Too mainstream for criminals, bitcoin is losing its ransomware appeal
As Bitcoin teeters toward mainstream acceptance, some financial technology vendors are reconsidering whether the crytocurrency is suitable for use as a pure method of payment.
Payment processing company Stripe announced this week that it will no longer accept Bitcoin as a payment method on its platform, citing the currency's volatility, slow transaction times and ever-increasing processing fees.
Stripe explained that Bitcoin's price fluctuates so often that one side of the transaction almost always ends up losing out. Meanwhile, fees have increased to the extent that the average Bitcoin transaction costs about $10 US dollars, roughly the same amount as a bank wire. All of these issues combined have caused a substantial decrease in Bitcoin payments, Stripe said.
"Over the past year or two, as block size limits have been reached, Bitcoin has evolved to become better-suited to being an asset than being a means of exchange," Stripe product manager Tom Karlo wrote in a company blog post. "Empirically, there are fewer and fewer use cases for which accepting or paying with Bitcoin makes sense."
See also: Bitcoin futures begin trading | Ransomware's bitcoin problem: How price surge means a headache for crooks | JPMorgan calls Bitcoin 'fraud' only for use by criminals and North Koreans | TechRepublic: Why more companies will be betting on Bitcoin in 2018
Karlo said Stripe will wind down Bitcoin support over the next three months, with plans to officially end Bitcoin transaction processing on April 23.
Overall, it's clear that the industry is rethinking Bitcoin as payment method. Stripe's Bitcoin abandonment follows a similar move from Visa, in which the credit card giant froze the accounts of pre-paid Bitcoin debit card providers.
Likewise, Bitcoin was removed as a payment option from Valve's Steam game distribution platform. And in October, Vietnam banned cryptocurrency payments, with the State Bank of Vietnam declaring that Bitcoin was not a legal payment method from the start of this year.
"Huge swings in price make the perfect case for not using Bitcoin as a method of payment," said Daniele Bianchi, a finance professor at Warwick Business School and cryptocurrency researcher. "The fact that Stripe, the first major payments company that supported Bitcoin, is now scrapping such support is an interesting case in point."
But Stripe's decision to exit the Bitcoin game is less a symptom of the currency's demise as it is an indicator of the payment industry's willingness to adapt to market changes. It's also an indication of where we are in terms of Bitcoin and crypto development: there's still much to work out in terms of compliance issues, costs, benefits, adoption and use cases.
"It's all a part of understanding where the technology is useful, if at all, and where it's not," said James Wester, research director for worldwide payment strategies at IDC.
"I wouldn't be surprised to see other payment vendors in the space determine it's not cost effective or provide enough utility at the moment to warrant supporting it," he continued. "That won't mean there aren't good uses for Bitcoin or cryptocurrencies generally, only that it's not practical right now."
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