Payment processor Stripe was one of the first to accept Bitcoin back in 2014, heralding the crypto as a start toward of mainstream acceptance as a currency.
After the huge run upward in value, the processor now calls the virtual currency an investment, not a means of exchange. As a result, Stripe has ended support for Bitcoin, affecting 100,000 account holders.
“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 said in a statement.
“Transaction confirmation times have risen substantially; this, in turn, has led to an increase in the failure rate of transactions denominated in fiat currencies.
“Furthermore, fees have risen a great deal. For a regular Bitcoin transaction, a fee of tens of US dollars is common, making Bitcoin transactions about as expensive as bank wires. But the virtual currency was now better-suited to being an asset than being a means of exchange,” he said.
Full support will end on April 23.
Stripe once hoped Bitcoin would become a way for people in places with low credit card penetration or prohibitively high credit card fees to do transactions online.
Founded by Irish brothers John and Patrick Collison and funded by Silicon Valley luminaries like Peter Thiel, Andreesen Horowitz, and Sequoia Capital, Stripe has been at the forefront of fintech, which makes this announcement all the more worrisome for Bitcoin.
When Stripe launched in 2010 they revolutionized online merchant accounts previously held captive by banks that charged outrageous fees to small merchants. Stripe has implemented machine learning applications for fraud detection and was ranked No. 1 by Forbes for cloud computing.
Stripe added that it remains bullish on cryptocurrencies, naming the most promising projects, including Lightning, OmiseGO, Ethereum, Bitcoin Cash, and Litecoin.
The company will probably include Stellar cryptocurrency in the list of services it provides.
Customers of the U.S.-based payments firm pay a fee to Stripe each time it processes a payment. Clients include Lyft, Deliveroo, Grab and Target.
Will a wave of business stopping accepting Bitcoin because of costs? Tellingly, the Bitcoin Conference that just wrapped up in Miami is no longer accepting bitcoin either.
“We wish this was easier, but no ticketing options exist which can handle large volumes of ticket sales, and transaction fees on the Bitcoin blockchain exceed $30 at certain times of the day,” said Moe Levin, the conference organizer.
Microsoft, which integrated a Bitcoin payments system in 2014, temporarily suspended transactions using the cryptocurrency in the company’s online store this week due to instability. In December, the popular video game purchasing platform Steam announced that it would no longer accept Bitcoin, also because of volatility and prohibitive fees.