Bitcoin is causing too many complications for Valve, so the company has announced that it will no longer accept the digital cryptocurrency. Valve runs Steam, which is the the biggest PC-gaming distribution platform outside of China, and it started taking Bitcoin as a payment in April 2016 after talking about the possibility for years. But high fees and the roller coaster market value have convinced Valve to give it up as a viable alternative to traditional payment methods.
In a blog post, Valve engineer Kurtis Chinn lays out its reasons for ditching Bitcoin.
“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,” wrote Chinn. “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 20 cents when we initially enabled Bitcoin.”
Transaction fees are a part of doing business, but typically Visa or MasterCard charge businesses for every purchase made with one of their cards. Those fees are never more than a couple of bucks. For Bitcoin, however, the cryptocurrency market takes a fee when a Bitcoin owner initiates a transaction. This can add significant cost to a standard purchase of a digital game.
“Unfortunately, Valve has no control over the amount of the fee,” wrote Chinn. “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.”
And Bitcoin’s value has gone through some massive swings recently. Over the last week alone, the price has gone from $9,500 for a single Bitcoin to over $13,000. But it is not a steady ascent. At points, the digital coin dropped from $11,000 to $9,500 in value. And these ups and downs cause significant logistical problems for a company trying to process purchases.
“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 percent in value over a period of days,” wrote Chinn. “This creates a problem for customers trying to purchase games with Bitcoin.”
When a Steam customer paid with Bitcoin, they would transfer a certain amount for the cost of the game and then another amount to cover the fee. But transactions can often take longer than the Bitcoin Network guarantees the value of the currency.
“The amount it can change has been increasing recently to a point where it can be significantly different,” wrote Chinn. “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.”
For Valve, the answer to its Bitcoin problem is no more Bitcoin. This highlights the limitations of the cryptocurrency, and Valve currently doesn’t accept any alternatives. But it says that it’s not done with the digital coin for good.
“We may re-evaluate whether Bitcoin makes sense for us and for the Steam community at a later date,” wrote Chinn.
For now, Winklevoss twins, you’ll have to use your AmEx Black Card to buy Assassin’s Creed: Origins and PlayerUnknown’s Battlegrounds — like the rest of us.