[HN Gopher] '50% of transactions were fraudulent' when Steam acc...
       ___________________________________________________________________
        
       '50% of transactions were fraudulent' when Steam accepted Bitcoin
       for payments
        
       Author : mrkramer
       Score  : 368 points
       Date   : 2022-02-26 15:23 UTC (7 hours ago)
        
 (HTM) web link (www.pcgamer.com)
 (TXT) w3m dump (www.pcgamer.com)
        
       | doomroot wrote:
       | Context on what I believe they mean by "fraudulent".
       | 
       | Steam back in the day used to accept 0 confirmation bitcoin
       | spends. This means that the transaction has been gossiped on the
       | bitcoin p2p network but had not yet been mined into a block and
       | thus had minimal finality guarantees. Steam could see that they
       | were going to receive a bitcoin payment (when the transaction was
       | mined into a block) and would credit the users account instantly
       | for a better purchase UX.
       | 
       | Turns out anyone with some deeper understanding of bitcoin could
       | construct another transaction spending the same bitcoin back to
       | themselves before their original transaction was ever put in a
       | block. The bitcoin community moved away from accepting '0 conf'
       | transactions pretty much everywhere because of this reason.
       | 
       | In fact the high fee era (2016-2018) saw many wallets
       | incorporating this "double spend" feature into their wallets.
       | This is known as RBF, "replace by fee" and is really useful when
       | you need to bump your transaction up the queue. You replace your
       | old transaction, that is waiting to be mined, with a new one that
       | offers a higher fee to incentivize miners to add it to a new
       | block.
       | 
       | I think its rather unfortunate that 0 conf transactions were
       | written off so quickly. There are many context where a 0conf tx
       | makes sense, mostly IRL. But, if you are running a business
       | online and you don't trust you customers you should wait 3-6
       | blocks after the transaction has been mined before delivering
       | your goods.
        
         | kadoban wrote:
         | Depending on what it is, 3-6 is a _lot_. For something like a
         | Steam game, it seems like waiting for 1 should be more than
         | enough.
         | 
         | I say "more than enough" because can't they just revoke the key
         | of whatever was purchased if it gets double-spent? Seems easy
         | enough.
        
           | doomroot wrote:
           | > it seems like waiting for 1 should be more than enough.
           | 
           | Not in bitcoin land, orphaned blocks happen a few times a
           | day: https://bitcoin.stackexchange.com/questions/2170/how-
           | often-f...
           | 
           | If you're willing to tolerate this risk then by all means go
           | for it.
           | 
           | (I'm with you I think steam should be able to tolerate this
           | risk.)
        
             | bavell wrote:
             | FYI the answer in that link is from 2013, not sure how much
             | it's changed since then but I doubt it's the same today.
        
         | LanceH wrote:
         | You say wait 3-6 blocks -- which makes sense for large
         | transactions, but are there cases where 1 blocks have been
         | getting reversed? Is this happening now because some parts of
         | the network are on stale or diverging info?
        
           | doomroot wrote:
           | These are called "orphan blocks" and they happen very
           | regularly, like everyday.
           | 
           | https://bitcoin.stackexchange.com/questions/2170/how-
           | often-f...
        
         | marcus_cemes wrote:
         | > There are many context where a 0conf tx makes sense, mostly
         | IRL.
         | 
         | I'm curious, like what? To me this is more like "someone wrote
         | a cheque but there's no guarantee that they'll give it to you".
        
           | doomroot wrote:
           | Anything where the buyer doesn't leave 15-30 mins after
           | making the payment or the purchaser is id'd.
        
             | anonporridge wrote:
             | This is why it's always been absurd to believe that
             | standard retail purchases would be regularly done with
             | layer 1 base chain transactions. You can't even say that
             | you're ok with waiting for 1 block confirmation, because
             | the time between each block is only an average of 10
             | minutes, with high variance. It's fairly common to
             | experience over an hour between blocks, or as little as a
             | minute.
             | 
             | The security and confirmation of a transaction is not a
             | function of number of blocks, but time since inclusion in a
             | block and total amount of work (hashes) piled on top of
             | your transaction. Generally, 6 blocks (1 hour on average)
             | is considered sufficient certainty of immutability for
             | normal functioning of the blockchain (i.e. not under active
             | attack). One hour for final, and completely irreversible,
             | settlement is absurdly fast in the context of the
             | traditional financial system, which takes days at least for
             | final settlement, and can be much longer for some
             | international transfers.
             | 
             | Small, individual scale purchases only really make sense to
             | do on higher layer transaction protocols, like lightning
             | network (non-custodial and open) or some custodial networks
             | (like a bitcoin backed Visa credit card).
             | 
             | The only model that makes sense for bitcoin is the layer
             | one base chain is a settlement network, with payment
             | networks build on top that aggregate many transactions into
             | one on chain transaction. Think OSI model for networking.
        
               | TedDoesntTalk wrote:
               | > The only model that makes sense for bitcoin is the
               | layer one base chain is a settlement network, with
               | payment networks build on top that aggregate many
               | transactions into one on chain transaction. Think OSI
               | model for networking.
               | 
               | Do you think this applies to cyrptocurrencies that has
               | faster confirmations/block generation? Or is only
               | important when there is a lengthy confirmation?
        
               | anonporridge wrote:
               | The only thing that really matters is how much work has
               | been built up on top of the transaction. Shorter block
               | times doesn't change that function at all. In a version
               | of bitcoin with 1 minute block times, the security
               | guarantee of 60 blocks is identical to the current
               | security guarantee of 6 blocks, because it would be
               | exactly the same amount of energy going into mining to
               | create immutability.
               | 
               | The amount of work (hashes) represents a real world cost
               | (electricity and mining chips) that can't be undone
               | without massive commitment of these real world resources.
               | 
               | This is the foundation of why bitcoin works.
               | 
               | So basically, people who say their blockchain with
               | shorter block times is "faster" are either fools who
               | don't understand what's going on or conmen trying to pump
               | and dump their bags. Layer one transaction confirmation
               | is about settlement finality, not how fast you can pay
               | for coffee.
        
               | bavell wrote:
               | Great answer. This is related in my mind to the framing
               | of crypto "pointlessly wasting" electricity - it's
               | actually a fundamental part of securing the network by
               | making it prohibitively expensive to reverse or modify
               | mined blocks. I'm open to alternatives to PoW but so far
               | it's been the most successful tool to solve this problem.
        
               | anonporridge wrote:
               | Proof of work is an alternative to military spending.
               | 
               | Proof of stake doesn't solve this problem, as the top
               | stakers end up needing to control (or get coopted by) the
               | monopolies on violence. The traditional banking system is
               | effectively an obscured proof of stake system.
               | 
               | Proof of work also has the nice feature that every watt
               | of energy used to acquire and secure bitcoin is a watt
               | that can't be used for violence.
               | 
               | You might like the work of Jason Lowry, a US Space Force
               | Major who's currently studying bitcoin conceptualized as
               | a new kind of military technology,
               | https://twitter.com/JasonPLowery
        
               | 3np wrote:
               | > Proof of stake doesn't solve this problem, as the top
               | stakers end up needing to control (or get coopted by) the
               | monopolies on violence
               | 
               | How so? Assuming (pseudo-)anonymity for stakers is
               | possible.
        
               | anonporridge wrote:
               | Long lasting anonymity of stakers is impossible.
               | Eventually, everyone will be tracked down. There's too
               | much power at stake to remain hidden from establishment
               | power forever.
               | 
               | And anonymity of stakers who have unassailable control of
               | the network consensus is exactly the problem. If you
               | don't know who the king is or where he lives, then the
               | peasants have zero ability to countervail his control
               | authority when he starts abusing his power. No sovereign
               | nation or person will sign up for a system like that
               | without being violently coerced, like the US does to keep
               | the rest of the world on the petrodollar standard.
        
