
Steam is no longer supporting Bitcoin - tsneed290
http://steamcommunity.com/games/593110/announcements/detail/1464096684955433613
======
vxNsr
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.

~~~
janoc
The volatility alone wouldn't be a huge problem if the transactions were
quick, apart from having to constantly re-price the goods (not a big deal with
an automated system selling digital downloads, even though it is a real PITA
for the accounting afterwards!).

However, getting the transaction confirmed can take many hours at the times of
high demand and then it still fails because thanks to the volatility, the
transaction fees have gone up in the meantime. That is creating unsustainable
problems for the customer support and makes BTC unusable for actual payments.

I think this is what will ultimately bring Bitcoin down (and with it the
entire cryptocurrency goldrush, even though the problems are mostly with BTC).
Once the currency is impossible to exchange for actual goods or other
currencies due to being more trouble to handle than it is worth, it stops
being a currency. What good is that one BTC is $12k+ now if you can't actually
buy anything with that? People pouring money into this today and talking about
BTC being a "store of value" are being seriously nuts ...

~~~
derriz
Eh? The volatility is a HUGE problem for bitcoin as a currency.

If I run a small business, accepting payment in bitcoin just creates risk. The
state of my business not only depends on the quality and success of my
product/service but also on the volatility of bitcoin because by accepting
bitcoin I am forced to effectively take a long position on BTC. The price
could crash by 25% before I sell the bitcoin and now I've a cash-flow problem
- struggling to pay wages and rent - even though my business is successful in
that I made a profit on selling my products or services.

The purchaser of my services is effectively on the other side of this trade
and is exposed to the opposite risk wrt to BTC/USD. The only way for the two
parties to minimize this risk would be for the customer to convert fiat
currency into bitcoin just before paying, and then for the vendor to convert
the bitcoin back immediately on receipt. With high spreads and transaction
costs, using bitcoin in this manner is incredibly expensive and makes no
business sense.

~~~
totalZero
How does one take a short position in Bitcoin?

~~~
malloryerik
If the futures markets at the CBOT or CME attract volume, you could use those.
Otherwise, you'd have to do it over-the-counter. Borrow a bitcoin from someone
and turn it into real money. When you have to repay, if BTC is down, you'll
buy back a BTC at a profit. If it's up, you'll have to buy back at a loss.

Note that this gives you a maximum gain of whatever BTC/USD is today (assuming
you denominate in greenbacks), while upside risk is theoretically unlimited.

Of course the lender has to trust or be ensured (or insured) that you will
repay.

There must be people using Ethereum contracts to make options on BTC, and
maybe trying to minimize counterparty risk through the judicious use of open-
sourced smart contracts and digital collateral? Anyone know of interesting
cases?

~~~
LsDmT
What you mean? You can short any crypto currency on many exchanges. Bitfinex
and GDAX being the biggest right now.

~~~
ForHackernews
And when bitcoin crashes, and the exchange "gets hacked", goes bankrupt, and
the owners run away to some international destination, who do you claim your
USD back from?

~~~
tomkarlo
If you're shorting, you get the $ up front and have to supply the security
when you "cover". Not having to "cover" the short would actually be better.

------
phaser
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[1], 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[2] 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.

[1]
[https://github.com/bitquest/bitquest](https://github.com/bitquest/bitquest)
[2] [https://hammerco.in](https://hammerco.in)

~~~
runeks
Indeed there are clearing protocols on top of Bitcoin, which can reduce fee-
paying to only occur upon depositing and redemption. But the Bitcoin
blockchain is still limited to ~20 million of such transactions per month[1].

Only if we remove the withdrawal transactions from the equation, and start
trading unconfirmed transactions as regular bitcoins (confirmed transactions),
can we get around this limitation (such that only the number of new users
joining is limited to 20M per month). I’m somewhat skeptical this can work,
though, since recipients of funds usually have suppliers to pay, so I assume
that we need to settle on the blockchain at least monthly.

