As of today, Steam is dropping its support of Bitcoin as a valid currency for purchasing games and other products through its popular digital media distribution platform. The company cites the high volatility of Bitcoin as the main reason why.
Significant increases in the fees to process transactions, combined with an increase in the volatility of the cryptocurrency’s value, led to the decision. Transactions fees went from 20¢ in April of 2016 when Steam initially enabled the currency to almost $20 per transaction last week (!).
The high transaction fees have resulted in unreasonably high costs for purchasing games via Bitcoin. This is especially problematic when Bitcoin’s value plummets, which is can do by as much as 25% over just a few days. In fact, the value can change so fast that it can be different from the time you place an order to the time you complete it. If you have to redo the transaction, you get hit with another Bitcoin transaction fee. The value of Bitcoin changes so fast that it’s literally impossible to process an order reliably.
Steam may reevalute Bitcoin for use by the Steam community at some later date, but that would require a significant stabilization in the value of the currency. There’s no sign that will happen any time soon.
The volatility of Bitcoin during individual online transactions makes it hard to use the currency for anything in its native state. Consumers would have to cash in their Bitcoins directly, converting them into their local currency, before trying to use that money for online shopping.
Amazon is currently poking around the idea of using Bitcoin and other cryptocurrencies for customer purchases, but they’ve announced nothing so far. They’re buying up domains related to cryptocurrency, and while speculation is rampant, they’re not taking any overt action yet. The lesson learned by Steam is likely to be something Amazon will be watching very closely in the coming months.