You can no longer use Bitcoin to buy games on Steam (and with good reason)
The exchange rate for Bitcoin is soaring with no end in sight, but there are still a few things that you can’t yet buy with Bitcoin. Valve added Steam games to that list yesterday, announcing that the company would no longer accept Bitcoin as payment.
In a blog post on the Steam Community website, Valve cited volatility in the Bitcoin market as the primary driver behind the decision. These huge sweeps up and down over the year have played havoc on exchange rates and transaction fees for services that use Bitcoin, and the cryptocurrencies recent surge has pushed those fees to exorbitant levels. Valve said that the “transaction fees that are charged to the customer by the Bitcoin network have skyrocketed this year,” hitting USD $20 at one point last week. To put that in perspective, when Valve initially started accepting Bitcoin, transaction fees were in the $0.20-0.30 range, about 100 times less than current fees.
Valve also pointed to the large amount of risk associated with the currency, saying that “the degree of volatility has become extreme in the last few months, losing as much as 25% in value over a period of days.” This causes problems on the customer end of a purchase; a large price swing in the value of Bitcoin may occur during the purchase window, which could result in a loss for either the customer or for Valve.
Look at it this way: if a customer purchases a new title for USD $50 using Bitcoin (BTC), they would pay BTC 0.00313 (using this morning’s exchange rate). However, in the time that it would take for the sale to close out (sometimes up to 24 hours after the initial purchase), the price of BTC could rise 20%, like it did this morning. That would make that 0.00313 of Bitcoin worth US $60, meaning that the customer essentially paid $10 more for the same game due to the timing of the purchase process. If BTC were to swing the other way (-20%), then Valve would have lost $10 on the sale. Since Bitcoin is still extremely volatile, these swings are probably and likely have resulted in losses on the customer and business side of Bitcoin purchases.
Valve obviously has a plan to handle these kinds of swings by either issuing a refund for overpayment or requiring the customer to send additional Bitcoin to cover the loss, but either method results in another transaction fee for the customer. Since the transaction fees have grown so high, it’s feasible that a single game sale could cost the customer more than the purchase price of the title in transaction fees. Because of this, Valve is no longer accepting Bitcoin.
The company stated that they may explore accepting the cryptocurrency at a later date, likely after prices have calmed down (if they ever do). Until then, you won’t be able to enjoy buying the entire Steam library with your Bitcoin millions.