In a blog post by “Kurtis” on behalf of Valve’s Steam gaming platform, the company outlined why they made the decision to cut support for the popular digital currency Bitcoin.
In the statement, Steam said that “it has become untenable to support Bitcoin as a payment option,” so they “will no longer support” the encrypted digital currency as a payment method on their platform, “due to high fees and volatility in the value of Bitcoin.”
The company explained that when it first enabled support for Bitcoin, transaction fees were roughly $0.20. Now, a single payment has shifted the decimal point closer to $20. Further, due to the rapid rise and fall in Bitcoin value — especially over the last week —any transaction that is not processed instantly may end up requiring significantly more or less than the amount paid.
Any corrections that need to be made will charge additional fees, locking both consumer and distributor in a cycle of escalating cost that is virtually impossible to predict. The recent “degree of volatility” seems to be the driving factor for the change, and largely unsurprising in that light. As they explained:
Historically, the value of Bitcoin has been volatile, but the degree of volatility has become extreme in the last few months, losing as much as 25% in value over a period of days. This creates a problem for customers trying to purchase games with Bitcoin. When checking out on Steam, a customer will transfer x amount of Bitcoin for the cost of the game, plus y amount of Bitcoin to cover the transaction fee charged by the Bitcoin network. The value of Bitcoin is only guaranteed for a certain period of time so if the transaction doesn’t complete within that window of time, then the amount of Bitcoin needed to cover the transaction can change. The amount it can change has been increasing recently to a point where it can be significantly different.
The normal resolution for this is to either refund the original payment to the user, or ask the user to transfer additional funds to cover the remaining balance. In both these cases, the user is hit with the Bitcoin network transaction fee again. This year, we’ve seen increasing number of customers get into this state. With the transaction fee being so high right now, it is not feasible to refund or ask the customer to transfer the missing balance (which itself runs the risk of underpayment again, depending on how much the value of Bitcoin changes while the Bitcoin network processes the additional transfer).
The team said that they “may re-evaluate whether Bitcoin makes sense for us and for the Steam community at a later date,” and in the meantime will “continue working to resolve any pending issues for customers who are impacted by existing underpayments or transaction fees.”
Bitcoin was created by a group or individual calling itself “Satoshi Nakamoto,” and originally described by an anonymously posted cryptography paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System.” Since that time, it has achieved worldwide headlines that range from hailing it as the currency of the future, to a money-laundering scheme that should be banned outright. It has grown from novelty to economic force, with over 100,000 vendors currently accepting it as a method of payment.
Now, that number is one fewer.
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