The rapid rise of Bitcoin is not exactly being embraced by all groups, with online gaming platform Steam pulling the plug on the currency as a method of payment. The decision was made due to the high volatility of Bitcoin’s price in recent weeks along with high fees that ultimately dis-incentivized its use on the platform.
Steam is one of the household names in the gaming industry, with its online gaming platform previously accepting Bitcoin for payments. This method will no longer be accepted as of today, following an announcement from Steam’s support team.
How much volatility is TOO much volatility?
Indeed, the price of Bitcoin has catapulted to new highs over the past couple weeks, spurred by an unrelenting demand. However, the staunch volatility exhibited in the cryptocurrency has not been conducive for processing fees and the overall smoothness of transactions regarding Bitcoin.
For example, over the past few months, fees have spiked for processing transactions on the Bitcoin network. In terms of Steam, transaction fees that are charged to the customer by the Bitcoin network have surged in 2017, topping out at nearly $20 a transaction as of last week. This compared with roughly $0.20 when Steam initially enabled Bitcoin payments.
The roughly 10,000 percent increase in fees for Bitcoin payments was evidently enough for Steam to cut the chord on the crypto currency, even at a time when its adoption is growing across all industries.
As of today, Steam will no longer support Bitcoin as a payment method on our platform due to high fees and volatility in the value of Bitcoin. The group has no control over the amount of the fee being charged, with has in many instances resulted in much higher costs for purchasing games when paying with Bitcoin.
Compounding this issue is the prospect of any rapid decline of Bitcoin’s value, which also presents challenges for processing payments on its platform. For example, when checking out on Steam, a customer will transfer a given amount of Bitcoin for the cost of the game, plus a respective amount of Bitcoin to cover the transaction fee charged by the Bitcoin network.
Significant differences in processing prices
Unfortunately, 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. Given the widely oscillating price of Bitcoin, this can result in significant disparities.
Steam does rely on a normal resolution for situation, which is to either refund the original payment to the user, or ask the user to transfer additional funds to cover the remaining balance. However, both these instances, the user is hit with the Bitcoin network transaction fee again, which as mentioned above has spiked to nearly $20 in certain cases.
Consequently, Steam has determined Bitcoin to be untenable as a method of payment on its platform. The group did leave the door open for further usage of Bitcoin, noting it may re-evaluate its usage at a later date.