In 2018, the online payments company Stripe made an announcement the company was “winding down support” for Bitcoin payments. Stripe stopped accepting Bitcoin transactions on April 23, 2018. But Stripe has returned to crypto and began accepting new cryptocurrency transactions on April 22, 2022.
Some got their hopes up on reading the announcement; could Stripe be back to accepting Bitcoin? No. The rollout of Stripe’s new option is on a very limited basis; the earliest of those transactions are not what you might expect with customers paying vendors for goods and services using virtual currency.
Instead, Stripe is permitting merchants to pay buyers in crypto in its initial stages, but not the other way around.
The crypto rollout was limited to Twitter in the earliest stages, and the company issued a statement saying Stripe learned that in spite of dropping Bitcoin a few years back, “…our optimism for the future of crypto was not unfounded,” and the company has partnered with Blockchain.com and FTX as part of its return.
At press time, Stripe has opted to accept a stablecoin (USD Coin) via its payment gateway and nothing more. At press time, Bitcoin and others are not included but there are plans to add more cryptocurrencies over time, according to Stripe.
Online payments via Stripe using USD Coin are (at press time) limited to the ability to make merchant-to-user payments in USD Coin and Twitter may pay some of its users via Stripe in this manner.
Programs like these tend to evolve over time and you may see an expansion of these options in the future. At press time, there is no mechanism for Stripe users to pay a merchant in crypto. That is likely to change if the company moves forward with its crypto plans.
Investopedia notes that when Stripe issued its press release back in 2018 about ending Bitcoin transactions, it was due at least in part to volatility and a “lack of efficiency”. Whether that refers to the energy cost of mining / minting Bitcoin isn’t clear–we’ll talk about that more below.
What is clear in this case? The idea that Stripe viewed Bitcoin as a bad choice for typical online purchases.
The 2018 Stripe press release announcing its exit from crypto notes, “as block size limits have been reached, Bitcoin has evolved to become better-suited to being an asset than being a means of exchange,” and for many business-minded or investment-minded people that’s an issue well worth considering.
As the Stripe press release reminds us, when you initiate a Bitcoin transaction “a fee of tens of U.S. dollars is common”, which potentially makes a Bitcoin purchase as expensive as paying via bank wire transfer.
It’s telling that Stripe ditched Bitcoin over both volatility and inefficiency. When Stripe announced it was coming back to crypto it did so intending to conduct operations on the Ethereum blockchain instead of the Bitcoin blockchain. Stripe partnered with Polygon, which is described as an “Ethereum scaling platform”.
Bitcoin is still criticized for the massive power consumption required to mine/mint. Ethereum has been working on its alternative proof-of-stake model which is meant to lower the power consumption needed to mine or mint coins and in June 2020 there was a major “dress rehearsal” for proof of stake that showed great promise.
In 2021, Stripe built a “crypto team” to explore using Web3 and the blockchain as part of its payment operations. Since then it has been moving back towards being involved with crypto even in a limited fashion.
The selected payment (USDC coin) and the nature of these payments (merchant-to-customer only) is at once experimental but also very cautious.
Stripe seems to be committed to opening themselves up to very limited risk. Using a stablecoin as the initial cryptocurrency might indicate a desire to avoid the volatility of Bitcoin; it’s a logical assumption to make given the company’s past statements about Bitcoin’s efficiency and stability.
And the fact that the company has chosen to partner with Twitter in this venture is also telling; two well-known entities with serious financial resources and online reputations such as these working together toward a common crypto-oriented goal is already fairly common.
But when names as large as Stripe and Twitter work on a project like this, it’s an indicator that crypto may be evolving into a more permanent part of the online landscape. These are not the only major companies devoting more resources to virtual payments. PayPal, Mastercard, and others are actively working with crypto in varying degrees.
That permanence may sound far-fetched to some but don’t forget that not everyone is a crypto enthusiast. Some view Bitcoin as a technically complicated pyramid scheme, and hold those who invest in it with disdain.
Twitter and Stripe working together to make sensible advances in crypto and eliminate the volatility would seem to indicate that longer-term thinking is at work here; the future of crypto may well depend on the success or failure of such ventures.
Why? Because an epic fail is one thing; having the financial futures of thousands of investors cratered because of that epic fail is quite another. The fastest way to bring down the hammer of government regulation in the cryptocurrency space is for a lot of people to lose a lot of money all at once.
Joe Wallace has covered real estate and financial topics, including crypto and NFTs since 1995. His work has appeared on Veteran.com, The Pentagon Channel, ABC and many print and online publications. Joe is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News.