This week the Hong Kong-based bitcoin remittance provider, Bitspark, has announced the firm is switching its services over to the Bitshares blockchain instead of using bitcoin because it is “better suited for the company’s business.”
Also read: Putin Tells Central Bank Not to Create Unnecessary Barriers to Cryptocurrencies
Bitspark is a cryptocurrency-based remittance provider that services the Asia-Pacific (APAC) region by using the bitcoin blockchain for end to end cross-border payment services. Founded in 2014 by entrepreneurs, Maxine Ryan and George Harrap, Bitspark offered remittance services to many APAC regions including Hong Kong, Philippines, Indonesia and Australia. When the startup first started in 2014 the business was able to provide customers with the ability to send payments for less than half the cost of the competition. Now the startup says they are switching to Bitshares due to the high and unpredictable fees associated with bitcoin in 2017.
“With the recent fork, for the last month or so fees have been very low and the mempool has been small resulting in less unforeseen delays, this is great, but the important thing here is predictability,” explains Bitspark’s announcement. “For most of this year the prevailing wisdom for high fees has been “Just pay more fees” which is not reasonable when there is no predictability or when your margins per payments on a $200 transaction can be wiped out on a $3 fee.”
Bitspark provides remittance services to the APAC region including Hong Kong, Philippines, Indonesia and Australia. The company said Bitcoin fees were too unpredictable for cross-border remittances.
Using dynamic fees also does not work as a value proposition- when a customer does a remittance, trustworthiness is not gained by telling them “one day your fee might be $1 another day it could be $3 and I’m not sure when”. Given this, for many years all bitcoin remittance companies have prefunded larger amounts with their liquidity providers which lock in rates and eliminates risk of slow payments.
Bitspark explains for now customers can still utilize bitcoin deposits and payment methods until the company makes the change. The remittance company explains after the change they will use the Bitshares blockchain to send money “quicker, cheaper and to more locations.” The firm says it will be shooting for swapping abilities with over 180 currencies worldwide.
“The Bitshares blockchain can solve the problem of access as there is no need to hedge USD and rely on a single gatekeeper,” the Hong Kong startup details. “Once people can settle between one another in their native currency and with new money transmitter providers they can directly trade/access liquidity in various FX pairs that were virtually non-existent previously.”
Bitspark joins a list of companies that have recently chosen to use an alternative cryptocurrency instead of bitcoin due to fees and slow processing time. The social media network, Yours, just recently switched to bitcoin cash; a bitcoin-based gift card startup from Ireland, Bitcart, just switched to the dash protocol, and the popular cryptocurrency-based Brave browser has switched to ethereum after initially planning to use bitcoin. As for bitcoin network fees this year, transaction (tx) costs reached a high of $3-5 per tx. Right now the fastest median transaction size of 226 bytes, costs 31,640 satoshis or $1.65 per tx at the time of writing.
What do you think about Bitspark’s decision to ditch bitcoin because of fees? Let us know in the comments below.
Images via Shutterstock, and Bitspark.
Need to calculate your bitcoin holdings? Check our tools section.Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written hundreds of articles about the disruptive protocols emerging today.