               | schoen wrote:
               | I think the faster block times help with conceivably
               | making it possible to use 1 confirmation instead of 0
               | confirmations for in-person transactions, as opposed to
               | than 60 instead of 6. That tilts the odds of winning in a
               | double-spend fraud attempt in favor of the merchant quite
               | a bit, compared to 0 confirmations, although I don't know
               | how to model by how much.
               | 
               | (You could empirically estimate by how much by looking at
               | abandoned chain history in a real network, though.)
        
               | AniseAbyss wrote:
               | Instantaneous payments exist, I use them several times a
               | day, with traditional banking. I never quite understood
               | what problem bitcoin was supposed to solve beyond
               | anonymity.
        
               | anonporridge wrote:
               | These are instant payments, not instant settlement.
               | 
               | Your bank abstracts the underlying inter bank settlement
               | complexity and aggregates all the minor transactions and
               | transfers that individuals do to a small number of larger
               | settlement transactions, likely on the SWIFT network.
               | 
               | When you make a payment, that transfer of money isn't
               | instantly settled. The instantaneous feeling is a service
               | that the bank provides you, but it's an illusion. There
               | are similar experiences being built now on top of
               | bitcoin, like http://strike.me, although the lightning
               | network that Strike and CashApp are building upon
               | actually is instant finality, unlike Visa/Paypal.
               | 
               | This is why comparing bitcoin to Visa or PayPal is
               | fundamentally flawed, since those are both layer 2/3
               | networks on top of SWIFT.
               | 
               | The proper comparison is with other settlement networks
               | that create finality, like SWIFT. Where SWIFT may take
               | days to create final settlement of a transfer, bitcoin
               | takes ~1 hour depending on how much confidence you want.
               | Where SWIFT is secured by nation state monopolies on
               | violence and global banking gatekeeping, bitcoin is
               | secured by the most powerful computer network on the
               | planet that no single nation state has the power to
               | disrupt. Bitcoin is open and permissionless and anyone
               | and everyone can join. SWIFT is tightly permissioned
               | because it relies heavily on exclusive networks of humans
               | who trust each other.
        
               | pgwhalen wrote:
               | At a high level this comment is correct, but SWIFT is not
               | a settlement network. A message on the network does not
               | actually represent the movement of money between
               | accounts.
        
               | smolder wrote:
               | Bitcoin only gives you a pseudonym wallet ID. I'd say
               | it's less anonymous than cash, since everyone has the
               | ledger.
        
           | [deleted]
        
           | qvrjuec wrote:
           | I think more like "someone wrote a check and there's no
           | guarantee it won't bounce". So really, it's quite analogous
           | to how 0conf works in practice.
        
             | tomc1985 wrote:
             | There are laws in place that specifically handle writing
             | bad checks. While I'm sure double-spending Bitcoin
             | transactiosn is illegal _in some way_ , it is probably
             | covered under a more nebulous fraud-type statute.
             | 
             | I'd be curious to see the percentage likelihood on both, as
             | well, as I suspect they are very different. Would
             | businesses accept checks if half of them were bad?
        
               | HWR_14 wrote:
               | The general fraud crimes you would get convicted of have
               | a pretty nasty set of penalties. But good luck convincing
               | a federal prosecutor to care about $20 worth of online
               | goods that can be revoked.
        
           | alickz wrote:
           | I only have a layman understanding of bitcoin, and I've never
           | used a cheque in my life, but would it not be more like
           | "someone wrote you a cheque and there's no guarantee it won't
           | bounce when you try to cash it in"?
           | 
           | Which, again maybe showing my complete lack of knowledge of
           | cheques, is how I thought they worked in the first place.
        
             | onion2k wrote:
             | Here in the UK we had "cheque guarantee cards" -
             | essentially a debit card without a live connection to the
             | bank. When you wrote the cheque the shop took your card
             | details as well and that meant the bank guaranteed to cover
             | the value of the cheque if it bounced (up to a maximum
             | amount). If your cheque bounced your account went into an
             | overdraft for that amount plus a hefty fee. It meant shops
             | didn't need to worry about bounced cheques which customers
             | could pay using them. It worked pretty well.
        
             | anonporridge wrote:
             | Watch "Catch me if you can" for some fun history on bank
             | cheque fraud.
        
             | egberts1 wrote:
             | Personal check is a quasi-promissory note binded whose
             | legal-teeth for recovery through law enforcement. "0-conf
             | bitcoin" has no legal teeth for recovery ... yet so there
             | is no enforcement (except for the merchant to chase after
             | the scofflaw). "Money is forthcoming".
             | 
             | Bank cheque is a bank-guarantee binded by banker self-
             | verification (almost always good) with no takeback
             | (voiding) mechanism. "block-chain confirmed" is always a
             | good transaction with no clawback mechanism so you must
             | wait until it's confirmed before receiving your
             | merchandise.
             | 
             | "Cash is king."
        
               | PretzelPirate wrote:
               | > has no legal teeth for recovery ... yet so there is no
               | enforcement
               | 
               | In this case, Steam was selling a digital good that they
               | could be fully revoke if the funds never arrived, so the
               | check ability works very well.
               | 
               | It would have been even better on a smart contract
               | platform where the game license would exist on the chain
               | itself and couldn't be purchased via a double spend,
               | Chain re-orgs would also sort themselves out in a fully
               | on-chain system.
        
         | ezoe wrote:
         | You don't even need to do anything on bitcoin side if you value
         | the 0 confirmation. You offer the goods or services before you
         | receive the payment. It's like a restaurant that serve the food
         | first and receive payment later. The restaurant do that because
         | they trust the customer to pay up.
        
           | elcomet wrote:
           | This doesn't work,people don't know the amount to pay before
           | they finish their meal.
        
             | hayd wrote:
             | You pay up front in most cafeterias for example.
             | 
             | More likely the reason this isn't done is to allow
             | customers to buy more (drinks/dessert, do so in a single
             | transaction, and tip post-service. Not because the amount
             | is unknown.
        
         | aasasd wrote:
         | > _and you don 't trust you customers_
         | 
         | Seeing as "remember the password" does about nothing in the
         | desktop app on my own machine near which only I ever come--
         | Steam's attitude toward the users is crystal clear, and I'd say
         | it's weird that they lived almost two years with that
         | arrangement.
        
           | sangnoir wrote:
           | Convenience and security are always in tension - and steam
           | account takeovers are very common, as they can have tradable
           | assets worth hundreds or thousand of dollars.
        
           | delusional wrote:
           | In the same era steam stored your password on disk if you
           | used "remember my password".
        
         | exitb wrote:
         | Shouldn't it make most sense in contexts exactly like Steam,
         | where the merchant can take the goods back in case of a
         | fraudulent transaction?
        
           | gambiting wrote:
           | It did, and they did. That's probably exactly why they
           | allowed it like that in the first place - if the transaction
           | is fraudulent then simply remove the user's entitlement, but
           | offer instant access for better experience.
        
             | agentofoblivion wrote:
             | "Fraud" and "simply" don't belong in the same sentence.
             | This is coming from someone who's spent years working with
             | many fraud departments in major companies. Wack-a-mole
             | doesn't work, they just scale their account creation.
        
               | gambiting wrote:
               | Well then please explain what is difficult here. You
               | initiate a purchase with bitcoin, valve instantly grants
               | you access, then few hours later valve checks if the
               | transaction has been confirmed in the blockchain or not.
               | If it hasn't, then the entitlement is removed. What's not
               | simple about it?
        
               | srcreigh wrote:
               | What about people who do this 10x a day to play free
               | games forever?
        
               | naniwaduni wrote:
               | How much worse is this than people who do this 0.5x a day
               | with 48-hour returns?
        
               | kadoban wrote:
               | What whack-a-mole? Just automate it so if it gets double-
               | spent, you revoke the key. If you really feel like it,
               | cancel the account if they keep doing it, but I'm not
               | sure you even need to bother. What have you lost? The
               | bandwidth to download the game?
        
