Stripe, the online payments startup used by more than 100,000 businesses worldwide, this week ended support for bitcoin because the time to complete transactions with the digital currency has increased along with fees, per a company blog post. Stripe will stop processing bitcoin transactions on April 23.
Bitcoin, whose value has jumped tenfold in the past 12 months and swings rapidly throughout the day, has become less useful as a payment method because transaction confirmation times have risen substantially, Stripe said. Those longer intervals mean that bitcoin’s value has time to fluctuate, sometimes dramatically, which leads to a higher failure rate of transactions.
Fees to process a regular bitcoin transaction can be “tens of U.S. dollars,” making payments as expensive as bank wires. Stripe customers who accept bitcoin have seen their revenues from the cryptocurrency decline substantially, removing incentives to accept it.
Cryptocurrencies are still evolving, meaning marketers need to proceed carefully. Digital currencies hold the promise of handling transactions quickly, securely and inexpensively, making them a technology that likely will transform mobile payments dramatically in the coming years. Unfortunately for bitcoin, the currency is starting to bump up against its technical limitations. Payments take longer to process among the cryptocurrency mining industry that earns bitcoins for providing the computing power to unlock new coins while updating the digital ledgers of transactions.
The value of bitcoin also is unstable, making it less useful as a medium of exchange. Bitcoin’s volatility isn’t quite as bad as the hyperinflation seen in war-torn or bankrupt countries, but the uncertainty doesn’t give merchants much peace of mind. Meanwhile, bitcoin mining consumes more energy than individual countries like Ireland, which has spurred environmental worries. China is concerned about the energy usage of its coin-mining industry that takes advantage of low power prices in some areas.
Stripe said it was optimistic about the usefulness of bitcoin in 2014, when it first started supporting payments in the digital currency. Despite discontinuing support for bitcoin, the company sees promise in proposals to speed up bitcoin transactions, such as the Bitcoin Lightning Network and OmiseGo for ethereum. Stripe may provide support fort Stellar, a non-profit open source cryptocurrency platform that received seed funding from Stripe.