Steam dumps Bitcoin on back of high transaction fees and volatility

The cryptocurrency has been deemed 'untenable' to support by the Steam game distribution platform.
Written by Chris Duckett, Contributor
(Image: Tsokur)

The high level of fees and wild swings in the value of Bitcoin have led to its dismissal as a payment option on Valve's Steam game distribution platform.

The company said that it may revisit its decision in future, but at the present time it is "untenable" to support it as a payment option.

"Transaction fees that are charged to the customer by the Bitcoin network have skyrocketed this year, topping out at close to $20 a transaction last week (compared to roughly $0.20 when we initially enabled Bitcoin)," Steam said in a blog post.

"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."

Steam described how the rapid rise and fall of Bitcoin versus the US dollar has impacted users trying to buy games with the cryptocurrency.

"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," it said. "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."

If a transaction times out, Steam has previously refunded the user, or asked for further bitcoin to cover the transaction -- however, both cases result in additional fees charged by the network.

"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)," Steam wrote.

At the time of writing, the price of one Bitcoin was just shy of $14,000. One year ago, the price was hovering around the $750 mark. The price of the infamous Bitcoin pizza that was purchased for 10,000 Bitcoin in 2010 is now worth over $123 million.

Earlier this week, the UK Treasury announced tighter regulation of the cryptocurrency. Treasury said it intends to regulate the digital currency to bring it in line with anti-money laundering and counter-terrorism financial legislation.

Under the European Union-wide plan, online platforms where Bitcoin is traded will be required to carry out due diligence on customers and report suspicious transactions, with the move designed to end the anonymity of the cryptocurrency.

In October, Vietnam banned cryptocurrency payments, with the State Bank of Vietnam declaring that Bitcoin was not a legal payment method from the start of next year. Those caught making cryptocurrency payments face fines of 150 million to 200 million Vietnamese dong, or roughly $6,000 to $9,000.

JPMorgan boss Jamie Dimon said in September that Bitcoin is a fraud and only used by criminals and North Korea.

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