Bitcoin hit a snag on Thursday as the largest online gaming shop in the U.S. and Europe said it will no longer accept the cryptocurrency as a source of payment because of its high transaction fees and volatile price.
Valve Corp.’s Steam, the video game platform, said allowing bitcoin payment has become “untenable” as surging fees have resulted in high costs for buyers, while massive price swings during purchases can result in “significantly different” prices. Fees reached about $20 per transaction last week, compared with about 20 cents when bitcoin was first enabled, the company said in the statement.
Steam’s decision is a setback for the cryptocurrency’s adoption and shows how the original vision of bitcoin as a widely used decentralized payment system may be some way off. While the largest digital currency gained more traction within the financial community this year as it soared more than 1,300 percent to above $14,000, many have claimed that it is a bubble waiting to burst.
Bitcoin’s surging popularity and limits on the amount of data processed on the network has caused transaction times and fees to jump, making it harder to match traditional cash as an established a medium of buying and selling goods.
The issue with bitcoin payment is hard to resolve as customers must pay the fee again when they receive refunds for their original payment or transfer additional funds to match the new fee, Steam said. The company said in August it has 67 million monthly active players, GeekWire reported earlier. Steam first started accepting bitcoin last April, according to CoinDesk.
Bitcoin surged to a record high on Thursday amid optimism the introduction of futures is boosting the legitimacy of the world’s most valuable digital currency. But for some, the promise of cryptocurrency as electronic cash simply doesn’t rest on bitcoin: the Steam announcements comments section was filled with suggestions of other tokens, including litecoin, bitcoin cash and dash.
Bitcoin’s answer to easing congestion is the Lightning Network. The technology moves some transactions away from the blockchain by allowing buyers and sellers to transact privately, and later broadcast their activity to the public network. Proponents say that will lower traffic on the blockchain, resulting in smaller fees and processing times.
On Wednesday, the three companies behind the technology — Lightning Labs, Blockstream Corp. and ACINQ — successfully made multiple payments using bitcoin, the first time their protocol has been used on its actual blockchain, according to Elizabeth Stark, head of Lightning Labs. She said this paves the way toward testing with outside businesses, including gaming companies and energy providers.
“This was the first payment on the bitcoin blockchain across implementations,” Stark said in an email. “The stakes are quite a bit higher when it comes to releasing for the main bitcoin network.”