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Steam is no longer supporting Bitcoin

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Re: Steam is no longer supporting Bitcoin

#51

Post by Kelbit »

Klathmon wrote: post #32
testvox wrote: post #24

Earlier quoted context omitted.

It seems like the main issue is transaction fees are close to $20, so even simple operations like refunding users for a incorrect or incomplete transaction is infeasible.

The "$20 transaction fee" was an absolute top, and when that happened it was the single most congested the bitcoin network has ever been. It's nowhere near that right now. The total cost for your "median" transaction right now (at 226 bytes) is about $4.30 USD (at 150 sat/byte). Even if you double that to 300 sat/byte you are still at ~$9. Edit: I'm not saying even $4 fees are okay, just pointing out that it's not $2…

Meanwhile, Visa is about 1.5-2% plus $0.10 flat interchange. To break even with BTC against Visa, we're talking an average transaction of over $200. That's not feasible for the vast majority of merchants.

Not to mention that the currency's extreme volatility means that when you sell it to convert it to greenbacks (the currency your investors actually care about) it probably won't be the same amount you were paid for.

Re: Steam is no longer supporting Bitcoin

#53

Post by Klathmon »

bigtunacan wrote: post #45
Klathmon wrote: post #32

Earlier quoted context omitted.

The "$20 transaction fee" was an absolute top, and when that happened it was the single most congested the bitcoin network has ever been. It's nowhere near that right now. The total cost for your "median" transaction right now (at 226 bytes) is about $4.30 USD (at 150 sat/byte). Even if you double that to 300 sat/byte you are still at ~$9. Edit: I'm not saying even $4 fees are okay, just pointing out that it's not $2…

How are these transaction fee amounts even determined? With something like credit cards, PayPal, or EFT the fees are deterministic. With Bitcoin it seems fees are both ridiculously high, plus I can't even tell what I am going to be charged?

When you make a bitcoin transaction, it gets put into a "mempool". Basically you send your TX to a node, that shares it with other nodes on the network, and they all hold it in memory. Once a block is found, the miner that found the block will pull as many transactions as possible from the mempool and put them into that block and sign it on the blockchain forever.

Since TX fees go to miners, they are incentivized to pick the transactions with the largest "fee per size" to include first to maximize their profit (though they aren't required to do so).

So basically you can envision all transactions as a stack, with the highest fees at the top. Once a block is found, it takes the top ~1MB worth of transactions, and the cycle repeats. [0] is a good visual representation of this.

Unfortunately this means there isn't an easy way to determine what fee will absolutely get you included in a block before it's mined, since if thousands of transactions show up with higher fees than yours after you (but before a block is mined) yours might not make it in the next block (even if your fee was the highest when you made the transaction).

It's a tough problem to solve, but there are some solutions being worked on to help solve this problem for the vast majority of bitcoin transactions.

[0]https://core.jochen-hoenicke.de/queue/#24h

Re: Steam is no longer supporting Bitcoin

#54

Post by efdee »

i_cant_speel wrote: post #49
colordrops wrote: post #43

Earlier quoted context omitted.

> I think this is what will ultimately bring Bitcoin down People have been saying that for years. It serves purposes other than buying and selling goods, and in fact almost no one uses it to buy things.

What other purposes is it used for?

Gambling.

Re: Steam is no longer supporting Bitcoin

#55

Post by Klathmon »

Domenic_S wrote: post #47
Klathmon wrote: post #33

Earlier quoted context omitted.

Kind of, if you set it too low it might never get confirmed at all, but for the most part you can set fees pretty damn low if you are willing to wait for confirmation.

Possibly much, much longer, but it could be returned in 14 days if it's too low and never makes it out of the mempool. That's where traditional electronic payments have a huge edge -- instant, incredibly cheap guaranteed verification.

Well it "can" be returned after 14 days, but a "malicious" node can also just rebroadcast it to prevent that from happening.

Re: Steam is no longer supporting Bitcoin

#56

Post by vxNsr »

janoc wrote: post #30
vxNsr wrote: post #3

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.

