Today, Valve announced that the Steam gaming platform will no longer accept Bitcoin payments due to high fees and incredible volatility. Valve says transaction fees, which are passed on to the company by Bitcoin payment processor Bitpay, surpassed $20 last week. Transaction fees were only 20 cents last spring when Valve began accepting the digital currency for payment.
The Steam platform began accepting Bitcoin in April 2016, when the currency was trading for around $450. It’s ironic that Valve is complaining about Bitcoin’s high volatility; had they actually held the Bitcoins they received instead of immediately selling them, they would be sitting on an absolute fortune.
Valve wrote, concerning Bitcoin’s volatility:
“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.”
While Bitcoin’s volatility is certainly problematic in terms of cash flow and business planning, over the long term the currency has always trended up in price. If vendors would retain even a fraction of their Bitcoin receipts, it would more than pay for the currency’s transaction fees, in time.
Valve also complained, understandably, about high fees for using the Bitcoin network:
“n 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.”
Valve is not alone; many in the Bitcoin space have long complained about high fees. Bitcoin’s core developers, after rejecting a proposed blocksize increase, have placed their hopes on a solution called “lightning network.” This network will move transactions off-chain, theoretically maintaining security while drastically reducing fees and confirmation times.
Many in the digital currency industry are advocating Bitcoin’s use as digital gold, rather than as a payment method, per se. Max Keiser believes Bitcoin’s price could go as high as $100,000 due to its usefulness as a store of value, while other digital currencies could be used for payments. Keiser wrote:
“Dash is emerging as the crypto payment rail while Bitcoin asserts itself as Gold 2.0. I suggest those frustrated by the Bitcoin scaling debate to embrace Dash for payments and leave Bitcoin Core alone to continue working on Gold 2.0.”