Steam To Stop Supporting Bitcoin Transactions

[coder]

One nice thing about Ethereum (as a currency - not an investment vehicle) is that it has built-in inflation, which makes it less attractive to speculators. However, being blockchain-based, it's also going to have scalability problems and will be too expensive for low-value transactions.

Their solution for scalability is sharding, which sounds good until they get to the part about possibly taking weeks to move a coin between shards. Shards have other issues, as well.

[plasma5]

This is worrying for me since it was the only anonymous/pseudonymous way to pay for games... (until they decide to support a different coin, which would be great)

I buy my games on steam by paysafecard which is anonymous, or with that anonymous steam prepaidcards which you can buy in most stores.

[cybertraveler]

For those of you who don't know, there has been a multi-year battle within the Bitcoin community to try and stop this exact problem from occurring. It was completely foreseeable, foreseen and avoidable.

People have fought long and hard to increase the transaction processing capacity of Bitcoin by trying to get a single Bitcoin rule changed. The rule is called the block size limit. It defines how big blocks are. Transactions are stored inside blocks and thus the block size limit defines how many transactions per second the Bitcoin network can process.

The 4 main efforts to change this rule to increase the transaction processing capacity were spear headed by Bitcoin XT, then Bitcoin Classic, then Bitcoin Unlimited and then BTC1. This final BTC1 effort (also called the New York Agreement or Segwit2X), was cancelled on 8th November.

Almost everyone who has backed these efforts to increase the Bitcoin block size has seemingly given up and refocussed their efforts on a competing crypto currency called Bitcoin Cash.

BTC (what people are currently calling "Bitcoin") is no longer the peer to peer electronic cash system described by Satoshi Nakamoto. Its supporters now see it as either a "store of value" (their words not mine) or as a "settlement system". They believe Satoshi's design for Bitcoin cannot work as described and they claim their future planned improvements to Bitcoin (which includes the Lightning Network) will, years from now, allow it to once again function as a cash system.

BCH (Bitcoin Cash) is the peer to peer electronic cash system described by Satoshi. It is a continuation of the Bitcoin project. It shares the exact same transaction history as BTC up to August 1st 2017 when BCH forked from BTC. After that date the two chains (BTC and BCH) forever diverged. BCH has support from many of the early advocates of Bitcoin including Gavin Andresen who sees it as the thing he started working on back in 2010 when he worked alongside Satoshi. The BCH supporters believe that Satoshi's plan and vision for Bitcoin is not flawed and so they began their journey on August 1st by immediately increasing the block size of BCH from 1MB per 10 minutes to 8MB per 10 minutes. So far there have been no observable problems caused by this block size increase.

Whereas as BTC is currently only processing about 3 TPS (transactions per second), BCH can already handle 8 times that (24tps) and there are near term plans to further increase the capacity of BCH to ~96tps.


Edit: If you are unsure how the constrained block size limit causes the high transaction fees that Valve referred to, then consider this: there is a fixed amount of space in each block for transactions. There is now never enough space to include all the transactions waiting to be included in a block, in the next block that is mined. Miners are the people who decide which transactions to include in a block. Now, if you were a miner and you saw a pool of 60MB of transactions waiting to be included in a block, but you had only 1MB of space in the block which you are mining, how would you decide which transactions to include? (hint: the transaction fee is a "fee per byte").

[tildearrow]

Anonymous money transactions are good for criminals and scammers. Everyone else should prefer transparent, traceable transactions.

I'm sorry, but did you think of simple food stores like the ones here? (I'm on a developing country) You only request the product, pay, and it's yours. You don't have to tell the vendor your name, address or phone number and he doesn't ask you for such information.

[SethDusek]

It was really bad for Valve. It's impossible to refund bitcoin back into someone's BTC wallet, even though a lot of people were complaining. Transaction fees were also totally absurd (I had to pay $3 fee for $6 worth), and I recently contacted Steam support about this too because I thought I wasn't properly billed, only to realize it was the transaction fee

[dwagner]

Ethereum's blockchain, on the other hand, does not require much energy, nor is it expensive, because it's not based on mining hardware anymore.

Ah, so all the GPUs the Etherium-Miners buy are for free, as is the power those GPUs consume. Or maybe your assumption is just wrong - see https://en.wikipedia.org/wiki/Ethereum#Milestones - the current Ethereum is of course based on proof-of-work. And btw., nobody has yet demonstrated that "proof-of-stake" can possibly work in a no-trust environment.

[planetguy]

Ethereum's blockchain, on the other hand, does not require much energy, nor is it expensive, because it's not based on mining hardware anymore. Rather than Proof-of-Work, it is using Proof-of-Stake.

Ethereum plans to switch to proof of stake, but it hasn't yet - I know because I'm currently mining it on my GPU.

[shmerl]

If you are unsure how the constrained block size limit causes the high transaction fees that Valve referred to, then consider this: there is a fixed amount of space in each block for transactions. There is now never enough space to include all the transactions waiting to be included in a block, in the next block that is mined. Miners are the people who decide which transactions to include in a block. Now, if you were a miner and you saw a pool of 60MB of transactions waiting to be included in a block, but you had only 1MB of space in the block which you are mining, how would you decide which transactions to include? (hint: the transaction fee is a "fee per byte").

Thanks, that explains it very well. I hope usage of cryptocurrency as, well, actual currency, will grow (with BCH and Co.). Using it as a value storage defeats the purpose of it being a currency.

[cybertraveler]

Thanks, that explains it very well. I hope usage of cryptocurrency as, well, actual currency, will grow (with BCH and Co.). Using it as a value storage defeats the purpose of it being a currency.

I personally haven't quite figured out how this "store of value" use of BTC is supposed to work. At some point the flow of new people buying into BTC will slow down considerably (there aren't infinite people). When this buy pressure stops, that will slow or even stop BTC's price from rising. When BTC's price stops rising, are people going to be happy to keep their stored up purchasing-power in BTC? What if those people see some other investment opportunity which is producing positive returns; surely many people will sell BTC at this point to buy into these other investments which are producing good returns. If lots of people do this then this will create sell pressure and the price of BTC will fall. In this situation you will have people holding BTC who are actually losing purchasing-power. Will these people still be happy to keep their money in an asset class which doesn't do anything other than "store value". Will these people even consider BTC to be a "store of value" at this point if it's losing value (losing purchasing power)? If not this will create further sell pressure and lower the price further.

I don't think this "store of value" argument holds water. I think the reason many people are buying BTC right now, is not because it stores value, but because it goes up in value. I think lots of people are buying in now because they want to make a quick buck. This is fair enough, but something these BTC buyers should consider is that when they hold something which only goes up in value because other people are buying in... well, that thing they are holding might well be a token in a giant ponzi scheme; or something a lot like one.

This is all a shame, because BTC used to be a useful currency and cash system. With this fixed block size limit, its ability to be a useful currency and cash system is decreased as it gets more popular. One attribute which defines a good currency is that it is widely accepted. BTC cannot be widely accepted if every time the adoption increases, the network gets slower and more expensive to use.

There is a chance that BCH (Bitcoin Cash) will be able to continue the original vision of Satoshi. It remains to be seen whether people and businesses will adopt it in place of BTC though. If BTC eventually crashes hard (due to the forces I described above), then many businesses and people may shy away from crypto currency for a long time.

[Guest]

https://bitinfocharts.com/comparison/bitcoin-transactionfees.html