         | sidewndr46 wrote:
         | > Steam back in the day used to accept 0 confirmation bitcoin
         | spends. This means that the transaction has been gossiped on
         | the bitcoin p2p network but had not yet been mined into a block
         | and thus had minimal finality guarantees.
         | 
         | Why? Why would anyone ever accept this?
        
           | philsquared_ wrote:
           | Because I am pretty sure it isn't true. I am one of the few
           | people who used bitcoin on steam during this time and I don't
           | remember it ever being instant. I would like to see
           | clarification to the top point because I don't think it is
           | true...
           | 
           | In my opinion when he says "fraudulent" he is probably
           | talking about how people would use it to avoid bans. Steam
           | would track banned users that remake accounts by checking
           | their CC. They would also verify the people by making sure
           | the address on the CC was close or the same to the address on
           | the account.
           | 
           | With Bitcoin you could avoid any tracking from remaking an
           | account which leads to more 'bad actors' using Bitcoin. For
           | reference you needed to spend something like $5 - $10 to
           | enable trading on the platform. From their people would
           | phish, scam, and break the TOS on the account.
        
             | doomroot wrote:
             | I used bitcoin all the time on steam and there was a time
             | when they were using 1 conf but the majority of the time
             | they used 0 conf with bitpay. Couldn't find anything
             | official with a quick goog but here is a reddit comment
             | from 5years ago corroborating 0 confs on steam: https://www
             | .reddit.com/r/Bitcoin/comments/6arpvq/comment/dhg...
        
               | philsquared_ wrote:
               | It is possible I am incorrect then. I remember it always
               | taking 5 - 10 minutes before any funds hit my account. I
               | never actually counted the confirmations so it is very
               | possible I am just wrong and they were doing 0 conf. At
               | the same time I am surprised BitPay would have been
               | structured this way and not experience a major attack...
        
           | CyberDildonics wrote:
           | Because they can revoke your game from your steam account if
           | the transaction doesn't get picked up.
        
         | donkarma wrote:
         | It was my understanding that RBF does not work by double
         | spending, but by making a transaction with a much higher fee
         | that depends on the parent transaction which means you would
         | need to mine both to get the higher fee.
        
       | xyst wrote:
       | I am more surprised that Gabe Newell is still the CEO of
       | valve/steam and it's privately owned
        
       | woah wrote:
       | Completely incoherent article. What does "fraudulent" even mean?
       | Fraudulent credit card transactions for gift cards are common,
       | because the gift card provides a way to cash out a stolen credit
       | card number. But if a criminal has access to someone else's
       | Bitcoin, it's already "cashed out".
        
         | jayd16 wrote:
         | It's not cash so it's not cashed out. Simple as that.
        
         | deutschewelle wrote:
         | I feel like your comment is unjustified and incoherent. It is
         | obvious to many of us what "fraudulent" mean here, it could be
         | an array of:
         | 
         | - previously flagged wallets moving through mixers
         | 
         | - purchases and refunds to facilitate money laundering
         | 
         | - converting to and from steam wallet to crypto etc.
         | 
         | It is NOT at all ambiguous which is what you are insinuating as
         | the basis for not reading past the headline and discouraging
         | others from doing so.
         | 
         | Bitcoin is a public ledger where all transactions are
         | PERMANENTLY recorded. The law enforcement agencies have much
         | better deobfuscation tools than 10 years ago and the tools will
         | just continue to improve as they have INFINITE resources.
         | 
         | > But if a criminal has access to someone else's Bitcoin, it's
         | already "cashed out".
         | 
         | You are describing one type of crime that has existed far long
         | before crypto as basis to discredit Gabe's claims and its an
         | unconvincing argument/poorly baked logic that they tell in
         | maximalist echo chambers.
         | 
         | Rather I ask, what is it that you fear so much whenever
         | criticisms are raised? Did you transfer your savings to
         | purchase jpegs and other insane APY that seasoned hedge fund
         | managers can't produce?
        
           | gruez wrote:
           | >It is obvious to many of us what "fraudulent" mean here, it
           | could be an array of:
           | 
           | >- previously flagged wallets moving through mixers
           | 
           | So if someone robbed a bank, used that money to buy drugs,
           | that money ended up in my hands somehow (eg. I bought from
           | the same drug dealer), and I used that to buy a big mac, my
           | big mac purchase is "fraudulent" as well?
           | 
           | >- purchases and refunds to facilitate money laundering
           | 
           | How does that even work? You can only refund to the same
           | person. It's not like you can buy a game, gift it to someone,
           | and have that person "refund" the game to cash out
           | 
           | >- converting to and from steam wallet to crypto etc.
           | 
           | There isn't an official way to convert steam wallet to crypto
           | 
           | >It is NOT at all ambiguous which is what you are insinuating
           | as the basis for not reading past the headline and
           | discouraging others from doing so.
           | 
           | 1. You say it's "NOT at all ambiguous" but you yourself
           | listed 3 very different possible reasons. That sounds pretty
           | ambiguous to me.
           | 
           | 2. I skimmed the article and there isn't really much in the
           | body either.
        
             | deutschewelle wrote:
             | The crux of your argument appears to be that Gabe is lying
             | and not to be trusted :D
        
               | gruez wrote:
               | >that Gabe is lying
               | 
               | Quit putting words in my mouth. I made no such claim.
               | 
               | >and not to be trusted :D
               | 
               | Yes, if by "not to be trusted" you mean "not to be taken
               | at face value".
        
       | ike0790 wrote:
       | bitcoin should be seen in the mainstream as a universal payment
       | network. I believe its best use case for the average(non-
       | cypherpunk libertarian) person/company is to accept it by using a
       | service that automatic exchanges it for dollars on their end.
       | 
       | For example, someone in africa could pay .001 BTC($40 currently)
       | for a game and all steam would see on their end is a debit
       | transaction for $40(cash not bitcoin) in their account. It allows
       | for bitcoin to be held by those who don't mind the volatile
       | nature of its market value, AND allows for those wanting to
       | accept without holding it in the short term. Win Win for both
       | parties :)
        
         | jayd16 wrote:
         | You're forgetting the tax implications here. Steam is still on
         | the hook for sales(and other) taxes. The problem was never just
         | picking an exchange currency. It was the legal hurdles that
         | made this complicated. Those hurdles are still there. They
         | apply to everyone but especially in Valve's case as they are
         | not under the radar.
        
         | PragmaticPulp wrote:
         | > For example, someone in africa could pay .001 BTC($40
         | currently) for a game and all steam would see on their end is a
         | debit transaction for $40(cash not bitcoin) in their account.
         | 
         | Transaction fees and exchange fees will diminish that received
         | value and force the customer to pay a fee to pay for something.
         | 
         | The net cost of Bitcoin transaction fees and exchange fees is
         | higher than just using a random, common credit card processing
         | company. It's also slower for users.
         | 
         | Let's be real: Gamers don't really want to pay extra
         | transaction fees for the privilege of sending Bitcoin and
         | waiting as much as an hour or more for the transaction (my
         | latest Bitcoin payment took longer than an hour) before they
         | can play their game. Not when they can type in a credit number
         | and get it done right away for 0 fees (or negative fees with
         | reward cards)
        
       | hogrider wrote:
        
       | space_rock wrote:
       | This article is incoherent. Say what you like about Bitcoin but
       | fraudulent payments are not possible. And yes Gabe is right that
       | people in crypto are criminals running scam projects
        
         | AlexandrB wrote:
         | Fraudulent payments are very much possible in the "buying stuff
         | with a stolen credit card" kind of way. This is a much more
         | common type of fraud than the "double spend" attacks Bitcoin
         | protects against.
         | 
         | Bitcoin is only resilient to fraud only if you define fraud as
         | "violating the rules of the blockchain". Any definition of
         | fraud that involves meatspace is possible.
        
