BTC Loses Steam, High Fees and Volatility to Blame
High transaction fees and increased volatility of Bitcoin force Valve to drop support for the digital currency.
Top online game distribution platform Steam will no longer accept Bitcoin as a payment method, announced game company and distributor Valve via blog post today. The company cited “high fees and volatility in the value of Bitcoin” as the reasons behind the decision.
Steam has been an early adopter of Bitcoin, following a partnership between Valve and Bitpay in April 2016 to integrate Bitcoin into Steam. This was when the cryptocurrency was priced at around $460 – a pittance compared to its current value, hovering close to the $14,000 mark.
Explaining the motivating factors behind the move, Valve pointed out that Bitcoin transaction fees have shot up to as much as $20 per transaction, “compared to roughly $0.20 when we initially enabled Bitcoin”. Valve has no way to control these fees, which can raise the costs of games to unreasonably high amounts that have to be shouldered by customers. In addition, the volatility of Bitcoin can also adversely affect the platform’s own revenue if the price of Bitcoin suddenly drops.
Noting that while the cryptocurrency has a history of volatility, Valve goes on to state that “the degree of volatility has become extreme in the last few months, losing as much as 25% in value over a period of days”. Bitcoin’s bull run in 2017 has been marked by significant dips in price, following events such as China’s crackdown on cryptocurrencies and the cancelation of the SegWit2x upgrade (which resulted in a 29% drop in price, followed by an abrupt recovery).
Since the value of Bitcoin is “only guaranteed for a certain period of time”, if a transaction is not completed within that time frame, the value of the agreed upon BTC can fluctuate greatly, leaving either customers or Valve to cover the difference. Even if that were acceptable, the increase in fees makes this arrangement highly impractical.
The Bitcoin community has long rallied to get the cryptocurrency included among accepted payment methods for popular platforms, and it doesn’t get bigger than Steam when it comes to video games, making this a disappointing development for the supporters of the world’s most popular cryptocurrency. However, while the blog post did emphasize that Bitcoin fees are untenable at present, it did not entirely rule out the possibility of reintegrating the cryptocurrency in the future:
“We may re-evaluate whether Bitcoin makes sense for us and for the Steam community at a later date.”
At present, however, Steam is focusing on working with customers to resolve any pending issues related to underpayments or transaction fees. Whether Steam chooses to accept an alternative cryptocurrency with lower transaction fees in the future remains to be seen.