[1] [https://runeksvendsen.github.io/blog/posts/2017-10-08-no-
bit...](https://runeksvendsen.github.io/blog/posts/2017-10-08-no-bitcoin-
based-protocol-can-handle-more-than-20m-users-per-month.html)

~~~
vertex-four
A Lightning Network transaction results in one of two things - a proof that a
certain amount of bitcoins can be withdrawn at any time (minus some delay), or
a proof of cheating. Surely a proof that you can withdraw a certain amount of
bitcoins is more-or-less equivalent to that many bitcoins, and therefore any
rational actor - including your suppliers - should accept it as such?

This isn't equivalent to unconfirmed transactions - it's tokens of exchange
which directly and provably represent bitcoins. Settling on the blockchain
shouldn't even have to happen monthly.

One of the other interesting things is that Lightning Network allows for
payment in one cryptocurrency while you hold another by channeling it through
a very simple, provable currency exchange. This could behave similarly to, for
example, paying for something in USD when you hold GBP - practically
automatically. So the lack of scalability in Bitcoin's blockchain might not
matter so much - if something else turns up that's better for a given person
holding money, they can start using it while still continuing to trade with
all the people using Bitcoin.

IMHO, cross-chain transactions like this are one of the most important parts
of Lightning Network - suddenly, network effects around a specific currency
don't matter so much, people can hold whatever they like - Bitcoin people can
trade with Litecoin people who can trade with Ethereum scripts, and when
something new that solves more problems turns up, people holding that can
still buy VPSes with bitcoin.

~~~
zodiac
I think it is worth pointing out that it is not exactly equivalent, in the
sense that if you pay Steam via a payment channel (for simplicity, a one-
directional payment channel, so they don't need to lock up any cryptocurrency
themselves), they don't need to settle on-chain, but if they don't do so they
cannot use the "money" the received from you to pay someone else (eg their
lawyer).

In the very long term, if we get to a point where most people's and
organization's income is roughly equal to their expenditure, then this won't
be a problem, but until then there is still pressure to settle on-chain
because of this.

~~~
tlrobinson
> if they don't do so they cannot use the "money" the received from you to pay
> someone else (eg their lawyer).

They certainly can if their lawyer is also on the Lightning Network.

Eventually all Bitcoin wallets should support on-chain and Lightning Network
transactions, and seamlessly pick one or the other depending on the
transaction amount.

~~~
zodiac
No, they really can't. They have to open a payment channel with their lawyer
(or open it with someone who has a path of channels to their lawyer), and that
requires them to own cryptocurrency on-chain to use as stake (what LN calls
the funding transaction)

~~~
tlrobinson
Hence “if their lawyer is also on the Lightning Network“

~~~
zodiac
No, even if their lawyer is on the LN, Steam cannot pay their lawyer via
payment channel, unless Steam owns some cryptocurrency on-chain to use as
deposit

------
eqmvii
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.

~~~
Epenthesis
I've been hearing this a lot, but what does it actually _mean_?

Isn't the most important thing you want from a store of value stability? Ie,
that it'll _store_ the value that you put into it? Bitcoin certainly doesn't
have that property.

And if that's not the desired property implied by "store of value", what is?

~~~
nlperguiy
Main source of instability is price manipulation by big players and market
inefficiency (not easy enough to arbitrage between exchanges). It would be
interesting to see them do the same thing if BTC market cap is in couple of
trillions.

For example, if you're on any exchange that lists the total amount of orders
in BTC, you can easily catch when the manipulation starts by seeing out of the
ordinary sums (triple the amount of usual) for open positions.

Not to mention insane bot activity that is equivalent to a DDOS attack on the
exchange.

During the last several hours of IOTA pump, exchanges, even the IOTA tangle
were, and still are unstable.

~~~
gruez
>not easy enough to arbitrage between exchanges

doesn't tether fix this?

~~~
nlperguiy
for arbitrage you want to move all currencies, not just one.

[https://coinmarketcap.com/currencies/bitcoin/#markets](https://coinmarketcap.com/currencies/bitcoin/#markets)

for example, bitcoin is now huge on bithumb, I'd buy it at bitstamp and sell
it for 10% more, and repeat. given the slow transaction times, huge fees,
large mempool, this is impossible to do.

exchanges also ban you for trying to do arbitrage too, so there's a risk of
losing all the funds.

~~~
celticninja
Exchanges don't ban users for exploiting arbitrage, every trade is money to
the exchange and it benefits them to enable arbitrage to take place. No idea
where you pulled that claim from.

It's also not impossible to trade via bitstamp and bitthumb, sure it may take
an hour or so to get your btc from bitstamp to bitthumb but that's not the
bottleneck. Once you sell on bitthumb for USD you need to get that USD back to
bitstamp. So you have to get it from a Korean Bank to your own account and
then to bitstamps European bank account. Best case scenario that route takes
5-10 working days so the BTC network taking an hour or so to confirm is the
least if your problems.

~~~
nlperguiy
Some exchanges offer fee-less withdrawals (like Bitstamp), which makes
arbitrage more profitable. I'm pretty sure they'd ban you ASAP if you're
withdrawing like crazy (they are paying your fees in BTC).