           | allisdust wrote:
           | Stolen credit cards are a problem for the merchant because
           | the charges could be reversed by the bank and merchant will
           | incur the loss.
           | 
           | I don't see how that is even remotely possible with Crypto.
           | How did Steam lose money ? My guess is they might be
           | accepting it through some payment provider (so not a true
           | crypto) who has in their T&C to be able to reverse
           | transactions (which must be happening in Cash on the Steam
           | facing side).
        
             | erk__ wrote:
             | Yes they were using the BitPay provider when they were
             | accepting Bitcoin, I assume they were made aware of that it
             | was possible to track the transactions back to fraudulent
             | credit card transactions, which I guess in some way could
             | still make them liable for it.
        
               | rosndo wrote:
               | This is absolutely not what happened. Why come up with
               | such crazy theories when this just comes down to double
               | spends of unconfirmed transactions?
        
               | anonymousab wrote:
               | > Another thing was that the vast majority of those
               | transactions, for whatever reason, were fraudulent, where
               | people were repudiating transactions or using illegal
               | sources of funds and things like that.
               | 
               | Seems like it was multiple things and "fraud" is just a
               | catch-all term and Gabe didn't bother to list everything
               | that they considered to be fraud.
        
             | Duralias wrote:
             | It might not necessarily be that they lost money, it is
             | possible it happened through the way you are suggesting,
             | but opening up for crypto does mean Steam becomes a money
             | laundering platform.
             | 
             | Criminal creates a shit game and then uses the crypto to
             | buy that game (with alt accounts) and since *very* few
             | developers would be happy with getting paid in crypto,
             | Valve has to convert it into fiat(?) currency.
        
               | allisdust wrote:
               | That could be a problem but then that would be money
               | laundering not fraud (and Steam won't be on hook for it -
               | just like Amazon isn't for its gift cards).
        
               | DangitBobby wrote:
               | The purchases are fraudulent. A single party buys the
               | game from themselves many times, desiring to look like a
               | diverse crowd making legitimate purchases.
        
             | anonymousab wrote:
             | > Stolen credit cards are a problem for the merchant
             | because
             | 
             | Because they don't want to process illegal transactions
             | with illegally acquired money, because they don't want to
             | abide or facilitate criminal conduct, wherever possible.
             | Life and business is not merely nor always about the
             | potential to lose money through legal ramifications.
        
       | IgorPartola wrote:
       | At this point is BTC a good idea? Does it actually provide any
       | damn value at all at a macro level?
        
         | ipaddr wrote:
         | It provided a great way to buy weed before it was legalized and
         | transaction fees skyrocketed.
         | 
         | Bitcoin at $5,000 a coin was extremely useful for transactions.
         | Bitcoin at $50,000 make it less useful because of scaling
         | issues.
        
           | doomroot wrote:
           | Have you tried lightning network its extremely fast and cheap
           | and pretty reliable these days. Many great mobile wallets
           | support it now, Blue wallet, Muun, Phoenix. Hell even Cash
           | App supports outgoing lightning payments now. Scan a QR code
           | few seconds later done, final, irreversible.
        
             | ipaddr wrote:
             | I haven't I'm use to having an account on an exchange and
             | moving money directly to the account.
             | 
             | Is there a way I could use the lightening network directly
             | if my exchange doesn't use it behind the scene?
        
               | beardog wrote:
               | You're not supposed to be using an exchange for payments,
               | you are meant to have a wallet, ideally a non-custodial
               | one.
        
           | mccorrinall wrote:
           | You currently pay about 10 pennies for a transaction which is
           | included in the next block.
           | 
           | Using Lightning is even cheaper.
        
             | CJefferson wrote:
             | Really, googling around, average transaction fee looks
             | about $1.70? Which is much more than I pay through any
             | other service.
        
         | doomroot wrote:
         | It's a permission-less payment network, can you not think of a
         | single thing that would be useful for?
        
           | rabuse wrote:
           | Xi angrily joins the chat.
        
         | reaperducer wrote:
         | _Does it actually provide any damn value at all at a macro
         | level?_
         | 
         | It provides macro value to coinbros and wantrapreneurs who
         | think that bragging on social media about fake money is the
         | same thing as owning real money. I guess that's something.
        
         | EVa5I7bHFq9mnYK wrote:
         | Well, my friend in Russia just yesterday donated $10,000 in
         | Bitcoin to Ukrainian defense fund. Had he done that using
         | paypal, he'd already be in Gulag being raped with a broken
         | bottle.
         | 
         | Now he wants to leave Russia, but Russia is being banned from
         | the SWIFT network, so he can't get any of his savings out.
         | Enter Bitcoin again.
        
         | Finnucane wrote:
         | No.
        
         | abi wrote:
         | Say you're a Ukrainian fleeing refuge and you want store your
         | life's savings somewhere safe. Pretty damn useful there. If you
         | don't want to deal with the price fluctuations of BTC or ETH,
         | buy stablecoins instead.
        
           | pfooti wrote:
           | there's also banks.
        
             | rosndo wrote:
             | My Ukrainian bank card still works, but yesterday when I
             | had to send a friend 40k UAH I had to split it into 8
             | transfers.
        
               | loyl wrote:
        
             | nmilo wrote:
             | But which bank are you trusting in a time of war? We've
             | seen countries have the power to subvert savings accounts,
             | e.g. Greece limited bank withdrawls to PS5000/month. Do you
             | trust these banks more than a distributed ledger? This is a
             | question that needs real thought and evaluation, and crypto
             | _might_ be a useful option. Diversification is important.
        
             | esosac wrote:
             | i don't know about ukraine, but i live in venezuela and i
             | can't do an international wire transfer here. so some
             | people can't rely on banks, but i probably can rely on
             | someone around here wanting to take my cash or car or house
             | and give me bitcoin if i needed to go away. i use
             | localbitcoins a lot of buy local currency in exchange for
             | bitcoin... and i'm not a "crypto person", but it happened
             | to be super useful for me here in that way
        
           | IgorPartola wrote:
           | Right so other crypto is just as good if not better for this?
        
             | rosndo wrote:
             | Yes.
        
           | PragmaticPulp wrote:
           | > Say you're a Ukrainian fleeing refuge and you want store
           | your life's savings somewhere safe.
           | 
           | Doesn't make sense. Why would anyone wire your bank account
           | money to a crypto exchange, convert it to crypto, transfer
           | the crypto to a different bank in another country, then
           | withdraw it when they could just wire the money directly to
           | the other country's bank?
           | 
           | If you can't wire money out of your bank account to somewhere
           | else, you probably can't exchange it for crypto either.
        
         | newaccount74 wrote:
         | The only real use case that people keep mentioning is
         | transferring large-ish amounts of money (>1000 USD)
         | internationally.
        
           | thallium205 wrote:
           | Which is not hard if you have a bank account that is in any
           | tier above poor person consumer level.
        
             | rabuse wrote:
             | Unless you're Russian now
        
       | janandonly wrote:
       | Unfortunately no details were given about what makes 50% of all
       | bitcoin transactions "fraudulent" ?
       | 
       | What does that even mean?
       | 
       | * did someone try to send something other then bitcoin to a [?]
       | address?
       | 
       | * did a client claim he payed and did the payment seem to fail on
       | his end?
       | 
       | * did a client not realise that you as payee also pay for the
       | network fee?
       | 
       | Nowadays these kind of problems would be easily prevented by
       | using bitcoin lightning payments, because they work in a fraction
       | of a second and specify the exact amount that has to be payed.
       | Also they are almost free of transaction costs.
        
