In 2015, digital payments giant Stripe unveiled a tool for merchants around the world to accept Bitcoin. At the time, Stripe’s news came as further evidence that a cryptocurrency revolution was underway. But this April, Stripe pulled the plug. What happened? According to Stripe COO Claire Hughes Johnson, speaking at Fortune‘s Brainstorm Tech conference on Tuesday, Bitcoin and other blockchain-based payment services are slow, impractical, and overhyped.
She noted that clearance times for a Bitcoin transaction right now are about 60 minutes, and that last December it reached three to five days. Hughes Johnson said the backlog was so bad that merchants sometimes had to file a second transaction to account for bitcoin price fluctuations that occurred between when a purchase occurred and when it cleared.
She also questioned whether there is any mainstream purpose for Bitcoin and other cryptocurrencies. “The killer app for Bitcoin out there today is ransomware,” Johnson quipped, referring to the preferred payment method of criminals who ransom computers. Hughes Johnson’s assessment is the latest reality check for those who once thought cryptocurrencies like Bitcoin would become as ubiquitous as credit cards. Even more sobering was her assertion that blockchain the distributed ledger technology on which Bitcoin is based is also overhyped.
“I do think we’ve reached that jump the shark moment where you just say ‘da-da-da blockchain’,” said Hughes Johnson, adding that the SEC is rightfully stepping in to check a flood of scammy blockchain projects. According to Hughes Johnson, the problem with blockchain is that it appears to be duplicative of existing database tools, many of which are rapidly improving. She predicts blockchain won’t catch on in a mainstream way for a decade if ever.
Not everyone is so pessimistic. Bridget Van Kralingen, SVP of Global Industries, Platforms, and Blockchain at IBM, said the technology is already proving its mettle in three key areas: supply chains, cross-border payments, and identity verification. Van Kralingen made the case that the immutable nature of blockchains which lets parties across the world create a tamper-proof transaction record without intermediaries mean the technology is already making business processes faster and more secure.
IBM is likewise optimistic about cryptocurrency. On Tuesday, the company announced it is testing a so-called “stable coin,” which will maintain a one-to-one value with the U.S. dollar. Van Kralingen explained the stable coin will avoid the wild volatility associated with Bitcoin, and serve as a practical transaction mechanism. IBM is not the only company that sees a real world role for blockchain and cryptocurrencies right now. Asheesh Birla, SVP of Product at Ripple, which supplies blockchain to banks, said the technology is already making an impact in the financial world notably in emerging markets.
Birla described North Americans as “over-banked” with their plethora of credit cards and payment services like Venmo and PayPal but said the opposite is true in places like South Asia. “If you’re going to expand into a new country today, you’re going to use blockchain for that expansion,” said Birla.