Lightning facilitating transactions while merchants could receive dollars. However, Spiral points out that this infrastructure availability has not translated into comparable consumer spending.

The majority of holders prefer to hold Bitcoin as savings, and merchants generally seek stable prices, viewing little justification for adopting an additional payment method without corresponding customer demand. Spiral identifies stablecoins as the most formidable competitor because businesses and consumers can exchange dollar-denominated value without facing Bitcoin's price volatility.

The report cites Shopify's USDC checkout integration, PayPal's PYUSD services, and Stripe's acquisition of the stablecoin infrastructure provider Bridge as examples of this competition. This competition has extended into emerging machine-to-machine payments, where digital services, computing resources, and data are purchased automatically by applications.

Spiral estimates that roughly 99% of payments utilizing Coinbase's x402 protocol involve USDC, attributing this to the early preference for settlements backed by the dollar. In September, Block integrated Lightning into x402, providing developers with a Bitcoin payment option within the protocol. Although this integration showed technical viability, Block had not disclosed transaction volumes nor announced its deployment across Square and Cash App.

Other payment developers have continued to introduce Bitcoin-based alternatives. Lightning Labs recently launched Wavelength on the mainnet, enabling AI agents to remit Bitcoin payments without needing to manage their own Lightning nodes or channels. This service is currently in alpha, featuring an initial balance cap of 300,000 satoshis and a 0.25% fee for Lightning payments, exclusive of routing costs. Stablecoin support is still planned, meaning its current public payment capability is focused solely on Bitcoin.

Beyond the competitive landscape, Spiral outlines several factors discouraging routine Bitcoin transactions. Typically, consumers acquire Bitcoin through exchanges or financial applications before spending it, an extra step that conventional services and dollar-based cards usually bypass. Price fluctuation presents another barrier, as consumers might hesitate to spend an asset they anticipate will increase in value. Merchants aiming for predictable revenue often favor immediate conversion into dollars, while stablecoins already offer a familiar basis for pricing goods and services.

Furthermore, the U.S. tax framework introduces additional complications. Existing federal regulations generally treat Bitcoin spending as a property disposal, potentially triggering taxable gains or losses even for small purchases. Proposals aimed at exempting certain low-value transactions have not yet become law. The stalled CLARITY Act is also cited by Spiral as a source of ambiguity for payment developers seeking clearer federal guidelines.

The report makes a distinction between making a payment directly with Bitcoin and utilizing Bitcoin infrastructure to move other currencies. A dollar payment routed via Lightning can demonstrate the network's usefulness, but it does not confirm that the customer intentionally chose to spend Bitcoin.

Given these identified limitations, Spiral is actively soliciting proposals that could substantially alter Bitcoin payment adoption within five years. The group suggests investigating shared Lightning infrastructure capable of handling both dollar-denominated and Bitcoin payments within the same applications. Another suggestion targets individuals experiencing capital movement restrictions or unstable national currencies, arguing that self-custodial Bitcoin payments could offer advantages in those scenarios because users would not rely on a stablecoin issuer's authorization to transfer funds.

The group also wishes developers to test incentives, rewards, and other motivators to encourage existing holders to spend their Bitcoin, proposing a measurement system that tracks transaction value, frequency, and whether payments continue after incentives cease. Micropayments represent another potential use case, particularly for services that charge small amounts for computing, creator content, or AI inference. Spiral encourages developers to explore 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 lead Steve Lee mentioned that Dorsey believes Bitcoin payment adoption is still below its potential, and he invited developers to propose ways that Block, Spiral, and other parties could enhance adoption over the next five years. Bitcoin developer Matt Corallo separately characterized this debate as significant, asserting that transferring value via Bitcoin remains a core function of the technology. Corallo stated, "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 opened a GitHub discussion to gather proposals and supporting data, including metrics on merchant payment volumes, transaction success rates, and repeat usage.