         | jpollock wrote:
         | There is substantial exchange rate risk.
         | 
         | If Valve didn't want to see any forex risk on the sale, they
         | end up incurring it on refund. If people are using it as an
         | easy way to store money in USD and then convert back to BTC
         | when the rate goes up, that can get expensive in a hurry.
         | 
         | It could also be that they used Coinbase or some other provider
         | to act as a processor, and Coinbase charged the merchant if
         | there were chargebacks on Coinbase's accounts.
        
           | sebzim4500 wrote:
           | >If people are using it as an easy way to store money in USD
           | and then convert back to BTC when the rate goes up, that can
           | get expensive in a hurry.
           | 
           | Why would anyone do this? In what universe is buying games
           | and then requesting refunds easier than clicking buy/sell on
           | coinbase/kraken/etc.
        
             | j-bos wrote:
             | Reminds me of the old gamestop greentext
        
             | bastawhiz wrote:
             | Did steam charge a transaction fee for refunds? If not,
             | there's your answer.
        
               | isodev wrote:
               | By law refunds are free within the first 14 days of a
               | purchase in the EU. That's plenty of opportunity to
               | "speculate" with coin prices.
        
           | HWR_14 wrote:
           | Iirc, Steam refunded money in your local fiat, and used a
           | third party processor. There was a small forex risk on the
           | sale (when the btc transfer started vs when it was sold), but
           | that should even put in the long term and they're selling now
           | bits so they have the ability to absorb the cost.
        
         | paulgb wrote:
         | I remember a period somewhere in the 2010s where it wasn't
         | uncommon to see a business experiment with accepting Bitcoin
         | (as Steam did), before transaction fees made it impractical.
         | 
         | Given the way people talk about LN, and the (quite
         | understandable!) desire to avoid credit card transaction fees,
         | why don't we see more businesses accepting it?
         | 
         | (Asking this in good faith; I am admittedly ignorant about LN
         | and have not tried making a transaction with it.)
        
           | 3np wrote:
           | I think it's just a matter of businesses perceiving the
           | potential revenue increase not worth the overhead, combined
           | with the resulting slow growth and development of ecosystem
           | of service providers.
           | 
           | Running an independent node does take some management above
           | that of a normal bitcoin node and merchant tooling and open
           | source integrations are still coming together (though there
           | are some good and dependable options). A merchant will need
           | to keep an eye on their incoming liquidity, or use a service
           | provider that does.
           | 
           | That being said, once you're actually using it it's a great
           | experience, and for the individual enthusiast running a node
           | can be great fun.
           | 
           | One service provider is Bitrefill, where you can buy Steam
           | credits (and much else) over Lightning with a throwaway email
           | faster than it takes for me to dig and type out a credit card
           | out of my wallet or go through the SMS2FA BS of whatever
           | virtual credit card-supporting bank I can find in the country
           | I happen to be living in. Just copy and paste an invoice or
           | scan a QR, depending on your wallet interface.
           | 
           | I do hope we see Lightning support in Coinbase Commerce et al
           | soon. Unfortunately BitPay, one of the oldest and I think the
           | most widely used payment service provider for Bitcoin, has
           | become pretty much unusable as of lately and even if they did
           | add lightning support it wouldn't be interesting.
        
           | londons_explore wrote:
           | There are just too few users on the LN. Of the whole world
           | population, there is probably fewer than 1 in a million who
           | could just scan a qr code and make a lightning payment.
        
           | dale_glass wrote:
           | I'm not the best person to answer, but lacking better ones,
           | here's what I know:
           | 
           | * LN is technically complex, and hard for a normal person to
           | run.
           | 
           | * LN requires making an on-chain transaction to open a
           | channel. It's still vulnerable to high BTC fees and limited
           | by the chain's low capacity.
           | 
           | * LN still runs on top of BTC, and has all the economic
           | characteristics BTC has. So if it's stupid to buy pizza for
           | $10K BTC because it appreciates, or stupid to sell a game for
           | 0.0012 BTC because the price might fall tomorrow, then LN
           | changes nothing about that and in some cases makes it worse.
           | LN allows a non-cooperative party to delay things, which
           | could be used maliciously during price swings.
           | 
           | * It's all still happening inside the crypto ecosystem, which
           | is unpleasant to deal with. Think of say how people tried to
           | buy their Tesla in BTC, then asked for their money back when
           | the price rose. Why would a merchant want to deal with that
           | kind of thing?
           | 
           | LN to me is a bit like putting lipstick on a pig -- it still
           | leaves many significant problems in place, and adds some new
           | ones on top in exchange for the benefits it provides.
        
           | onelastjob wrote:
           | LN is too complicated imo. You can just use other chains if
           | you want fast and cheap txs. Solana, Nano, Near, any of
           | those.
        
           | lawn wrote:
           | Simply because LN isn't practical:
           | 
           | - You still need to open (and close) a channel, paying BTC
           | fees.
           | 
           | - To accept a payment, you need to first lock up balance.
           | 
           | - You need to always be online, otherwise your channel is
           | closed.
           | 
           | - Sometimes your payment can fail, if you cannot find a
           | route. This risk increases with the payment amount.
           | 
           | - Sometimes, you cannot even find a payment route, so you
           | need to open another channel.
           | 
           | - Sometimes, the other person on the other side of your
           | channel might close your channel.
           | 
           | - Despite all this, payments might still have a relatively
           | expensive fee (in addition to the BTC fees).
           | 
           | People are trying to create solutions for these problems, but
           | they're often either quite complex, introduce third-party
           | dependency or both.
        
           | TrapLord_Rhodo wrote:
           | yeah, a couple of companies in the space are experimenting
           | with the concept of an omni-pool.
           | 
           | Essentially, since arbitrage bots are a constant you don't
           | need an outside oracle to ensure there's very little slippage
           | between assets. Addititionnally, since you are swapping
           | inside the pool it does not incur a trade fee as you aren't
           | trading some outside entity with a confirmation time.
           | 
           | Obviously it gets deep in math, but what you get it the
           | ability to pay for anything with anything with no trading
           | fees and a % APR for keeping your assets in the omni pool.
           | 
           | Solona and dot already beat visa in transaction speed,
           | latency and confirmation time. DOT at technology maturity is
           | looking to be able to process around 10X the transaction
           | volumes of visa.
        
             | thallium205 wrote:
             | Oh cool so a centralized payment system except stupid
             | complicated. Sounds like another winning crypto invention
             | to me.
        
               | sebzim4500 wrote:
               | Not sure about the others but Solana is not centralized.
        
               | rglullis wrote:
               | How much does it cost to run a node?
               | 
               | Strictu sensu, it is "decentralized". In practice, it has
               | all the disadvantages of blockchains and none of the
               | advantages of the traditional banking networks.
        
               | TrapLord_Rhodo wrote:
               | it's profitable.
        
               | rglullis wrote:
               | Owning a bank also is. Your point?
        
               | TrapLord_Rhodo wrote:
               | I can't open a bank, but i can run a node.
        
               | TrapLord_Rhodo wrote:
               | Low Trade Fees, cross-colatorilization, instantanious and
               | algorithmic liquidation.
               | 
               | imagine i wanted to buy Tesla. I have no money but i do
               | have GM Stock. This allows mee to trade GM directly for
               | Tesla stock with no actual trade fee, because the trade
               | never occurs until i pull all my money out out of the
               | pool.
               | 
               | So i am exposed to the asset without having to do the
               | centralized exchange way of selling the asset (Incurring
               | trade fee) buying usd. selling USD for the next asset
               | (Incurring a trade fee) then eventually selling it back
               | to USD when i want to utilize that asset.(Incurring a
               | trade fee).
               | 
               | So, like i explained before it is a much more efficient
               | mechanism of trading any asset. Since trading is
               | literally the bedrock of civilization and effective
               | capital allocation through trading is what drives
               | prosperity, creating a more efficient trading algorithmn
               | in crypto is one of the finest achievement of our
               | generation even though most haven't undeerstood it's
               | significance yet.
               | 
               | The soverign individual was a good book for me to
               | recognize the need for crypto in the world.
        
