VISA Waging War Against Bitcoin By Rejecting It As Currency
The world's largest cryptocurrency by market cap, Bitcoin, is a commodity and not a payment system. This is according to VISA CEO Alfred Kelly who revealed that the company will no longer process transactions using the cryptocurrency.
"I don't view it as payment system player," Kelly said in a recent interview with CNBC. "We at Visa won't process transactions that are cryptocurrency-based. We will only process fiat currency-based transactions."
Fiat currencies, such as the US Dollar, are issued by governments as legal money. However, their value is not backed by any physical commodity but rather trust on the government issuing them.
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Bitcoin was originally created and intended as a replacement for fiat currency in transactions. Unlike fiat currency, the digital currency is not issued by anyone but rather "mind" by powerful computers which solve certain algorithms. The miners then write those transactions to the online blockchain ledger, where all activity is recorded and shared with everyone.
Today, Bitcoin acceptance as a payment system has been rather limited thanks to its volatility. As bitcoin turnover grows, it also faces problems like high fees, astoundingly slow transactions and volatile prices making them unable to compete with established players like VISA which can process thousands of transactions every second with little to no fees.
According to Kelly, who became the company's CEO in December 2016, Bitcoin today is a commodity that somebody could invest in, a speculative commodity at that. And given the spectacular rise and fall of its value in the past few months, he does have a point.
Cryptocurrencies recently lost over $200 billion in market capitalization due to a massive sell-off that ended on Wednesday. The sell-off saw the value of Bitcoin drop to less than half of its $19,000 peak.
Earlier this year, VISA terminated cooperation with a debit card provider called WaveCrest which issued cards associated with cryptocurrencies and facilitated ways to buy and sell them. According to VISA, the crypto-cards had been suspended for "continued non-compliance with our operating rules."
