Steam Will No Longer Support Bitcoin Due To Volatility And High Fees
As Bitcoin surged past $15,000 in USD valuation, gaming platform Steam, owned by Valve Corporation, said that it could no longer support Bitcoin owing to manic volatility in the market and skyrocketing transaction fees.
Valve noted that the fiat value of Bitcoin does not even stay stable for a sufficient period of time to allow a transaction to be processed and as the price escalates to unprecedented heights, transaction fees are often greater than the amount of payment. These factors had rendered Bitcoin untenable as a payment option for Valve.
“In the past few months, we've seen an increase in the volatility in the value of Bitcoin and a significant increase in the fees to process transactions on the Bitcoin network. For example, 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). Unfortunately, Valve has no control over the amount of the fee. 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.
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. At this point, it has become untenable to support Bitcoin as a payment option.”
Valve assured its customers that it would continue working to resolve any pending issues for customers who are impacted by existing underpayments or transaction fees.
Bitcoin's volatility and transaction costs are a major sticking point for its commercial use as a currency. Any potential solution mediated by centralized entities could imperil its value proposition of being decentralized and trustless.
Why Bitcoin Does Not Work As A Commercial Payment Vehicle?
Put simply, because too many people don't understand Bitcoin and measure the currency in terms of fiat. Bitcoin can only be denominated in satoshis, not dollars or pounds.
Volatility is not a problem exclusive to Bitcoin. It's a cryptocurrency-fiat intersection problem. Fiat currencies and cryptocurrencies are two irreconcilable modes of exchanging value, measuring one in terms of the other, especially when one market is bereft of regulatory infrastructure, is fiscal folly. Cohabitation is ultimately detrimental to both the conventional financial system and the proposed new blockchain system.
Valve is not the first company to give Bitcoin the boot and it won't be the last. Bitcoin or cryptocurrency payments can only work if and when a new financial system premised upon the principles of the blockchain routs out and usurps government-backed centralized monetary system on a global scale as ‘the' money. Until then, the two systems will remain mutually incompatible, making futile any attempt at reconciliation.