               | [deleted]
        
         | skybrian wrote:
         | Could people create fake game items and use Bitcoin to pay
         | themselves as a way of converting it to cash? Is that a thing?
         | 
         | So the game item and the transaction are fake, as in they're
         | not actually there to play games.
        
           | trillic wrote:
           | Yes, this is colloquially known as "money laundering". It's
           | one of Bitcoin's most promising use-cases!
        
             | skybrian wrote:
             | I know, I'm asking how feasible it is with Steam.
        
               | bena wrote:
               | The game and item are real. Hell, they may be legit
               | games. The transactions are real. Everything is real.
               | 
               | But the source of the money used to buy the games is
               | illegitimate.
               | 
               | Let's say, I stole $100,000. Now, I can't use this money
               | until I find a way to explain how I have it.
               | 
               | If I wanted to wash it with Steam, I could go to the
               | store, buy Steam cards or gift cards with the cash. Set
               | up several Steam accounts, then use those cards to buy my
               | game.
               | 
               | Now I'll lose some money to taxes, Steam's cut, and
               | paying people to buy cards and games, but now I have
               | $50,000 dollars I can use and no one is going to question
               | where I got it.
               | 
               | You may be wondering why I can use the money to buy gift
               | cards but not just deposit it in my bank, but no one is
               | asking why someone has $100. That money is not traceable
               | to anyone.
        
           | Duralias wrote:
           | It isn't as widespread as it probably would be with crypto
           | (start selling shit game, buy game with crypto, get fiat),
           | but Steam already has problems with people doing this, it is
           | usually just more creative as it is hard to buy stuff with
           | stolen credit cards, but we know from a ton of news that it
           | is very common on grey market selling sites.
        
         | bena wrote:
         | > Unfortunately no details were given about what makes 50% of
         | all bitcoin transactions "fraudulent" ?
         | 
         | And? They don't report to you. So they don't have to explain
         | anything to you. They don't have to defend their decisions to
         | you.
        
         | mmaunder wrote:
         | "did someone try to send something other then bitcoin to a [?]
         | address?"
         | 
         | Like what? Cottage cheese?
         | 
         | Transaction failures and and fees are not fraud. The quote is
         | specific.
         | 
         | Regarding lightning:
         | https://twitter.com/nikzh/status/1356335970300416001?s=20&t=...
        
           | Tenoke wrote:
           | >"did someone try to send something other then bitcoin to a
           | [?] address?" Like what? Cottage cheese?
           | 
           | Most commonly btc via lightning network to a place that
           | doesn't support it or bch. It happens all the time.
        
             | 3np wrote:
             | > Most commonly btc via lightning network to a place that
             | doesn't support it
             | 
             | That makes no sense - how would that happen in practice?
             | 
             | BCH, though, yeah. Though less so over time since newer
             | address types aren't compatible.
        
             | hungryforcodes wrote:
             | There was no lighting network in 2016
        
           | SilasX wrote:
           | Sorry, I went to the article and it wasn't any more specific
           | on what a fraudulent transaction means in this context, and I
           | don't know what that would mean here (for the context of a
           | purchase via Bitcoin on a user's Steam account).
           | 
           | All I can imagine is a case where the user claims they didn't
           | make the purchase, "please refund", but that would be easy to
           | disprove.
        
             | giaour wrote:
             | I assumed they meant spending stolen bitcoin on steam. It's
             | common to call purchases made with a stolen credit card
             | "fraudulent," even if there's nothing untoward about the
             | purchase itself other than the payment instrument.
        
               | toast0 wrote:
               | > even if there's nothing untoward about the purchase
               | itself other than the payment instrument.
               | 
               | When you make a purchase with a credit card, you claim
               | that you are an authorized user of the card, and that you
               | will pay the bill in accordance with the account
               | agreement.
               | 
               | If that's not true, it's fraud. You've knowingly made an
               | untrue claim in order to receive something of value.
        
               | giaour wrote:
               | From the other comments on this thread, it seems like
               | Steam was using a zero-confirmation payment validator of
               | some kind. That makes bitcoin payments Steam accepted
               | effectively a form of check, and if customers exploited
               | this to double-spend bitcoin, then they paid steam with a
               | hot check. Hence, fraud.
               | 
               | Should Steam used a different form of validation? Yeah,
               | that would have let them reject some (most? all?) of
               | these fraudulent transactions. But anyone exploiting that
               | situation to double-spend coins was committing fraud just
               | as much as if they had written a worthless check, used a
               | stolen credit card, or tried to pass off a counterfeit
               | $100 bill.
        
               | SilasX wrote:
               | I thought it was always really big news whenever someone
               | even attempted a double spend, regardless of success? So
               | if that's what he meant, we should have been seeing those
               | cases in the news back then.
               | 
               | Edit: I guess not?
               | https://news.ycombinator.com/item?id=30480133
        
           | tenuousemphasis wrote:
           | That dude is an absolute idiot.
        
         | isodev wrote:
         | Fraudulent also includes tricking people into purchasing
         | without understanding what they are buying or how much it would
         | cost.
         | 
         | In the case of crypto, there is no actual bank or payment
         | provider through which to make a claim or facilitate a
         | reimbursement.
         | 
         | In the case of the EU, the law imposes guaranteed minimal
         | protection for online purchases. For example, any online
         | purchase is fully reversible (including network fees) within
         | the first 14 days following the transaction.
         | 
         | I don't think there are reasonable ways to meet this level of
         | consumer service with crypto.
        
         | Beltalowda wrote:
         | Steam marked me as a "fraud" because I used my European Revolut
         | card to try and make a purchase when I lived in Indonesia.
         | 
         | I get that they don't want European people to pay Indonesian
         | prices through a VPN or whatnot, but I was living in Indonesia
         | and living off a local salary; I thought marking me as a
         | "fraud" was rather harsh; with the increased ease of
         | international banking there are loads of cases where this is
         | perfectly legit (Spotify also doesn't allow it, but is far less
         | harsh in how they communicate it - Netflix posed no problems;
         | it's also circumventable by using gift cards, which is how I
         | used Spotify, but I never tried this for Steam).
         | 
         | Anyway, I'd wager a significant chunk of the "fraud" cases is
         | stuff like this: circumvention of regional pricing.
        
           | mindslight wrote:
           | I think you figured it out. In general "fraud" gets used as
           | an abstraction-primacy obfuscation term just like the more
           | extreme "identity theft". The claim is obviously not akin to
           | credit card fraud, and Valve doesn't describe the mechanics
           | of what they're calling "fraud". So it's likely the one of
           | the least offensive possibilities - like routing around their
           | regional price discrimination. Which would make perfect sense
           | as there's no identifying metadata tying a payment source to
           | a location in the way that say a credit card does. Of course
           | from the customer's perspective this is simply making the
           | market more efficient, and I'll make sure to play my tiniest
           | violin.
        
           | dehrmann wrote:
           | I used to work for a company that does this sort of fraud
           | detection. Using a credit card from a rich country in a
           | developing country for an online transaction screams stolen
           | credit card number. Fraudsters often use services like Steam
           | where you can buy something fairly cheap to test the card
           | number, then they go to the effort of trying a bigger
           | transaction.
        
           | andai wrote:
           | I'm on vacation in Croatia and my Spotify Premium expired. I
           | tried to renew it with my Dutch card and was rejected, so I
           | had to use a VPN set to Amsterdam...
        
             | robocat wrote:
             | Are they getting stricter? I've never had that problem,
             | including when travelling to all ex-yugoslavia countries
             | some years ago. I'm a New Zealander.
             | 
             | Reminder to self: organise VPN before leaving for overseas.
        
