DecryptedTech

Wednesday06 July 2022

High Fraudulent Transaction Rates Combined with Volatility Led to Steam Dropping Crypto as a Payment Form in 2017


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As the Steam Deck is starting to get to people that have ordered them questions about Steam’s place in Web3 and recent moves around NFTs come up in conversation. Steam, Valve’s distribution arm has been seen as a one of the more cutting-edge services, with founder Gabe Newell once having a following like Elon Musk (at least in the gaming world). However, despite this perception they have never really been completely onboard with Crypto and the trappings of Web3.

Although the platform did accept Bitcoin for about 20 months, it removed the currency in December of 2017 citing volatility of the currency as the reason. BTC and other crypto currencies can see massive fluctuations in value even in the span of a few hours. Because of this people either ended up under or overpaying for goods and services. This was not just an issue with gaming and digital delivery, it also popped up with other vendors including Dell who cited similar issues.

Now, after a recent interview, we find out that it was not just the volatility of the currency. It was also a massive fraud rate. According to Newell, they saw a 50% fraudulent transaction rate. With as much as half of the monies coming in being from bad actors it can put you off a form of payment. As Newell put it in an interview with PCGamer:
“We had problems when we started accepting cryptocurrencies as a payment option. 50% of those transactions were fraudulent, which is a mind-boggling number. These were customers we didn’t want to have.”

This level of fraud and malicious activity is also why the platform recently banned games with crypto currency and NFT integrations. As we have talked about before the high number of rug pull schemes, malware embedded in smart contracts, and other activity around NFTs, these items still have a lot of hype. Other game distribution services have not been as restrictive of NFTs and crypto as Steam. On the other hand, companies like Meta seem all onboard with the technology and pretty much all aspects of it as they push for a more virtual world experience.

Blockchain, the concepts around it, and the technologies involved are interesting and have merit. The problem is that the biggest hype also comes from the people with the most money in it and no one can seem to explain why these technologies and systems are any better than what exists now. They are certainly no more secure than current systems and, when you break it down, might actually be more susceptible to fraud and malicious activity.

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