It's for the same reason that no one wanted to touch zimbabwe dollar back in 2007, if the value of the medium of exchange differs from breakfast to lunch it's not really a good medium of exchange. Doesn't matter if value is appreciating or depreciating, currency needs to have a reasonably stable value to be useful.
I'm here to say the problems in selling games for Bitcoin are not the same for microtransactions.
I'm the original developer of Bitquest, where we used to process hundreds of micropayments smaller than 1 cent each day using 0 fee Bitcoin transactions.
When the blocks started to fill up we had to move all transactions off-chain except when players send money to the game and cashing out.
From the player's perspective, it's hard to justify paying $2 each time get Bitcoin in/out of the game. On the other side, there's no cut for Apple, Google, et al. who charge for as much as 30% cut for micro transactions.
I'm now working on a similar game that will take advantage of Segwit and Lightning Network. There's still miner fees involved to send money in and opening a payment channel, however there's no cut to a payment processor and the associated problems of compliance.
I'm not saying it's perfect but there's still important advantages on Cryptocurrency for game transactions and I'm confident that Steam and others will get back to it after it's infancy.
Makes business and technological sense. Even the true believers have largely switched to advocating the store-of-value/digital gold model of bitcoin.
We're absolutely in a bitcoin/cryptocurrency mania. Unfortunately, stating that is much easier than predicting what will happen next.
Until segwit, lightning network etc. shape up and the wild bull/bear runs smooth out, BTC (and most other cryptos: see ETH and crypto kitties; or IOATA and their overrun nodes) don't really make sense for small transactions. I know LTC says they are the small transaction coin but I guess they'd hit scaling issues too if volume went up (and even if they didn't, speculators and crazy price swings would still make things tricky).
XRP seems less prone to wild speculation (much to the chagrin of some holders) but, afaik, Ripple are more focused on positioning XRP as a settlement layer for banks and big FX houses rather than as a day to day currency.
Personally, I think all of the above will eventually sort itself out. All the crypto currencies are still very young and the entire space is experiencing hyper growth. Teething issues, design flaws and bumps along the way are to be expected. One thing's for sure though, there's too much promise, money and interest in this space for everyone to give up and decide blockchain/tangle tech can't safely scale. It's just a matter of time before a winner emerges with the right formula.
I posted this as an Ask HN, but this might be interesting here.
It's sort of off-topic, but in this case there's not much to say about Steam dropping Bitcoin anyway. Maybe it'll hover near the bottom:
What should we do about the destabilizing potential of Bitcoin?
There are two facts about Bitcoin worth worrying about:
1. There is no upper bound on the price
2. Everyone who thought the price won't continue to exponentially increase was wrong
Greed is a powerful motivator.
It's easy to smile at this but it will only take a couple more 10x increases before people stop laughing.
What happens when governments start putting money into Bitcoin because they don't want their economy to be left out? It'll only make the price go up even further.
It might be a good idea to take a step back for a moment and stop thinking "Can I get rich?" and start thinking "Before this reaches a point where we should worry, what should we do?"
I'm aware that this has roughly a 0.1% chance of happening. But if you'll suspend your disbelief for a few minutes and accept "What if it might be true?" then you'll find it's an interesting question worth thinking about.
It's starting to feel like no one really has a plan for this contingency. It will be a relief if the price crashes back to $1k, but Bitcoin defies belief. How many of you have parents that are seriously talking about getting in? Everyone wants to become rich. And if that infectious mindset spreads to the whole population, we might get an uncontrolled upward spiral.
Is there a way to prevent that?
Bought my first Bitcoin in 2011. Recently had my credit card stolen and deactivated, wanted to buy something from Steam, and needed an alternative payment method. Considered using Bitcoin, and decided against it for exactly these reasons. Valve is absolutely right. Bitcoin is not useful for day-to-day payments anymore.
$20 transaction fee. Bitcoin for small payments is dead.
In the U.S., it seems absurd to even consider Bitcoin (or any other cryptocurrency) for small day-to-day transactions like Steam purchases. Under the current IRS guidance, every sale or exchange of cryptocurrency is a taxable event.
That means that for every $10 game you bought with Bitcoin during the last summer sale, you now have to calculate the cost basis, capital gains, etc., of the BTC you used, and list it on a Form 8949 in April.
