Today Valve announced it will no longer be accepting Bitcoin as currency on the Steam store.
This follows a series of rapid Bitcoin growth. After recently tipping the $US10,000US mark in late November, Bitcoin lost approximately 20% of its value, but promptly fought back. Roughly one week later Bitcoin is sitting at $US13,000.
In short that’s a lot of volatility for a currency if you want to buy video games.
That’s one of the reasons why Valve is no longer accepting Bitcoin as a payment method.
“Historically, the value of Bitcoin has been volatile,” Valve explained in note posted earlier today, “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.”
Essentially the price of Bitcoin moves so quickly, and so dramatically, that it’s difficult to find a reasonable foothold on what video games will cost.
The secondary issue is transaction fees.
When Steam initially enabled Bitcoin transaction fees were roughly 20 cents, now it can be upwards of $20. That’s a significant jump.
“Unfortunately, Valve has no control over the amount of the fee,” explained Valve. “These fees result in unreasonably high costs for purchasing games when paying with Bitcoin. The high transaction fees cause even greater problems when the value of Bitcoin itself drops dramatically.”
It’s an interesting decision, and one that raises questions about Bitcoin’s value as a currency. Is Bitcoin something users want to be using on a day-to-day basis as digital money, or is it still only functional as a store of value. Difficult to tell at this point.
But at time of print, the news has had little impact on the price.
Many are using this as an example of Bitcoin’s limitation as a currency, and pointing to other newer cryptocurrencies (like Ethereum or Bitcoin Cash) with newer technologies — which is the reason why Steam’s comments are now being flooded with requests for Valve to accept payments from some of these currencies. That is unlikely at this point.
Steam has not ruled out accepting Bitcoin payments in the future.
“We may re-evaluate whether Bitcoin makes sense for us and for the Steam community at a later date,” they said.