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Steam Ends Support For Bitcoin (polygon.com)
Valve is ending support for Steam purchases made with bitcoin, the company said today, citing "high fees and volatility" in the value of the cryptocurrency. In a statement, it said: "In the past few months we've seen an increase in the volatility in the value of Bitcoin and a significant increase in the fees to process transactions on the Bitcoin network," Valve said in a post on Steam. "For example, transaction fees that are charged to the customer by the Bitcoin network have skyrocketed this year, topping out at close to $20 a transaction last week (compared to roughly $0.20 when we initially enabled Bitcoin). Unfortunately, Valve has no control over the amount of the fee. These fees result in unreasonably high costs for purchasing games when paying with Bitcoin. The high transaction fees cause even greater problems when the value of Bitcoin itself drops dramatically."
The recommended fee is 0.000339 BTC or about $4.41 at current values [1]. Fee are the same if you are transferring less than a US penny or more than a million dollars. For any transaction, you can use less fee and wait (much) longer or a larger fee have a shorter transaction time.
Fees have really been the driving force behind the recent Bitcoin forks. Some argue that bitcoin should be a store of value (not me) rather an a tool for transferring money. Independent of your opinion on the fork Bitcoin Cash, I believe they are doing it right with transaction fees [2], which currently is about $0.15 per transaction, again independent of transaction amount.
1. https://bitcoinfees.earn.com/
2. https://bitinfocharts.com/comp...
In order for the transaction to be confirmed, it must be cryptographically linked into the blockchain. This occurs when a new bitcoin is "mined", and added to the blockchain. At that point, 1MB of transaction data can be recorded in the blockchain with the new bitcoin. To incentivize inclusion of your transaction, you can offer a portion of your bitcoin as a "fee" to record the transaction. This competes with all of the other pending transactions, so the higher the fee, the faster your transaction will be confirmed.
The problem is that 1MB is currently the max transaction data added per bitcoin, and the difficulty of mining bitcoins keeps going up. The rest is basic economics: limited supply, increasing demand = higher cost.
Bitcoin miners perform the processing required to process transactions. When a bitcoin transaction is submitted, it is submitted along with a "bid" for how much the person is willing to pay for the transaction. Miners then prioritize incoming transactions based upon how much is bid. If the bid is too low, it will end up at the end of a long queue and might take hours to finish (if ever).
The optimal bid amount, then, is determined by the computing power of the Bitcoin network combined with how much processing power it actually takes to process each transaction and how many transactions there are. Right now, bids above about 150 Satoshis per byte (which works out to just under $5 per transaction on average at current prices) finish relatively quickly (typically under 30 minutes). Bids below that take an increasingly long time to commit.
This high transaction cost is a function of the poor scaling of the Bitcoin algorithm to large numbers of transactions. It's one reason among many why I think Bitcoins are an absolutely abysmal medium of exchange, and why I question the entire concept of a blockchain-based currency system.
Gold-based currencies had this problem, only Bitcoin's issue is far worse. Typically it's not so much that the currency fails as the economy it's based upon collapses due to deflation.
This is part of the reason why the Great Depression was so bad, for instance. Japan has been struggling with deflation over the last couple of decades as well, resulting in a long period of economic stagnation. The smaller, poorer countries that share the Euro currency are also dealing with a deflationary problem right now. But in all of these cases, the magnitude of the deflation is nowhere remotely close to the deflation with Bitcoin. Real-world factors tend to prevent national currencies from deflating nearly that rapidly. If Bitcoin were actually used as the national currency of a country, that country's economy would be experiencing unprecedented economic pain.
National currencies usually are fine with modest amounts of inflation, but cause economic disruption if inflation is too low (or negative) or much too high. As long as inflation is stable and of a modest amount, the currency works pretty well.
You made yours, so fuck everybody else, eh? I'm not sure you're any better than a "bank shill", yourself.
His ignorance covered the whole earth like a blanket, and there was hardly a hole in it anywhere. - Mark Twain