Leading Payment Gateway PayFast Scraps Bitcoin Citing ‘Design Flaws’
Leading South African digital payments gateway PayFast has decided to scrap all Bitcoin transactions starting from July 20th. The Cape Town-based company was one of the first local providers to offer online cryptocurrency exchange but now looks to backtrack on its alternative payment solutions.
It’s latest press release dished out heavy criticism towards Bitcoin citing design flaws as a key issue:
“Unfortunately there are a number of limitations and design flaws unique to Bitcoin that make it an impractical substitute for cash, including high transaction fees and long confirmation times for buyers.”
The surprise comments come even after providing the service for several years, including cryptocurrency’s 2017 volatile price run. PayFast was quick to discount Bitcoin’s role as a global currency in the new world.
Less Design Flaw, More Likely Implementation Flaw
Bitcoin was never designed to operate around a country’s local currency. Rather, Satoshi built it to run securely on its own network. Nevertheless, as crypto gathers momentum, payment gateways have looked to merge the two.
PayFast’s implementation relies on local cryptocurrency exchange Luno. Buyers can pay in Bitcoin while sellers receive their funds in South African Rands.
To deal with price volatility, Luno locked the exchange-rate in ten-minute windows. More or less in line with Bitcoin confirmation times. Trouble is, the Bitcoin network doesn’t follow a strict time schedule.
Unfortunately, this meant that some customers ended up paying Bitcoin processing fees even if the network didn’t clear their payment by the time the window closed.
“…it has become increasingly difficult for the network to sufficiently confirm transactions within the 10 minute time limit. Since the network isn’t able to handle the volume of instructions at the speed required, the majority of Bitcoin transactions on the PayFast platform ended up being unsuccessful.”
This statement is unusual considering the majority of the above graphs confirmation times. In any event, trying to lock down prices in a non-regular window is not a sustainable idea.
Bitcoin as Everyday Currency
Thanks to central banks Bitcoin will continue to appreciate against all fiat currencies. That means that volatility is unlikely to come down in the near future.
And while altcoiners continue to criticize Bitcoin for it’s ‘slow’ confirmation time, ten minutes is still excellent in the grander scheme of things. What Bitcoin sacrifices in time it more than makes up for in security.
South African banking infrastructure, for example, is fairly advanced even by first-world standards. Still, most interbank transfers take at least one working day to clear. In this regard, Bitcoin still blows the competition out of the water. Buying a cup of coffee, on the other hand, is admittedly a different story.
PayFast Scraps Bitcoin But Considers Alternatives
The company went on to say that while it intends to remove support for cryptocurrencies, it will revisit the option again in the future. It specifically referred to Ripple as an alternative based on its superior transaction speed.
It further stated:
“we’re eagerly following the developments of cryptocurrencies and the supporting technologies that are aiming to enable faster payments. As soon as these become workable alternatives, we look forward to supporting cryptocurrencies as a payment method in the future..”
By the time cryptocurrencies ‘become workable’ we probably won’t have a need for third-party providers anyway.