Steam drops bitcoin citing $20 transaction fees
A tipping point?
Steam first announced that it was accepting bitcoin in April 2016. Back then, bitcoin was worth around $415 and transaction fees tended to hover around the US$0.20 mark.
But today it announced an end to that, citing transaction fees that are topping out around US$20. To make matters worse, customers have also been getting hit with multiple transaction fees on a single purchase.
This is due to extreme bitcoin price volatility of late, and increasingly unpredictable transaction times.
Steam's usual procedure accounted for volatility by guaranteeing the value of bitcoin for a few days. Customers would simply transfer the cost of the game plus the transaction fee at a locked in price. This gave Steam time to process payments at the original value.
But in the event of especially big price changes, Steam would either refund the difference (if the price of bitcoin increased) or ask the customer to make a top-up payment (if the price of bitcoin decreased). In both cases, the once-negligible transaction fees would be at the customer's expense.
Pay $40 in transaction fees to buy a $20 game
Steam isn't the first company to drop bitcoin in the face of big transaction fees. The now-ironically-named micro-transaction platform SatoshiPay did it back in July 2017, dropping Satoshi's bitcoin blockchain and partnering with IOTA instead.
But Steam is probably the biggest name to drop bitcoin to date, at a time when many others are rushing to pick it up.
Steam is well known for its periodic sales that slash the price of AAA games by up to 50%, plus its range of thousands of indie games that might go running from 99c to $10. The biggest seller in recent months, PlayerUnknown's Battlegrounds has been going for about $29.
It's naturally not tenable to run with transaction fees that cost more than the games themselves.
The scaling problem has been chafing bitcoin's blockchain for a while but has gone largely ignored. In many cases, the community has even opposed efforts to try and solve it. But with more merchants dropping bitcoin, the problem (and the transaction fees) are getting too large to ignore.