I can see the headlines now... "Bitcoin running out of steam?"
The problems we see with Bitcoin now are severe and detrimental and not at all aligned with its original goal and purpose. However, these issues were foreseen, hence the fork (Bitcoin Cash). High transaction fees coupled with extreme volatility and a slow transaction time is making sure BTC will not be used for small transactions. If things continue to escalate or stay status quo, BTC's purpose will as predicted be just as a backing coin, like gold once was, but even for that purpose, it needs to be less volatile.
The current situation is quite terrible, and the hype that lead to the current price is not doing Bitcoin any favors. I would have hoped that it wouldn’t get so much attention before it gets a chance to improve the underlying tech more. That being said, the lightning network will be ready soon and perhaps that will improve the situation. The following is a demo doing a lightning payment: https://youtu.be/a73Gz3Tvx3k , and it is super fast.
So one of the things I liked the idea of was micro payments - eg click to donate 5 cents to the author of an article. Are there any crypto currencies that work with negligible fees for micropayments? Is there a framework to use them?
why are transaction costs so high? I thought one of the selling points was that the transaction cost is negligible because miners main incentive comes from mining new bitcoins?
Please accept Crypto Kittens.
I don't blame them. Bitcoin's fees have been way too high. I had to spend $6 just to make a $20 purchase. This is ridiculous.
This statement would be true during any period of Bitcoin's existence.
but the degree of volatility has become extreme in the last few months, losing as much as 25% in value over a period of days
Finally! This was caused by my complains, I paid $32 for a $25 dollar game, and I it didn't go through since txn fees were not right 4 cents less. And BitPay refunded me just $17.
I am so thankful Steam did it right, meanwhile BitPay still blames the customer!
Here are the different threads of where the complain went viral. The internet wins at the end, removing the shady business of BitPay.
Why the bitcoin crazies ignore news like this but salivate and hike the price over the fake news about Amazon accepting Bitcoin?!
Maybe they should have just switched to dogecoin instead of turning off crypto payments.
I'd venture to guess that the unspoken issue here is that when Valve originally announced it was accepting Bitcoin, Bitcoin was cool and exciting and trendy. Just accepting it made Valve seem and the leading edge - part of the future.
That’s really not true any more and so a large part of the value of accepting it has simply disappeared. Really, why should they bother any more?
"We asked our user to pay X at T but when we received the payment at T' the price wasn't the same so we need to match the price currently so ask for X' actually and when we receive the payment at T'' the price has changed so actually ask them for X'' oh but wait..."
watching bitcoin implode will be a glorious day..... the volatility in that market is astounding..
The partner they used has been very untrustworthy when it comes to the transactions. Many of the stories can be found on the subreddit of Steam. Also, the transaction cost made even discount often not worthy.
Fair enough, when I tried to spend it with them I got pretty bad exchange rates so I stayed away. g2a accepts bitcoin and I saw more reasonable rates there.
I cannot see barely any cryptocurrencies really replacing fiat currencies unless stability is kept. It's for this, I personally bet on Ripple.
I wonder how many bitcoins Steam has, and how many of those they've even cashed out on.
You know what I think is the best alternative digital currency for Steam? The Steam Wallet!
bitcoin boosters will try and spin this as good for bitcoin somehow
Steem is still supporting Bitcoin though.
Good heavens. The steam dev team is alive ? What a miracle, I thought valve was run by two interns and a coffee machine.
I really wish we would stop wasting energy on this. I mean literal energy, as in the electricity.
a) they should be using segwit addresses
b) they have the option of using a payment processor that handles ALL OF THE PROBLEMS THEY DESCRIBED on the backend, behind the scenes
c) switch to a different blockchain. they already built the rails, different trains can run on them already.
d) bitcoin futures start trading on Sunday, its an easy way to hedge volatility, so there goes that argument. Professionals in multinational companies know what these are used for.
Bitcoin is not meant to be used for small transactions. Bitcoin can scale indefinitely in terms of dollar value of daily transactions but it is limited when it comes to number of transactions.
I don't think that the lightning network will offer a solution. In engineering, problems are always better solved at the root. As clever as it might be, the lightning network is a bandaid patch on top of a suboptimal solution... There are many cryptocurrencies that scale better than Bitcoin in terms of number of transactions.