“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,” Valve said in a post on Steam. “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.”
Valve said that the degree of volatility in bitcoin value “has become extreme in the last few months, losing as much as 25% in value over a period of days.” The open source cryptocurrency reached new highs this week, reaching a value of $12,000 per bitcoin today, jumping $1,000 in just 24 hours.
It may be great for those holding BTC for long-term investing, but this kind of volatility makes it a nightmare for companies like Valve that would rather leverage these currencies on other transactions that have quick turnaround. It’s easy to see why Valve would pull the plug, because that may be worth $13,000 today, could be worth half that tomorrow.
Gamers can still use their BTC to buy Steam giftcards through exchanges or third-party retailers if they wish.
“At this point, it has become untenable to support Bitcoin as a payment option,” Valve said. “We may re-evaluate whether Bitcoin makes sense for us and for the Steam community at a later date.”
This meteoric rise in value, and it’s associated rise in fees, is part of the way transactions are verified and completed in the bitcoin economy. BitPay, the company Valve partnered with to process BTC transactions, is part of the network that all BTC users are a part of. That same network prioritizes transaction verification based on the fee paid by those involved in the transaction. That fee is then returned to the currency pool on the network as a “miner fee”. The hope is that higher fees on transactions incentivize faster processing of transactions. Another complication is that some users use online wallets that charge a secondary transaction fee that can easily double the amount of fees paid. In short, if you want to use BTC on steam you should buy Steam gift cards from other sources from now on.