Since it emerged from obscurity in early 2009, cryptocurrency pioneer Bitcoin (CRYPTO:BTC) has ushered in an entirely new digital asset class. The tokens are the oldest and most widely recognized of all cryptocurrencies, and rely on blockchain technology to ensure the security of their transactions.

There's been an ongoing debate regarding the long-term value and stability of Bitcoin. Still, with a growing cadre of well-known companies adopting the digital payment method, the questions are slowly being put to rest.

Recent data shows that the Bitcoin network has surpassed an important milestone on the path to widespread acceptance.

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Overtaking PayPal?

The Bitcoin network now processes more payment volume than online payment leader PayPal Holdings (NASDAQ:PYPL), according to data supplied by blockchain insight provider Blockdata. Thus far in 2021, the Bitcoin network has handled transactions worth $489 billion per quarter, on average, dwarfing the average of $302 billion for PayPal.

It's important to put those numbers in context, however. Bitcoin's surging price has boosted payment volumes since the price has more than tripled in 52 weeks (as of this writing). Moreover, since PayPal's transactions are conducted in government-backed currencies, they don't experience the volatility inherent in Bitcoin. So while it isn't necessarily an apples-to-apples comparison, directionally it points to increasing adoption of Bitcoin as a payment method.

Some perspective is needed

Additionally, even with the artificial boost in volume, transactions on the Bitcoin network still pale in comparison to payments giants Mastercard and Visa, which on average processed $1.8 trillion and $3.2 trillion per quarter, respectively, so far this year. 

Then, there's the number of transactions, which makes the difference even starker. The Bitcoin network processes about 280,000 transactions per day, versus roughly 366 million per day by Mastercard and 597 million per day by Visa. Even PayPal's transaction numbers are higher than Bitcoin's, at an average of roughly 53 million per day in the third quarter. When viewed through this lens, it provides some much-needed perspective to Bitcoin's place in the grand scheme of things.

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Twin sons of different mothers

There's little denying that Bitcoin is all the rage these days and while surpassing this milestone is no doubt important, it is also somewhat arbitrary, particularly given the disparity between volume and transactions. It also doesn't diminish the fact that PayPal is still the digital payments king.

PayPal was the original online payment system and has long been the leader in digital payments. To illustrate this point, nearly 8 in 10 smartphone users had at least one payment app on their phone to close out 2020, according to research conducted by Cornerstone Advisors. PayPal was by far the leader, installed on 65% of phones, while Apple Pay came in a distant second with 26%. 

It's also important to note that Bitcoin and PayPal have an alliance of sorts. In late 2020, PayPal launched a service to enable its users to buy, hold, and sell various cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, directly from their PayPal digital wallet. PayPal views this feature as "exploring and investing in the next generation of financial services infrastructure." 

The digital payments space is evolving

It's difficult to estimate the number of Bitcoin owners -- at least with any degree of accuracy. Some studies place the number in the neighborhood of 100 million, while others put it closer to 300 million. Because users store their cryptocurrency in digital wallets, at exchanges, or in brokerage accounts, that task of estimating Bitcoin holders won't get any easier. 

For its part, PayPal closed out the third quarter with 416 million active accounts, with roughly 44.2 transactions per account during the trailing-12-month period.

The explosion of fintech in recent years has made it clear that there will be multiple winners in the digital payments space. As the oldest and most well-established cryptocurrency, Bitcoin will likely have a place on the podium. Given its track record in digital payments, PayPal will likely be there as well.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.