Stripe made history in 2014 by becoming the first major payments processing firm to offer bitcoin support, and now the company may be making history again—by ending it. The company announced today that it is ending bitcoin support for payments because the cryptocurrency is becoming “less useful for payments.” The question now is how long it will take other firms which process transactions in bitcoin to end support for it as well.
Bitcoin has become too volatile
Tom Karlo of Stripe said in a blog post today that when announcing support for bitcoin payments in 2014, they were hoping that the cryptocurrency could become a “universal, decentralized substrate for online transactions.” He also said that they had hoped bitcoin could help their customers make transactions in places were credit card penetration was lower or in use cases involving prohibitively-high credit card fees.
However, he said that now bitcoin is more suited as an asset than as a means to process transactions. He explained that the amount of time it takes for transactions to be confirmed has risen significantly, which also has caused a rising failure rate for transactions which are actually denominated in fiat currencies. In other words, the extreme volatility bitcoin has been experiencing over the last few months has made it very difficult to process payments in it.
Bitcoin’s utility drops dramatically
According to Karlo, by the time a transaction being processed via the bitcoin network is confirmed, the value of the digital currency has changed so much that the amount is “wrong” by the time of confirmation. Processing fees have also climbed quite a bit. He said that for “regular” bitcoin transactions, it’s common for fees to be in “the tens of U.S. dollars,” which makes transactions completed via bitcoin “about as expensive as bank wires.”
For these reasons, Stripe customers have started showing less and less desire to accept bitcoin as a payment option. Additionally, those that have been taking bitcoin on Stripe have watched their bitcoin revenues tumble “substantially.”
“Empirically, there are fewer and fewer use cases for which accepting or paying with bitcoin makes sense,” the blog post states.
Ending bitcoin support on April 23
Thus, Stripe is starting to wind down support for bitcoin payments starting today, and it will stop processing transactions in the cryptocurrency on April 23. The company clarified that it’s still “optimistic about cryptocurrencies overall” and that it still sees some efforts as “promising,” which they could enable support for at some point.
Specifically, Stripe is interested in Lightning, OmiseGO, and ethereum, and it could one day add support for Stellar, which it provided seed finding for. Stripe also said it could one day add support for bitcoin cash, litecoin or “another bitcoin variant” if it’s able to “find a way to achieve significant popularity while keeping settlement times and transaction fees very low.”