Slashdot Mirror
Microsoft Halts Bitcoin Transactions Because It's An 'Unstable Currency' (bleepingcomputer.com)
Catalin Cimpanu, reporting for BleepingComputers: Microsoft has stopped supporting Bitcoin as a payment method for Microsoft products, Bleeping Computer has learned. A Microsoft support staffer has told us the move is temporary and cited the unstable state of the Bitcoin currency. Microsoft added support for Bitcoin in 2014, and has previously temporarily stopped supporting Bitcoin in the past.
When a currency can quickly gain or lose half it's value with no apparent reason and no apparent cause, many people won't want to take them for fear they will lose money on the deal.
The cause of the volatility is obvious. Fear Of Missing Out combined with greed which is what drives most asset bubbles.
Microsoft ultimately has to convert all transactions to dollars for financial reporting. They hold many currencies (global company) but it's a bad idea to hold particularly volatile ones since they will have to convert those to dollars at least on their financial reporting statements. They can take the risk since in reality bitcoin is basically a rounding error to them but they aren't going to take a loss on it either.
They're quite far from the cap (21 million, out of which app. 17 million have been mined). What they can't scale is throughput: the Bitcoin network can manage about 10-14 transactions per second, while Visa for instance executes about a hundred times that per second.
Now, miners can apply all the hacks they want (SegWit and co.) but if the system wasn't made to scale, no amount of patching will make it scale.
Hyperbole: I use it liberally!
When a currency can quickly gain or lose half it's value with no apparent reason and no apparent cause, many people won't want to take them for fear they will lose money on the deal.
The gain should be obvious: Bitcoin is the preferred currency for the black market, it has a fixed liquidity requirement to meet the demand of the userbase, and non-criminals started using it for normal transactions thereby artificially inflating demand. The loss should likewise be obvious: the traders to followed the non-criminals in got freaked out by the rapid rise, expecting a bubble to burst, and subsequently bailed (or may have outright caused it.)
The real issue with Bitcoin isn't the technology, that's a great concept for things like automated contracts. The issue is the same as its tax classification: it is a commodity with a limited quantity available. Coins/wallets get lost forever and there's only ~23 million which will ever be minted, it is inherently deflationary, meaning it not only has limited supply but that supply disappears over time.
Actual cryptocurrencies (as opposed to cryptocommodities like Bitcoin) like Ethereum with a built in inflation rate surpassing lost coins/wallets and accounting for new user adoption (still unfortunately treated as commodities per tax codes) would be the solution to the problem, and quell a lot of the bubble-looking effects of volatility.