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 trans…

Right, that is really the other side of what I didn't say. I don't expect Steam to be holding onto bitcoin for very long but if even for the short amount of time they're holding it the price is fluctuating and doesn't offer an equivalent price in USD from the time the user presses pay to the time the transaction is processed, on top of what can amount to a 20% fee it's simply not currency. They'd be better off allowing people to pay them in stocks sold on the NYSE and NASDAQ.

Re: Steam is no longer supporting Bitcoin

#57

Post by [deleted] »

bigtunacan wrote: post #45
Klathmon wrote: post #32

Earlier quoted context omitted.

The "$20 transaction fee" was an absolute top, and when that happened it was the single most congested the bitcoin network has ever been. It's nowhere near that right now. The total cost for your "median" transaction right now (at 226 bytes) is about $4.30 USD (at 150 sat/byte). Even if you double that to 300 sat/byte you are still at ~$9. Edit: I'm not saying even $4 fees are okay, just pointing out that it's not $2…

How are these transaction fee amounts even determined? With something like credit cards, PayPal, or EFT the fees are deterministic. With Bitcoin it seems fees are both ridiculously high, plus I can't even tell what I am going to be charged?

[deleted]

Re: Steam is no longer supporting Bitcoin

#58

Post by openasocket »

heifetz wrote: post #35

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?

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.

Re: Steam is no longer supporting Bitcoin

#59

Post by Klathmon »

Kelbit wrote: post #51
Klathmon wrote: post #32

Earlier quoted context omitted.

The "$20 transaction fee" was an absolute top, and when that happened it was the single most congested the bitcoin network has ever been. It's nowhere near that right now. The total cost for your "median" transaction right now (at 226 bytes) is about $4.30 USD (at 150 sat/byte). Even if you double that to 300 sat/byte you are still at ~$9. Edit: I'm not saying even $4 fees are okay, just pointing out that it's not $2…

Meanwhile, Visa is about 1.5-2% plus $0.10 flat interchange. To break even with BTC against Visa, we're talking an average transaction of over $200. That's not feasible for the vast majority of merchants. Not to mention that the currency's extreme volatility means that when you sell it to convert it to greenbacks (the currency your investors actually care about) it probably won't be the same amount you were paid for.

Yes, but at the same time Visa requires you to hand over your payment information to each and every merchant you transact with, and they are able to pull as much money from your card as they want, and they are able to charge you multiple times at any point in the future.

But there are some really cool solutions being worked on right now for this problem in bitcoin that can make it scale to a similar way to Visa. But they aren't here yet (and some might turn out to be nonviable). Lightning network would allow Visa levels of transactions per second, at basically zero or next to zero fees per transaction for the majority of them.

Re: Steam is no longer supporting Bitcoin

#60

Post by rlpb »

bigtunacan wrote: post #45
Klathmon wrote: post #32

Earlier quoted context omitted.

The "$20 transaction fee" was an absolute top, and when that happened it was the single most congested the bitcoin network has ever been. It's nowhere near that right now. The total cost for your "median" transaction right now (at 226 bytes) is about $4.30 USD (at 150 sat/byte). Even if you double that to 300 sat/byte you are still at ~$9. Edit: I'm not saying even $4 fees are okay, just pointing out that it's not $2…

How are these transaction fee amounts even determined? With something like credit cards, PayPal, or EFT the fees are deterministic. With Bitcoin it seems fees are both ridiculously high, plus I can't even tell what I am going to be charged?

> How are these transaction fee amounts even determined?

The number of transactions that can fit into a block (ie. "clear") is roughly fixed. The rate at which new blocks are added (ie. "clearing rate") is roughly fixed. Traders effectively bid for clearing via the transaction fee, and the highest bidding transactions are accepted.

In order words: supply of transactions is effectively fixed, and demand for transactions determines the fee.

There is work going on to enable external clearinghouses called the lightning network that will fix this problem, but that work isn't ready yet.

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