The utility aspect of Bitcoin faced a setback yesterday as PC gamers heard from Valve Corporation’s Steam Team in a blog post that Bitcoin would no longer be accepted as payment on its digital distribution platform, Steam. Citing the volatility of the currency as well as the rising cost of fees, a representative of The Steam Team, known as “kurtis”, explained that the volatility of Bitcoin has created a problem for users trying to purchases games using the currency. Kurtis pointed out that:
The value of Bitcoin is only guaranteed for a certain period of time so if the transaction doesn’t complete within that window of time, then the amount of Bitcoin needed to cover the transaction can change. The amount it can change has been increasing recently to a point where it can be significantly different.
Kurtis further elaborated that the normal resolution mechanism on Steam is either to refund the original payment to the user, which would negate the transaction or to 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.” Bitcoin was adopted as a means of payment via bitcoin payment processor, BitPay, for games on Steam on April 27, 2016.
Some users commenting on the blog seem to agree and support Valve’s decision, with many calling for utilization of alternative cryptos such as Vertcoin, IOTA, and Litecoin. Others, such as one user named “Kaj Jez”, stated,
Massively disappointing. The first purchase I ever made in Bitcoin was on Steam. As long as Steam doesn’t accept BTC I will prefer to do business with devs’ own stores that hopefully do…But as Bitcoin will undoubtedly improve itself with scalability solutions so to will Steam hopefully improve itself by rectifying this mistake and once again accepting it.
Steam, the largest digital distribution platform for PC Games, has an active user base of over 275 million users with an average of 11 games per user, according to Sergey Galyonkin’s Steam Spy API. In a Medium article, Galyonkin elaborated that 2016 sales for PC games through the Steam Platform totaled roughly $3.47 billion dollars. While it is unclear how much of that revenue resulted from bitcoin transactions during its period of acceptance, it is clear that the PC gaming community faced a major setback in utilizing Bitcoin as a means for buying games.
At the time of this writing, neither BitPay nor Steam nor Valve Corp could be reached for additional comment.
Andrew M. Nelson is a researcher and analyst of alternative investments. While in law school, he was drawn to cryptocurrencies by the potential impact of smart contracts on international trade. After years of analyzing alternative investment funds, he uses his JD and MBA to analyze regulatory and investment trends on new, alternative, and illiquid asset classes. You can follow Andrew on Twitter @Andrew_M_Nelson