As for transfer times for BTC not being a problem, 1 hour is a gamble in
cryptocurrency world.

~~~
celticninja
They won't ban you for withdrawing. If you withdraw lots then you have
purchased lots, the exchange makes a cut each time you buy. BTC fees are
minimal and exchanges can craft more efficient transactions too, so they are
not going to ban anyone for making too many withdrawals.

------
corford
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.

~~~
jameskegel
>IOATA and their overrun nodes

IOTA is a Tangle[1], which is coordinated[2] flow, similar to a Directed
Acyclic Graph[3]. I'm not sure what you mean when you say "overrun nodes" but
by virtue of how the network operates, this should not be an issue unless
everyone is sticking with only the default nodes in their configuration, but
that delves into a conversation of programmer vs user error that isn't
pertinent to this thread. Some of us choose to run full nodes without
incurring any speed loss, and it doesn't seem to be much of an issue of not
having enough of them, only that people aren't using them. Even still, this
has not degraded network performance.

[1] -
[https://iota.org/IOTA_Whitepaper.pdf](https://iota.org/IOTA_Whitepaper.pdf)

[2] -
[https://www.reddit.com/r/Iota/comments/792d6c/eli5_the_coord...](https://www.reddit.com/r/Iota/comments/792d6c/eli5_the_coordinator_and_what_does_it_do)

[3] - [https://stackoverflow.com/questions/2283757/can-someone-
expl...](https://stackoverflow.com/questions/2283757/can-someone-explain-in-
simple-terms-to-me-what-a-directed-acyclic-graph-is)

~~~
gruez
it's easy to solve scaling (and the double spend problem) when you're trusting
a central entity (the coordinator).

~~~
corford
I believe the coordinator is slated to be removed sometime next year.

------
sillysaurus3
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[1] 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?

[1]
[https://www.reddit.com/r/Bitcoin/comments/1lfobc/i_am_a_time...](https://www.reddit.com/r/Bitcoin/comments/1lfobc/i_am_a_timetraveler_from_the_future_here_to_beg/)

~~~
patmcc
>>>2\. Everyone who thought the price won't continue to exponentially increase
was wrong

So far.

Want to bet on the price of bitcoin in 1/5/10/25/100 years?

~~~
fullshark
I bet you one bitcoin at each time interval the price of bitcoin is above $30
USD.

~~~
Nydhal
You should increase the bet with every interval, for a better outcome :)

------
modeless
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.

------
Animats
$20 transaction fee. Bitcoin for small payments is dead.

~~~
dmm
Here's a recent transaction with a $2 fee:
[https://blockchain.info/tx/704b0c6c19c8cfe1d16093552d5196a8f...](https://blockchain.info/tx/704b0c6c19c8cfe1d16093552d5196a8f8fcdfa707a8284da8ce5c34c9b65914)

For that $2 a transaction is forever recorded on thousands of nodes in a
worldwide consensus network, secured by a huge number of miners. Blockchains
are not going to scale to visa level numbers of transactions without huge
blocks and de facto centralization.

The reasonable alternative is a second transaction layer, the lightning
network.

~~~
eterm
Or a second transaction layer, like a bank or VISA?

At which point, why not use those same layers over USD instead of over
bitcoin?

~~~
AgentME
>Or a second transaction layer, like a bank or VISA?

* They don't transact bitcoin.

* They don't transact your (non)bitcoin in a decentralized way. They alone run the software and are in control of changes and restrictions, including who you're allowed to send to.

* You don't hold the private keys to your (non)bitcoin when it's a bank or VISA or Paypal. They own it for you. They can lock your account and maybe give you the privilege of putting yourself through some asinine process to regain access to it.

The lightning network is a "second layer" that still is decentralized and puts
users in control of their own funds.

~~~
eterm
Second layers over bitcoin won't have those properties you've mentioned
either.

~~~
AgentME
Is this word play over "second layer" or something? The Lightning Network is
an example of one that's decentralized and keeps users in control of their own
funds. All lightning network transactions are settled within normal bitcoin
transactions, and any funds locked up within a payment channel can be unlocked
by either party without needing cooperation of the other.

------
kpozin
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.

------
bitxbitxbitcoin
I can see the headlines now... "Bitcoin running out of steam?"

~~~
masklinn
Not being used is the logical end of it when we know there's a fixed available
amount[0]. That means bitcoin is intrinsically deflationary, and at there's
absolutely no reason to _use_ them: they'll be worth more tomorrow than today,
and next week than tomorrow. Until everything grinds to a halt and crashes
down.

[0] in which sense it is very different from gold, which kept increasing in
amount, just (mostly) slowly

~~~
scott_karana
GP's post was just a pun/joke. Think you missed it :)

------
erikbye
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.

