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Microsoft Bitcoin Businesses The Almighty Buck

Microsoft Halts Bitcoin Transactions Because It's An 'Unstable Currency' (bleepingcomputer.com) 106

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.
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Microsoft Halts Bitcoin Transactions Because It's An 'Unstable Currency'

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  • by DaveV1.0 ( 203135 ) on Monday January 08, 2018 @10:45AM (#55884941) Journal
    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.
    • by Holi ( 250190 ) on Monday January 08, 2018 @10:50AM (#55884979)
      Notice they only made this decision now that bitcoin is down. They had little issue with instability when it kept climbing.
      • by DaveV1.0 ( 203135 ) on Monday January 08, 2018 @11:02AM (#55885077) Journal
        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.
        • by tlhIngan ( 30335 ) <slashdot@nOSpam.worf.net> on Monday January 08, 2018 @02:20PM (#55886397)

          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.

      • by swb ( 14022 )

        Nominally maybe, but I'd wager it makes sense for MS to hold some quantity of BTC to manage transactions.

        The fluctuating price may cause them to need to buy BTC at elevated prices and increase their risk if the price goes down. I'm sure it's an accounting mess, too.

      • I thought that the spin is that Bitcoin is now a "store of wealth" instead of a currency now.

        Or, at least that's the latest excuse I heard on the slow purchase confirmation transaction times and high transaction fees.

        The funny thing is that if you actually want to use cryptocurrency as an actual currency, you're probably better off using a lesser known coin like Litecoin, where the network isn't as overloaded at the moment.

        • "store of wealth"

          It can be.

          Say I invent some fancy new technology or have a data file that proves aliens are with us. Without showing you the data, how can I prove to you in 20 years that I have the data now?

          Store the checksum in Bitcoin as proof of existence. In 20 years you can sha256 the file yourself and see that I did in fact have that data right now.

          Parts of CableGate were put up there. I wouldn't be surprised if the next WikiLeaks document isn't already up there just waiting for someone with the right key.

        • by slazzy ( 864185 )
          Yeah I just did some litecoin transactions. Pennies in fees, and very fast transfers! There are better generation 3 crypto currencies like Cardano (ADA).
      • That because 'it kept climbing' is stable, so there was no reason to have issue with the stability.
      • Notice they only made this decision now that bitcoin is down.

        It's not really down though. It's oscillating between 14k-15k for a while now. It's down 4% since last month, hardly dramatic.

        Ethereum for some reason never really went down and has been on mostly a steady climb for some time.

        • by Khyber ( 864651 )

          "Ethereum for some reason never really went down and has been on mostly a steady climb for some time."

          That's because the proof of stake system was finally demoed.

    • by sjbe ( 173966 ) on Monday January 08, 2018 @11:10AM (#55885125)

      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 [wikipedia.org] 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.

      • by DaveV1.0 ( 203135 ) on Monday January 08, 2018 @11:27AM (#55885219) Journal
        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.
        • by lannocc ( 568669 )

          There is no identifiable cause for the individual fluctuations of bitcoin value so the changes can't even be guessed.

          This means only that you have not connected to enough of the signals that drive Bitcoin's price.

          • So? If there's no identifiable cause because it's based on quantum-generated random numbers, or because I can't tell what the cause is, it's still no identifiable cause.

      • by Luthair ( 847766 )
        Its also classic investment psychology, people buy high and sell low.
      • by thegarbz ( 1787294 ) on Monday January 08, 2018 @12:10PM (#55885483)

        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.

    • by NicknameUnavailable ( 4134147 ) on Monday January 08, 2018 @11:24AM (#55885201)

      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.

    • I think anyone who was educated on the hyperinflation of the Deutsche mark after WWI could have called it. The reason for that hyperinflation is completely unrelated, but it doesn't take much to see that being completely tied to one currency that is fluctuating wildly isn't sustainable and wreaks havoc on economies.

      Bitcoin might have staying power. It might keep getting acceptance for some things. But it's a pipe dream to assume it's going to obsolete the fiat currencies we have today (at least in its cu
    • Notice they stopped when it started FALLING...not when it was climbing into the sky, despite it being precisely as "volatile" on THAT side of the hill....

    • 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.

      There is a cause, wall street speculation. Bitcoin's price rose 65x as wall street speculators were joining the pre-existing home based speculators.

  • I hate cryptocurrency and everyone that likes it. I love the US Dollar and the banks holding on to my money for me. Generic response about a bubble and how I don't want responsibility in my life. I'd rather someone else do it for me, blah blah. :)))))
  • This is good news for Bitcoin.
  • by Anonymous Coward

    No one saw this coming.

  • It's just not stable enough do to the inability to scale it. The number of bit coin in existence is capped and we're feeling those repercussions as transactions are mere fractions of btc now.
    • by ThunderBird89 ( 1293256 ) <zalanmeggyesi AT yahoo DOT com> on Monday January 08, 2018 @11:16AM (#55885151)

      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.

      • by inking ( 2869053 )
        Visa executes around 2000 on average. It’s capacity is 56,000.
      • by paskie ( 539112 )

        > 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.

        Unclear why this would be the case. The Lightning Network should compress many transactions to a single one per a long time period.

      • by houghi ( 78078 )

        Not sure how much they do, but 1.000 to 1.400 per second worldwide looks not like much.

        • That's because the figure appears to be wrong. Visa claims they can do 65k/second as of August 2016 ( https://usa.visa.com/dam/VCOM/... [visa.com] ) or about one per living person per day. And they can grow that number larger if they ever get even close to capacity.
        • Two orders of magnitude is not a big difference??

          • I pointed out in a sibling post that you need to add another two orders of magnitude to Visas capacity so it's really 4 orders of magnitude. But more importantly, Visa has plans to increase capacity. Bitcoin has architectural issues that make that impossible.
  • by PeeAitchPee ( 712652 ) on Monday January 08, 2018 @11:33AM (#55885265)
    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.
    • Does it matter if the "unstable" part is due to some random blue blocks in the chain or that the value fluctuates because of current bills attempting to regulate the marriage of sunflowers?

      In this case, the source is irrelevant.

      Microsoft doesn't want it.

      That's the message.

  • by 140Mandak262Jamuna ( 970587 ) on Monday January 08, 2018 @12:39PM (#55885667) Journal
    Accepting bitcoin payment is similar to accepting payment in terms of commodities, frozen concentrated orange juice ("Sell 30 April at 142!") or pork bellies. Or, at best, a foreign currency with a very volatile exchange rate. So there is no surprise, nor real news in this announcement.
  • That's the only way to stop BitCoin, which has a god-awful carbon footprint due to all the pointless farming going on. I'd be happy to see it just go away.

  • Paying a with bitcoin is a bit like asking a vendor to give you a product based on winnings from a yet unplayed poker game. Companies these days (especially big ones like MS) are looking for any way they can to decrease their risk. Risk these days are only for employees and customers. Even insurance companies have done all the calculations and eliminate risk. They will reject anything less.

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