As the cryptocurrency market grows, Bitcoin is becoming increasingly unusable for online payments.
The vision of Bitcoin was to act as a peer-to-peer digital cash, but it has instead become a “store of value” for many and is regularly referred to as digital gold.
This has been caused by volatility, high transaction fees, and long transaction times on the Bitcoin blockchain, resulting in online payment providers stopping their Bitcoin services.
Two examples are Stripe and Steam, which no longer accepting Bitcoin as it has become unfeasible for online payments.
To see what the Bitcoin-payment situation is like in South Africa, MyBroadband spoke to online payment gateway provider PayFast.
Most South African online retailers who accept Bitcoin do so through PayFast’s services, which convert Bitcoin payments into fiat currency.
This conversion from Bitcoin into fiat is done through cryptocurrency exchange Luno, which provides the service to enterprises.
PayFast said it continues to support Bitcoin payments in South Africa, but they do come with problems.
“Yes, we do still support Bitcoin payments, but like anyone else doing so, we are affected by the increased confirmation times and associated costs,” it said.
“It is our recommendation that anyone wishing to spend their Bitcoin through PayFast, or any other provider, be aware of the transaction fee required to confirm the transaction within the stipulated time frame.”
The transaction fee and time frame can vary depending on blockchain activity, and transactions can sometimes go hours without being confirmed.
“Spending too little to confirm the transaction will result in the payment transaction expiring, with the Bitcoin transaction succeeding much later, and frustration for the buyer as well as lost fees which cannot be recouped,” said PayFast.
Bitcoin’s transaction problems are a result of the obstacles faced by every blockchain-based cryptocurrency – scaling the network.
Other cryptocurrencies such as Ethereum have implemented numerous improvements to their blockchain architectures, allowing for transactions at extremely low rates and almost-instant confirmation times.
Bitcoin’s development has been more controversial, however, and more inhibited than that of other cryptocurrencies.
A recent attempt at scaling the Bitcoin blockchain resulted in the formation of Bitcoin Cash, a cryptocurrency which implemented a block size upgrade and is now competing with Bitcoin.
There are multiple ways Bitcoin could improve its network capacity, but until new upgrades are proposed and agreed upon, it risks losing its ubiquity as an online payment method to other cryptocurrencies.