by Nuno Menezes
The digital currency industry has had a difficult time parting itself from hundreds of scams and financial plots which earned the industry a bad name. Almost every month, we hear about a new attack or hoax in the cryptocurrency ecosystem.
Change of Heart
In yet another scandalous move, BitPay was accused of trying to manipulate the market shortly before christmas. It seems that the digital currency Point of Sale (PoS) company went from supporting bitcoin cash as the best alternative, to supporting bitcoin in under 24 hours.
On December 22, 2017, BitPay released a blog post where it stated that it was declining all BTC transaction lower than $100. Alongside the statement, the firm also noted that it was quickly working to add support for a Bitcoin Cash (BCH) payment option on all BitPay invoices.
Further, they iterated the fact that Bitcoin Cash allowed purchasers to send payments with significantly lower bitcoin miner fees which would enable the company to continue accepting micropayments.
Amidst this announcement, the company explained that Bitcoin was experiencing delays and that the transaction cost was becoming more expensive:
“With current bitcoin network conditions, transactions sent without large miner fees are at high risk of significant payment delays or payment failures. Bitcoin payments under $100 are quickly becoming impractical for users to send and for BitPay to process.”
The post continued to outline the problems facing the payment intermediary, particularly the features of which they have no control:
“BitPay does not control or benefit from bitcoin miner fee levels. But we will continue to improve our platform to protect our users from the effects of large swings in these fees.”
A Communal Response
The announcement received a fierce reaction from the Bitcoin community as the news had a negative impact on thousands of merchants accepting the pioneer digital currency. The community immediately accused the company of trying to promote BCH, of discrediting bitcoin, and with that, trying to manipulate prices.
Bitpay then hastily changed their position and went from supporting bitcoin cash to supporting bitcoin once again.
The company said it was looking to fix the above mentioned problems by executing some changes. BitPay said it was working to implement Segregated Witness (Segwit) in various parts of its platform in the coming months. With this implementation the company was expecting to reduce the size of bitcoin transactions, allowing for an average bitcoin miner fee reduction of over 40 percent.
While BitPay stated that on average, miner fees are now more than $30 per transaction making it far from profitable for small purchases, it implicitly noted that bitcoin cash offers the same functionality at much lower fees.
This event is also a comment on the fragility of the network, as it is affected by its block size limitations. The cost of a transaction is becoming increasingly high and slow. This incapacity to manage a spectrum of payments affects exchanges and businesses alike and may well be the critical flaw capable of toppling bitcoin.