Valve has dropped Bitcoin as a payment option from its PC gaming platform – Steam – owing to the high volatility in the value of the cryptocurrency.
“At this point, it has become untenable to support Bitcoin as a payment option,” the company said in a blog post.
Higher transaction fee and volatility to blame
Announcing the decision on Wednesday, Valve stated that there had been an increase in the volatility of Bitcoin and increase in the fees to process transactions on the Bitcoin network.
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“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),” the company said.
Valve also stated that the value of Bitcoin remains stable for a very short period and so after a customer checks out, and if in the process, the actual transaction takes place after that period, a higher amount of Bitcoin is needed to cover the transaction. Thus, the company is left with no other option but to refund the original payment to the user, or ask the user to transfer additional funds. In both cases, the user is hit with the Bitcoin network transaction fee again.
Valve notes that more and more customers on Steam have been caught in this issue. So, they have decided to remove Bitcoin as a payment option.
Steam collaborated with a company called BitPay based in Atlanta, Georgia to process the Bitcoin payments.
BitPay communication manager James Walpole said, “We’re disappointed we can’t work with them right now.”
Further, Walpole noted that some Bitcoin wallet services could be slow, and thus, could take hours instead of minutes to broadcast transactions. BitPay stated that it is looking to make the system more efficient, according to PCmag.
Is Bitcoin a bubble?
Bitcoin has increased over 1000% this year after retail and institutional investors showed interest in the virtual currency as a possible future means of exchange and store of value. Bitcoin received further strength after major exchanges such as CBOE and CME announced plans to introduce future contracts on their respective exchanges, thus, further supporting the price.
Top economists disagree with the general excitement around the cryptocurrency, which is now surging to $14,000. They are warning investors that it is a dangerous speculative bubble. Stephen Roach, Yale University senior fellow and the former Asia chairman and chief economist at the investment bank Morgan Stanley, stated that Bitcoin is a “toxic concept” for investors.
“This is a dangerous speculative bubble by any shadow or stretch of the imagination,” Roach told CNBC’s “The Rundown.”
Ben Davis, co-founder of the financial technology company Glint, however, feels that Bitcoin is not a bubble, but that other digital currencies are.
Speaking to CNBC, Davis said that these currencies are “flooding the market with perishable supplies of worthless value.”
Davis further stated that even though Bitcoin is not a bubble, all the signs and characteristics make it look like one. The term bubble indicates that a price is unjustified by any future outcome, Davis said, adding that in price terms, one might say that both Bitcoin and Altcoin are a bubble, but in value terms, Bitcoin is not.