Digital gaming giant Valve has announced that some 18 months after adding the ability to buy games on Steam with Bitcoin, it will no longer accept BTC as a method of payment. The original decision to accept the cryptocurrency was never seen as a make-or-break affair for Bitcoin’s acceptance as legal tender, but Steam’s dominance of PC digital game distribution and the overlap between PC game enthusiasts and BTC users made it a high-profile win back in 2016. (To be clear, we’re not saying that there’s a high degree of overlap between gamers and cryptocurrency enthusiasts, so much as we’re arguing BTC is probably more popular with gamers than it is with, say, suburban Atlanta retirees.)
There are several reasons why Valve has stopped supporting BTC. First, the fees required to process transactions on the Bitcoin network have jumped, up to as high as $ 20, compared with just 20 cents when Valve began accepting the cryptocurrency. Second, the volatility surrounding Bitcoin has become a significant concern. The currency’s value has skyrocketed since the beginning of the year, but it’s also become much more volatile. Third — and this is an issue we’ve discussed when talking about Bitcoin’s several forks since August 1 — it can take a long time to process transactions on the network.
Under normal circumstances, the customer pays for a game with the appropriate amount of Bitcoin plus the transaction fee. This works well when BTC values are roughly steady, and transaction volumes are small enough for reasonable processing times and low fees. The problem is, that hasn’t been the case for the past few months. BTC values are only guaranteed for a certain period of time; if a transaction doesn’t complete within that window, the amount of BTC required to cover the transaction can change. Lately, it’s been changing a lot. Valve writes:
The normal resolution for this is to either refund the original payment to the user, or ask the user to transfer additional funds to cover the remaining balance. In both these cases, the user is hit with the Bitcoin network transaction fee again. This year, we’ve seen increasing number of customers get into this state. 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).
In other words, it’s not just that the price of BTC is volatile, transaction fees have jumped, or that it takes longer to complete a transaction — it’s that all three of these things have happened simultaneously, resulting in a scenario in which Valve doesn’t want to take on the responsibility of refunding transaction fees it didn’t choose to levy (or choose the price of levying), while recognizing that repeatedly stacking these fees on users for circumstances beyond their control is similarly untenable.
Volatile is certainly the appropriate word for BTC’s activity. On November 7, Coinbase recorded a per-BTC price of $ 7,095. From that date until now, the currency has fallen as low as $ 5,871 and topped out briefly, today, at just over $ 16,000 (Bitcoin prices have varied widely today from exchange to exchange, which is why you’ll see figures as high as $ 19K on other exchanges). Valve notes it might try supporting BTC again at some point in the future, and that it will continue working with customers on issues related to transaction fees and underpayments.