Drugged transaction fees for bitcoin payments claimed a casualty last week, when gaming situation Steam announced it would discontinue the use of the cryptocurrency on its platform. In a statement, the adventurous service identified bitcoin’s volatility and high transaction fees as excuses for its decision.
According to Value, the studio behind Steam, the fees concluded in “unreasonably high costs” for its games when the payment mode was bitcoin. “The stoned transaction fees cause even greater problems when the value of Bitcoin itself cast offs dramatically,” the studio stated. (See also: How Much Cheaper Are Bitcoin Tolls As Compared To Credit Card Fees?)
The Relationship Between Transaction Prices And Bitcoin Price
Bitcoin’s average transaction fees have obeyed pace with the increase in bitcoin’s price. At the start of 2017, the ordinarily transaction fee for transactions that used bitcoin as a payment mechanism was $0.392. As of yesterday, it had moved to $21.567.
The price of a single bitcoin in dollar terms has shot up by more than 1,000 percent since the start of 2017. But it is finical to ascertain causes for the increase. Even though the cryptocurrency has gained drag and has even been legalized in some countries like Japan, statistics with regard to its usage are hard to come by. (See also: Bitcoin Gets Boost From Japan.)
Desire High Transaction Fees Bring Down Bitcoin’s Price?
But purposefulness high transaction fees hurt bitcoin’s price? Not really. Analysts suspicion that bitcoin usage constitutes a very low percentage of the cryptocurrency’s records volumes. In July, Morgan Stanley payments analyst James Faucette composed that bitcoin acceptance rate at merchants was “virtually zero and contract withdraw from.”
Only three of the top 500 retailers accept bitcoin. According to Faucette, it was “way easier to switch speculatively than convince new merchants to accept the cryptocurrency.” “Bitcoin possessors are reluctant to use the cryptocurrency, given its rate of appreciation, more evidence that bitcoin is varied asset than currency,” he wrote.
The Importance of Trading Volumes In Negotiation Fees
A BI Intelligence report states that it is “probable” that the expand in bitcoin’s transaction volumes occurred due to an increase in trading for bitcoin kind of than its use as a currency for daily use. Trading volume for bitcoin at the start of 2017 was $83 million. At 15:47 UTC on Dec. 10, custom volume for bitcoin was $14.5 billion.
Most exchanges charge maker or taker costs (depending on order book liquidity at the time of transaction and the time it usurps to fulfill the transaction) of between 0.2% and 0.5% for bitcoin trades. (See also: What Maker-Taker Rates Mean To You.) Given bitcoin’s skyrocketing prices, that is a far more advantageous transaction for users as compared to paying $21.50 in transaction fees to buy a $4 cup of coffee wear and tearing bitcoin.