David BurrowsBitcoin might be soaring towards a $15,000 valuation but for some the currency is simply too hot to handle.
Games platform Steam has announced it will no longer accept the cryptocurrency as it views it as a speculative asset.
According to Steam, user fees for Bitcoin transactions have surged from $0.20 to nearly $20 in less than two years. That not only makes games more expensive for Bitcoin users, but also causes problems whenever the value of Bitcoin falls rapidly.
When checking out on Steam, a customer will transfer x amount of Bitcoin for the cost of the game, plus y amount of Bitcoin to cover the transaction fee charged by the Bitcoin network.
Transaction times
The value of Bitcoin is only guaranteed for a certain period of time so if the transaction doesn't complete within that window of time, then the amount of Bitcoin needed to cover the transaction can change. The amount it can change has been increasing recently to a point where it can be significantly different.
When this happens, Steam either refunds the user their payment or asks them to transfer more Bitcoin to cover the additional cost. Either way, the user is subjected to another transaction fee. Steam has said that situation has become increasingly common this year
While retailers may be showing reticence towards cryptos, ‘speculators’ are, according to Reuters, salivating over the potential of long-awaited legitimacy for the cyptocurrency when futures trading launches this weekend.
The Wild West
However, experts worry the risks associated with bitcoin’s Wild West-like nature could overshadow the debut.
The first bitcoin future trades kick off on Sunday on Cboe Global Markets’ Cboe Futures Exchange, followed a week later by CME Group. Nasdaq intends to enter into the fray next year.
While Cboe, CME and Nasdaq offer strictly policed trading environments, the underlying bitcoin market is riddled with crypto-exchanges lacking even basic oversight.
Not surprisingly this has stoked fears of market manipulation, inaccurate pricing, and systemic risk to clearing houses.
“I’m kind of taken aback by what’s happened in the last three months,” said Richard Johnson, an analyst at Greenwich Associates who owns digital currencies and considers himself a bitcoin bull. “I‘m concerned things are moving a bit too quickly.”
Bitcoin’s more than 10-fold upsurge this year has led to warnings of a bubble by the likes of JPMorgan Chase & Co Chief Executive Officer Jamie Dimon, who called it “a fraud” that will eventually blow up.
Others, like Wall Street adviser Tom Lee, expect bitcoin to top $100,000.