Gaming and entertainment platform Steam on Wednesday announced it would no longer support bitcoin as a payment method, citing expense in addition to market uncertainty.
This news comes on the heels of the 1.0 release of the Lightning Network Specification, a technology that could potentially solve any issues Valve's game distribution platform might have with BTC. According to Valve, transaction fees have exploded from their original cost of 20 cents to roughly $20, a 100x increase, over the course of the past year.
"Unfortunately, Valve has no control over the amount of the fee", explained Valve. In an effort to prevent customers from wasting money on fees and to protect itself from volatility, Valve has simply made a decision to remove Bitcoin as an option during checkout.
Steam's usual procedure accounted for volatility by guaranteeing the value of bitcoin for a few days. The price of the infamous Bitcoin pizza that was purchased for 10,000 Bitcoin in 2010 is now worth over $123 million. 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).
"The amount it can change has been increasing recently to a point where it can be significantly different", wrote Chinn. Fees have skyrocketed since the beginning of the year. For consumers, the transaction fees are prohibitive.
The volatility has caused one company that was accepting bitcoin to drop the currency. When a gamer requests a refund, it left a gray area as to whether they should be refunded the U.S. dollar equivalent of their transaction or if they should just have their Bitcoin returned to them.
When Valve started to accept Bitcoin as a payment method last April, the value of the cryptocurrency was at $450, as pointed out by Ars Technica. But transactions can often take longer than the Bitcoin Network guarantees the value of the currency.
For Valve, the answer to its Bitcoin problem is no more Bitcoin. Besides, very few people user Bitcoin for everyday transactions because of the very slow processing speeds and high fees involved per transaction. However, the post did end by stating that Steam may re-evaluate Bitcoin in the future and decide then whether or not it is suitable for the company and its community.