------
lifty
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](https://youtu.be/a73Gz3Tvx3k) , and it is super
fast.

------
rb808
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?

Thanks

~~~
nvusuvu
Bitcoin cash, a hard fork from the original Bitcoin. Super low fees, and the
community that supports Bitcoin cash considers themselves the Bitcoin for the
people. There are apps/wallets to use them. Coinbase will support Bitcoin cash
by Jan 2018.

~~~
celticninja
Litecoin

------
heifetz
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?

~~~
openasocket
There's a finite number of bitcoins, fewer and fewer bitcoins are being
produced over time by design. There can only be 21 million bitcoins, and the
majority have already been mined. So the reward just for completing a block
(not including the transaction fees) has been steadily decreasing, and that's
not even taking into account that more and more miners means it's harder to
get that reward. Thus the trend is going to be towards increased transaction
fees.

~~~
Sargos
... so bitcoin is doomed as a real currency as the prices are only going to
get higher and people are not going to pay a $5 transaction fee for a $10
product.

How is the bitcoin community rationalizing this seemingly inescapable
mathematical failure?

~~~
openasocket
The transaction fees won't grow forever. Generally speaking, they just need to
be high enough that miners can turn a profit. What that amount is, I don't
know.

And the fact that there's a limited number of transactions that can be
processed in a single block, and competition between miners to validate
transactions as quickly as possible, complicates things.

~~~
Sargos
What keeps the transaction fees from growing forever? If only a certain amount
of transactions can be processed when a coin is mined then that means that
competition will only grow as bitcoin becomes more widely used. This
competition will raise prices yes? Because if you don't have a high bid then
you won't get included when the coin is mined. And since coin mining becomes
slower and slower over time that means that less windows of opportunity exist
for even greater numbers of transactions. It certainly seems like this issue
will only get worse unless there's some other factor I don't know about.

------
eliaskg
Please accept Crypto Kittens.

------
anonymous5133
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.

------
myth_buster

      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
    

This statement would be true during any period of Bitcoin's existence.

------
mohamedmansour
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.

[https://news.ycombinator.com/item?id=15768303](https://news.ycombinator.com/item?id=15768303)
[http://steamcommunity.com/discussions/forum/10/3183345176714...](http://steamcommunity.com/discussions/forum/10/3183345176714002755/)
[https://www.reddit.com/r/CryptoCurrency/comments/7e7wsq/shad...](https://www.reddit.com/r/CryptoCurrency/comments/7e7wsq/shady_business_of_bitpay_buy_29_game_on_steam/)

------
nikolay
Why the bitcoin crazies ignore news like this but salivate and hike the price
over the fake news about Amazon accepting Bitcoin?!

------
naveen99
Maybe they should have just switched to dogecoin instead of turning off crypto
payments.

------
Angostura
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?

~~~
djhworld
Valve introduced bitcoin payments back in the days when people used to use
Bitcoin as a currency

------
kjullien
"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..."

------
icetoad
watching bitcoin implode will be a glorious day..... the volatility in that
market is astounding..

------
gbraad
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.

------
XR0CSWV3h3kZWg
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.

------
juanmirocks
I cannot see barely any cryptocurrencies really replacing fiat currencies
unless stability is kept. It's for this, I personally bet on Ripple.

~~~
summer_steven
Ripple, the currency that is being investigated by the SEC ?

~~~
juanmirocks
The market should be regulated if ALL OF US (grandmas too) are really going to
end using cryptocurrencies.

------
giancarlostoro
I wonder how many bitcoins Steam has, and how many of those they've even
cashed out on.

~~~
modeless
I think they used BitPay, so they likely had BitPay convert to dollars
instantly for every transaction and never received Bitcoin themselves.

~~~
ionwake
ouch

------
hateful
You know what I think is the best alternative digital currency for Steam? The
Steam Wallet!

------
wnevets
bitcoin boosters will try and spin this as good for bitcoin somehow

------
thomasfl
Steem is still supporting Bitcoin though.

~~~
dajohnson89
But -- Oh, I see what you did there.

------
ringaroundthetx
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.

------
jondubois
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.

~~~
mdotk
any blockchain that doesn't set a limit on the value of one single transaction
can scale indefinitely in terms of dollar value

~~~
jondubois
Sounds obvious but maybe it explains why Bitcoin's scalability problem doesn't
seem to have any effect on its price.

