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Microsoft Halts Bitcoin Transactions Because It's An 'Unstable Currency' (bleepingcomputer.com)

Posted by msmash on from the tread-with-caution dept.

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.

14 of 106 comments (clear)

  1. I called it earlier by DaveV1.0 · · Score: 5, Insightful

    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.

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    1. Re:I called it earlier by Holi · · Score: 3, Interesting

      Notice they only made this decision now that bitcoin is down. They had little issue with instability when it kept climbing.

      --
      Sorry, teleporters just kill you and then make a copy. A perfect, soul-less copy.
    2. Re:I called it earlier by DaveV1.0 · · Score: 4, Insightful

      Sure. And people using it should have had an issue with using it when it kept climbing. That is why highly unstable currencies are bad. The smart people buy low and sell high, and that "people" includes businesses. Accepting a depreciating currency is a bad business decision. If offered to pay you for a product you are selling with a 25% margin in a currency that had a 50% chance of loosing half it's value before you could trade it for the stable local currency, would you do it? If you are smart, you would tell me to pay in the stable local currency.

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      There is no "-1 offended" or "-1 you don't agree with me" mod options for a reason.
    3. Re:I called it earlier by NicknameUnavailable · · Score: 4, Interesting

      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.

    4. Re:I called it earlier by tlhIngan · · Score: 3, Insightful

      Sure. And people using it should have had an issue with using it when it kept climbing. That is why highly unstable currencies are bad. The smart people buy low and sell high, and that "people" includes businesses. Accepting a depreciating currency is a bad business decision. If offered to pay you for a product you are selling with a 25% margin in a currency that had a 50% chance of loosing half it's value before you could trade it for the stable local currency, would you do it? If you are smart, you would tell me to pay in the stable local currency.

      The problem is not that - because they only accept bitcoin for the few minutes it takes to confirm a transaction - as far as Microsoft is concerned, they get US dollars either way.

      The problem is Bitcoin takes forever to confirm transactions, or you start paying through the nose for it - and I'm sure the real reason is Microsoft is not going to pay the $50+ it takes to do a near-instant confirmation. And likely, because cheap confirmations can take over two weeks, I'm sure people don't like to wait either - only to find out they're still short in the end.

      I'm guessing the real problem is the processor is unable to reflect the current bitcoin transaction fee status to the customer - and customers are refusing to pay the inflated fees.

    5. Re:I called it earlier by Anonymous Coward · · Score: 3, Insightful

      Yes, the people failing to use logic or rational thinking are definitely the ones halting transactions on the wildly fluctuating "currency" that is traded like a commodity and has no intrinsic or backed value.

      On the other hand, let's trust the person who equates the USD and bitcoin.

      Bitcoin is a "currency", again, backed by nothing, which lost approximately 25% of it's value in a single day and whose lifetime minimum (I'd use ten years but it hasn't been around for 10 years yet) is equivalent to 1,52 euros with a maximum of just over 16K euros. It's single year min and max is 745 and 16K euros respectively.

      Meanwhile, the derided US dollar is backed by the government of a country who represents the largest economy based on GDP, and controls the largest military. Their currency has "depreciated" by about -23 euro cents over 10 years... in other worlds, the euro is actually what is depreciating, unless you mean just this past year alone, which the US dollar admittedly lost around 13 cents. This is over a 10 year min max of 0,62 and 0,96 euros,and a single year min max of 0,82 and 0,95 euros respectively. Or a 10 year swing of 1.54%.

      I'm not an economist, but I'm going to guess the volatility index of something that swung approximately 10664% in less than 10 years is going to represent a riskier investment than something that swung around 1.54%

      PS: Now if you've lost faith in America due to our most glorious leader, you might have something, but honestly I doubt the major players in our economy are struggling under our current administration. If anything they are thriving, making the USD an even better bet-- but that's heading into political discussion which is probably best left for another time.

  2. Cause of volatility is obvious by sjbe · · Score: 4, Interesting

    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.

    1. Re:Cause of volatility is obvious by DaveV1.0 · · Score: 3, Interesting

      That is the cause of the volatility but not the cause of the individual fluctuations. Generally, when a conventional currency's value changes, there is an identifiable cause, such as interest rate, unemployment, sanctions, trade issues, war, inflation, etc. With bitcoin, you have none of that because it is just 1s and 0s backed by nothing. There is no identifiable cause for the individual fluctuations of bitcoin value so the changes can't even be guessed. Some people decide to sell when no one is buying and the value crashes. Some people decide to buy when no one is selling and value explodes. The reasons for each transaction can be literally anything.

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    2. Re:Cause of volatility is obvious by thegarbz · · Score: 3, Interesting

      The cause of the volatility is obvious. Fear Of Missing Out [wikipedia.org] combined with greed which is what drives most asset bubbles.

      No, that is only the cause of the most recently spike in price. The cause of volatility is incredibly low trading volumes against items with pegged value which means that even small transactions can have a real impact on value.

      If I convert 50m BTC into USD it would register enough to influence the price.
      If I convert 50m EUR into USD no one would notice.

      In a usable stable currency, FOMO would not cause a change in value.

  3. Re:This is good for bitcoin because... by Oswald+McWeany · · Score: 3, Interesting

    No spin needed - if MS says its screwed, you should probably bet your shirt on it!

    They didn't say it is screwed, they said it is unstable, which, at least at the moment it is. How can you use a currency to price things when the value changes dramatically daily, even hourly? You can't. At least whilst it is this volatile it can't be used as a currency for most purchases usefully.

    Give it time, with banks moving in, and professional investors coming in, and no doubt- automated algorithms being place on trading computers, it will probably stabilize. Of course, then you have to deal with the transaction fees, and times next.

    --
    "That's the way to do it" - Punch
  4. Re:Well..... they're not wrong by ThunderBird89 · · Score: 4, Interesting

    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!
  5. Re:The USD has lost 98% of its value since 1913 by DaveV1.0 · · Score: 3, Interesting

    Actually, it is about 96% and that is over 100 years. In that same amount of time, pay and the CPI have gone up as well.

    Bitcoin has gained, lost, gained, and lost again up to 30% of it's value over the last month. Did the amount you pay for gasoline, electricity, bread, etc fluctuate like that? No, they did not. If you bought a $1.00 product on December 14, on December 19, that product had cost you $1.30. If you sold a product on Dec 19 for $1.00, on December 30 you have only $0.65 for that product, but what you are paying for the material to make that product hasn't changed.

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    There is no "-1 offended" or "-1 you don't agree with me" mod options for a reason.
  6. "Because it's an unstable COMMODITY" by PeeAitchPee · · Score: 3, Insightful

    It's the speculation related to the market dynamics of blockchain currencies being treated as commodities in a market that is currently causing any instability, either perceived or otherwise. That is a completely different issue than any cryptocurrency's intrinsic *technical* stability.

  7. Re:This is good for bitcoin because... by easyTree · · Score: 3, Interesting

    It won't be stable until the people that matter control it xx

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    Requiem for the American Dream