               | Beltalowda wrote:
               | There's loads of services that are very anal about it. I
               | also couldn't order a charger for my ThinkPad when I
               | lived in New Zealand because the Lenovo website didn't
               | accept my euro card, even though the shipping address was
               | _to New Zealand_. I contacted support: nothing they could
               | do. Had to use a friend 's Kiwi account.
               | 
               | Stuff like this is why I just started keeping the
               | accounts around as I move about instead of closing them.
        
             | devoutsalsa wrote:
             | I'm visiting Macedonia. I changed the email address on my
             | Capital One account (migrating off Gmail) and they froze
             | all 4 of my cards. To unfreeze them, I had to provide my
             | drivers license, social security card, and proof of
             | residence in the USA & then wait two weeks. There was no
             | process for accelerating the timetable.
             | 
             | #expatlife
        
               | mbreese wrote:
               | Did you notify Capital One you were in Macedonia at the
               | time? Every time I've been abroad, I had to notify any
               | card issuers first, just to make sure the charges weren't
               | flagged.
               | 
               | Otherwise, this level of fraud detection and response
               | should be considered normal (and good).
        
               | devoutsalsa wrote:
               | I did not notify them, but they can clearly see I've been
               | using the cards for the last two months. And I've called
               | my card companies in the past to notify them of upcoming
               | travel, and they all told me it was unnecessary with the
               | new chips. If I had changed my email using my laptop &
               | VPN connection to the USA, maybe I wouldn't have had a
               | problem, but I used the mobile app.
               | 
               | I didn't mind the cards getting frozen. It could have
               | been fraud for all they knew. What I did not appreciate
               | was the fact that it took two weeks & multiple calls to
               | my credit union to resolve proof of address. I was lucky
               | that I had my social security and with me, and that I had
               | a backup credit card from a different bank, otherwise
               | it's don't k is what I would have done.
        
               | TedDoesntTalk wrote:
               | Is that #expatlife or #donotusegmail ?
        
               | Beltalowda wrote:
               | Capital One froze the cards. I don't think gmail has the
               | ability to freeze someone's cards. Has nothing to do with
               | gmail at all, just the change of email address in Capital
               | One.
        
         | erk__ wrote:
         | Likely using stolen credit card credentials to buy bitcoin and
         | then use them to buy things on Steam. They already have a
         | massive problem with that without introducing bitcoin into the
         | equation
        
           | flotzam wrote:
           | Wut. This is like stealing faberge eggs so that you can throw
           | them through the window of a Shake Shack that you want to
           | break into
        
             | dahfizz wrote:
             | Have you ever heard the phrase "money laundering"?
        
               | flotzam wrote:
               | Yes, and it's almost always used as a vague catch-all
        
               | mr_cyborg wrote:
               | There are some resources out there if you search for the
               | stages of money laundering. Companies that have to fight
               | money laundering have to know what it looks like and what
               | they can do to catch it.
               | 
               | The stages are Placement, Layering, and Integration.
               | 
               | Here's one source that may help explain:
               | 
               | https://www.stpaulschambers.com/stages-of-money-
               | laundering-e...
        
               | flotzam wrote:
               | But how does any of that apply to the supposed "Steam
               | purchases with stolen credit cards by way of Bitcoin"
               | scheme?
        
               | mr_cyborg wrote:
               | 1. Stolen money is used to buy bitcoin
               | 
               | 2. Bitcoin is obfuscated by purchasing things online with
               | it
               | 
               | 3. Those online assets can be sold for cash
        
               | rosndo wrote:
        
               | candiddevmike wrote:
               | 1. Make a bunch of illegitimate money
               | 
               | 2. Release some shitty game on steam that no one will
               | play
               | 
               | 3. Buy millions of copies of said shitty game with your
               | illegitimate money using Bitcoin
               | 
               | 4. Your illegitimate money is now revenue from your
               | shitty game and can be taxed (Profit)
        
               | flotzam wrote:
               | The obfuscation in step 2 seems very superficial. Like,
               | is the IRS not going to ask where you got your stacks of
               | Steam codes from?
        
               | rosndo wrote:
               | Your bank will probably be the first one to ask, lying is
               | a felony. (As is money laundering, of course)
               | 
               | Also Valve will be looking for this too, as required by
               | their bank.
               | 
               | This is an incredibly unrealistic money laundering
               | scheme, entirely fabricated by mr_cyborg.
               | 
               | The truth is that the "fraudulent transactions" here are
               | double-spends, because Steam was accepting 0-conf
               | payments in an unsafe way.
        
               | anonymousab wrote:
               | > This is an incredibly unrealistic money laundering
               | scheme, entirely fabricated by mr_cyborg.
               | 
               | Using stolen money to buy gift cards, using those gift
               | cards to buy real things and then selling those real
               | objects or licenses or accounts after the fact is a well
               | known process. Substituting "bitcoin" or any
               | cryptocurrency for "gift card" is neither unreasonable
               | nor unrealistic.
        
               | rosndo wrote:
               | This only makes sense where "stolen money" is money that
               | you don't actually control, such as stolen credit cards
               | where the transactions will inevitably be charged back.
               | In that case it does make sense to buy and sell gift
               | cards in order to "cash out" the money.
               | 
               | This does not make any sense in the context of bitcoin.
        
               | berkes wrote:
               | How can you launder money on steam? Buying swords or
               | funny hats? Buying hundreds of games and then never play
               | any?
        
               | weird-eye-issue wrote:
               | Buy TF2 keys and trade them to another account? Or CSGO
               | skins? It's incredibly liquid and there are third party
               | marketplaces for cashing out
        
               | netheril96 wrote:
               | They are not more liquid than BTC itself. Why not just
               | sell the BTC directly?
        
               | hypertele-Xii wrote:
               | I guess games and cosmetics sell easier than crypto
               | scams.
        
               | mbesto wrote:
               | Speculative theory -
               | 
               | - You steal a credit card.
               | 
               | - Buy BTC with said credit card.
               | 
               | - Use BTC to buy Steam cosmetics that you already own and
               | Steam converts that BTC to USD.
               | 
               | You now have effectively used a stolen credit card to
               | convert its value to cold hard cash that is not
               | traceable, or at least requires several hoops to jump
               | through to figure out who stole the card.
        
               | k__ wrote:
               | Why would they go over Steam?
               | 
               | If they already have their assets in BTC they could
               | simply put them in a mixer.
        
           | TrapLord_Rhodo wrote:
           | that doesn't make any sense. The 'fraud' in your scenario and
           | where the point of contention lies is between the the credit
           | card company and the exchange where it was onramped. There's
           | no way the exchange is then going to go through the effort to
           | track the btc to steam and say 'Hey, that transaction that
           | didn't come from our exchange wallet was fraud i want the BTC
           | back.'
           | 
           | Also - That's just like fraud with extra steps? Why even usee
           | btc?
        
             | JKCalhoun wrote:
             | Perhaps stolen credit cards have checks in place to
             | immediately flag them as fraudulent?
        
               | TrapLord_Rhodo wrote:
               | yeah - Some. crypto companies have that too now though.
               | Most exchanges have haulted the ability to buy crypto
               | with credit altogether.
               | 
               | But Crypto.com allows you to buy up to $30 worth of
               | crypto with a credit card and cards online are pennies on
               | the dollar online if bought in bulk.
               | 
               | An astute con artist would recongnise that the only real
               | verifications credit cards have at their disposal is
               | geolocation and shopping habits. So if one were to buy CC
               | online, create a bot to enter the details onto the
               | crypto.com exchange, route the traffic through a VPN
               | using the CC address as a base, send the $30 worth of
               | crypto you bought off exchange and into a wallet, using
               | Tor and some clean Eth you bought in cash to pay the gas
               | fees, Wrap the BTC in WBTC, throw it on uniswap, swap for
               | some privacy coin, use that privacy coin to send to
               | another wallet within that private ecosystem so the
               | headers on the node are lost and bam. You've got some
               | clean crypto that you've fraudulently bought with a
               | credit card but can never be claimed as fraud!
        
