by Liam J Kelly
After nearly a year and a half of operation, gaming marketplace Steam will no longer accept bitcoin as a form of payment. The platform announced on December 6, 2017, that they “will no longer support bitcoin as a form of payment method on our platform due to high fees and volatility in the value of bitcoin.” Members of the crypto community, although disheartened to hear more scalability woes, have offered two other solutions; Bitcoin Cash and Litecoin.
Steam and Bitcoin
Valve’s digital distribution platform has accepted the digital currency since April 2016 when bitcoin traded for roughly $450. At this time, customers were charged a transaction fee of approximately $0.20. These figures have skyrocketed in 2017, “Topping out at close to $20 per transaction” and ultimately causing the platform to end their relationship with bitcoin.
As of today, Steam will no longer support Bitcoin as a payment method https://t.co/sqCmOYEnj6
— Steam Database (@SteamDB) December 6, 2017
The Steam Team also referred to the staggering volatility of the currency. In many cases in which the price dramatically fluctuated, purchases were also affected. Kurtis wrote the following as one of the major reasons the company made their decision:
“This creates a problem for customers trying to purchase games with bitcoin. When checking out on Steam, a customer will transfer x amount of bitcoin for the cost of the game, plus y amount of bitcoin to cover the transaction fee charged by the Bitcoin network. 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.”
Customers are then refunded the amount of the failed purchase, only to be charged with another transaction fee when making another attempt. Even the cost of refunding the bitcoin from business to customer experiences similar problems along the Bitcoin network.
Thus because of the rising popularity of bitcoin, the gaming firm concluded “It is not feasible to refund or ask the customer to transfer the missing balance (which itself runs the risk of underpayment again, depending on how much the value of bitcoin changes while the Bitcoin network processes the additional transfer).”
History of Crypto Usage
The team announced their acceptance of bitcoin on April 21, 2016, following rumors in February 2016 that the company would soon support the cryptocurrency. The April statement indicated that they would enable a system to insulate customers from the notorious volatility.
BitPay, the third party facilitator, stated that users would be able to “Load [their] steam wallet with dollars using bitcoin.” The relationship set out to unite gaming markets such as India, China, and Brazil “without the high fees or the risk of chargeback fraud that come with card payments.”
The release came after establishing a very technology savvy user base of nearly 12.74 million users in April 2016.
In June 2016, Steam also announced that the team would no longer be accepting bitcoin in Russia. The statement arrived after the Finance Ministry claimed that the only valid currency in the country would be the Ruble.
Litecoin and Bitcoin Cash Alternatives
In the wake of this news, two voices emerged from the crypto sphere offering a solution to the high transaction fees. Roger Ver of Bitcoin Cash (BCH) and Charlie Lee of Litecoin (LTC), were allegedly asked to comment on the subject.
Ver responded on December 6, 2017, via Twitter offering the bitcoin hard fork alternative. More importantly, he advised Steam to work with Coinify, another payment processor similar to BitPay, as they accept Bitcoin Cash. In his tweet, Ver mentioned Brian Armstrong of Coinbase, Tony Gallippi and Stephen Pair from BitPay.
I personally invite @SteamDB to start using the real Bitcoin, #BitcoinCash.
I'm sure @coinify would be happy to help you while we wait for @BitPay and @coinbase to roll out their own #BitcoinCash integration. CC @brian_armstrong @TonyGallippi @spair https://t.co/acovQrsNau
— Roger Ver (@rogerkver) December 6, 2017
If anything, the message promotes Bitcoin Cash’s integration with Coinbase and BitPay.
A former member of the Coinbase team and founder of Litecoin, Charlie Lee, responded to Steam’s announcement. Like Ver, Lee also looked to convince BitPay to integrate his creation due to the differences between Litecoin and Bitcoin.
Many wrote me today telling me to contact Steam to convince them to support Litecoin. Remember that they use @BitPay to help them accept Bitcoin. So lets instead convince BitPay that they should add Litecoin support because Litecoin is a great coin for payments. https://t.co/f9jW2Uh5Do
— Charlie Lee [LTC] (@SatoshiLite) December 8, 2017
On December 8, Lee revealed that Steam vouchers could be paid via litecoin payments by using Bitrefill:
— Charlie Lee [LTC] (@SatoshiLite) December 8, 2017
The most relevant features of Litecoin include a high-speed network and efficient transaction fees. In both cases, the two alternatives to Satoshi Nakamoto’s digital currency hope to capitalize on a growing problem in the Bitcoin network; cost and scalability.