No doubt that over the last few months, Bitcoin (or cryptos really) has become very controversial. Just like on any normal distribution curve there’s always those that lie on the extremes, be it to the right or the left. However in this case both the extremists do agree on one thing, they both agree that Bitcoin will end in tears; not just any tears, but tears of regret.
The tricky thing with Bitcoin (or maybe interesting, depending on your level of ‘twisted’) is that whatever you chose to do or not do, at some point, you will regret it. You’ll either regret not investing in it or investing in it, it’s just the degree of regret that will vary.
Anyway, Stripe, which is one of the biggest payment platforms (if not the biggest since last year it was ranked number one on the Forbes Cloud 100 list) has announced that it will no longer be accepting Bitcoin payments effect from the 23rd of April this year. Considering the magnitude of Stripe, this is a big deal.
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Stripe, the Irish technology company which allows for both private individuals and businesses to accept payments over the Internet, operates in over 25 countries worldwide and has more than a 100 000 businesses on its platform. This then means it has considerable influence on people’s perceptions, remember, the success or failure of Bitcoin (and all cryptocurrencies) is highly dependent on the people’s perception.
In their blog, Stripe revealed why they had to make this adjustment considering that they were the first major payment company to accept Bitcoin payments back in 2014. 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…
This has led to Bitcoin becoming less useful for payments, however. Transaction confirmation times have risen substantially; this, in turn, has led to an increase in the failure rate of transactions denominated in fiat currencies. (By the time the transaction is confirmed, fluctuations in Bitcoin price mean that it’s for the “wrong” amount.) Furthermore, fees have risen a great deal. For a regular Bitcoin transaction, a fee of tens of U.S. dollars is common, making Bitcoin transactions about as expensive as bank wires.
Because of this, we’ve seen the desire from our customers to accept Bitcoin decrease. And of the businesses that are accepting Bitcoin on Stripe, we’ve seen their revenues from Bitcoin decline substantially. Empirically, there are fewer and fewer use cases for which accepting or paying with Bitcoin makes sense.
This of course does make sense. Bitcoin, due to the high value it’s attracting, is somehow evolving from being the ‘easy value transfer’ method to becoming more of a store of value, well at least I know that’s true for Zimbabwe since we have no confidence whatsoever in our own currency.
However, this can easily become a cycle. The less uses Bitcoin has (e.g in the case where companies begin to drop it) then the less valuable it becomes. It becomes less valuable simply because less uses mean less demand and as I mentioned earlier on, Bitcoin prices are determined by the market’s perception.
Now already apart from the fact that Stripe in itself won’t be taking Bitcoin payments, this is an indication of the perception that businesses on Stripe have on Bitcoin too. After all, Stripe mentions that it’s because their clients (i.e. the businesses) no longer get much profit from using Bitcoin as a payment method hence this resolution.
So now questioning is, to what extent will this decision by Stripe affect the value of Bitcoin? Maybe in Zimbabwe not so much considering that our use for Bitcoin is quite different from the rest of the world (store of value, remittances, international payments etc.). But then again the international market does somewhat affect the local one, meaning either way whatever the changes may be, they will or should affect us locally. What do you think?