               | rosndo wrote:
               | No.
        
               | NicoJuicy wrote:
               | Yes.
               | 
               | What do you think a chargeback is?
        
               | rosndo wrote:
               | Literally nobody offers a service to check if specific
               | coins were bought with a stolen credit card.
               | 
               | I know what a chargeback is, and those are utterly
               | irrelevant here.
        
               | squeaky-clean wrote:
               | That's not what they said at all though. Have you never
               | been traveling and had your CC declined and your bank
               | immediately calls you to verify the purchase? Credit
               | cards do have checks in place to immediately flag them as
               | fraudulent. This is not related to bitcoins and they
               | never said it was.
               | 
               | On top of that, if you use a stolen credit card to buy a
               | steam game and the original owner files a chargeback,
               | your entire steam account gets banned. So yes it's
               | extremely relevant here.
               | 
               | If instead you buy BTC on an exchange and then spend
               | those BTC on steam, it's less likely to be flagged as
               | fraud (at the time) because the BTC is purchased from an
               | American website. Then you spend the BTC on steam. Then
               | once the credit card is reported as stolen and a
               | chargeback filed, it's the crypto exchange who gets hit.
               | The chargeback is never associated with Steam and you can
               | buy Steam games from a lower-priced market without the CC
               | company ever being aware.
        
               | NicoJuicy wrote:
               | I literally had to approve with my bank to verify payment
               | of a relatively large sum.
               | 
               | My credit card got into a locked state for a while every
               | month, when Vulture did a approved monthly charge.
               | 
               | There are plenty of systems that verify things out of the
               | ordinary.
               | 
               | It's not because you haven't encountered it, that they
               | aren't there.
               | 
               | Additionally, stolen credit cards can be marked as
               | stolen. Which would block any future payment with it.
        
           | tenuousemphasis wrote:
           | You can't really buy bitcoin with a credit card because the
           | seller would likely lose a ton of money to chargebacks.
        
           | scotty79 wrote:
           | How would steam know what was used to pay for bitcoin they
           | received?
        
             | jayd16 wrote:
             | Conceivably, the public ledger aspect of the technology.
        
               | gruez wrote:
               | I doubt steam is doing blockchain analysis, tracing back
               | where the coins came from, and seeing whether the
               | exchange that sold them the coins were defrauded or not.
        
               | jayd16 wrote:
               | First off, why not? Why would you doubt that when they're
               | a massive storefront and deal with fraud of all kinds?
               | 
               | But also, wouldn't it be fairly easy and beneficial to
               | have this information? Exchanges know what wallets are
               | charged back and fraudulent.
               | 
               | Is it not in their interest to work with Steam?
               | 
               | Or even, is it not in the exchange's interest to do this
               | analysis and demand the coin from Steam?
        
               | gruez wrote:
               | > First off, why not? Why would you doubt that when
               | they're a massive storefront and deal with fraud of all
               | kinds?
               | 
               | 1. The anti-fraud tech used for credit card fraud (ie.
               | stolen credit cards used for unauthorized transactions)
               | don't really translate well to the fraud described here
               | (ie. stolen cryptocurrency).
               | 
               | 2. it makes sense for ecommerence merchants to do anti-
               | fraud stuff, because they're on the hook for fraud. the
               | same does not apply to cryptocurrency transactions.
               | 
               | >But also, wouldn't it be fairly easy and beneficial to
               | have this information? Exchanges know what wallets are
               | charged back and fraudulent.
               | 
               | 1. I haven't heard of such blacklists being around,
               | especially in 2017 (when steam stopped accepting
               | payments)
               | 
               | 2. such blacklists would likely be ineffective, because
               | of mixers and lack of coordination (see previous point)
               | 
               | 3. such blacklists threaten the fungibility of bitcoin,
               | which would probably cause backlash from potential
               | customers.
               | 
               | >Is it not in their interest to work with Steam?
               | 
               | 1. it might be in their interest to work with steam, but
               | not the other way around
               | 
               | 2. even though steam might have huge sales volume, it's
               | not going to be the primary route criminals cash out. if
               | you stole tens of thousands of dollars in crypto, I doubt
               | you'll spend a significant portion of that on games. You
               | only have so much time, and games are relatively cheap.
               | Meanwhile localbitcoin has people willing to give you
               | literal cash for a few percentage points cut. There's a
               | reason why all the anti-money laundering regulations
               | target banks and other high cash volume businesses (eg.
               | pawn shops), and not bestbuy or mcdonalds.
               | 
               | >Or even, is it not in the exchange's interest to do this
               | analysis and demand the coin from Steam?
               | 
               | If [random exchange] messaged me and said that some coins
               | I hold were 10% tainted from 10 transactions ago, and
               | wanted me to return them, I'd tell them to fuck off.
        
               | jayd16 wrote:
               | >blacklists
               | 
               | They wouldn't be blacklists. You only learn after the
               | fact so its more about the analytics.
               | 
               | >I'd tell them to fuck off.
               | 
               | Well that's nice but if you get paid with stolen money,
               | you don't just get to keep the money and tell them to
               | fuck off. Steam would be liable to return the funds.
        
               | gruez wrote:
               | >They wouldn't be blacklists. You only learn after the
               | fact so its more about the analytics.
               | 
               | I mean, that goes back to my original question, why would
               | they do this? Does bestbuy run analytics on the cash they
               | receive to see how much % of their cash purchases were
               | "fraudulent"?
               | 
               | >Well that's nice but if you get paid with stolen money,
               | you don't just get to keep the money and tell them to
               | fuck off. Steam would be liable to return the funds.
               | 
               | IANAL, but I thought this only applied to stolen goods,
               | not cash? I heard of authorities seizing cash when they
               | raid a drug house, but not randomly seizing people's cash
               | because they happened to carry a bill that was involved
               | in a bank robbery.
        
               | squeaky-clean wrote:
               | > Does bestbuy run analytics on the cash they receive to
               | see how much % of their cash purchases were "fraudulent"?
               | 
               | Credit card companies do, yes.
        
               | gruez wrote:
               | Again, that's because credit card companies and/or
               | merchants eat the cost of fraud. That's not the case with
               | cash. The FBI isn't going to be raiding bestbuy's stores
               | looking for stolen bills.
        
               | jayd16 wrote:
               | In this case, it's still private self interest in the
               | exact same way. If a stolen credit card is used to buy
               | Bitcoin, then Bitcoin is used in Steam, who eats the
               | fraud and why would they not push against the others for
               | restitution if it's all trackable?
        
               | gruez wrote:
               | > If a stolen credit card is used to buy Bitcoin, then
               | Bitcoin is used in Steam, who eats the fraud
               | 
               | The credit card company and/or cryptocurrency exchange
               | would eat the fraud.
               | 
               | >and why would they not push against the others for
               | restitution if it's all trackable?
               | 
               | This is moving the goalposts. We're not discussing
               | whether such a scheme would benefit banks/credit card
               | companies/crypto exchanges, we're discussing whether
               | valve implemented such a scheme for steam. I'm sure the
               | aforementioned parties appreciate such a scheme, just as
               | banks would appreciate a scheme where stores were
               | checking the bills they accept were stolen or not.
               | However, that says nothing about whether such a scheme
               | exists, or whether steam was voluntarily doing so with no
               | apparent benefit to itself. Nor does it change the fact
               | that such a push was non-existent (or at least non-
               | visible) in 2017.
        
           | rhino369 wrote:
           | How would Steam even learn about that? The person getting
           | scammed in that situation is the person selling bitcoins for
           | credit card payments, since those payments will be canceled
           | by the card holders bank.
           | 
           | Does anyone actually sell bitcoin via credit card
           | transactions?
        
         | lucb1e wrote:
         | > * did someone try to send something other then bitcoin to a
         | [?] address?
         | 
         | That would not even register right? Different coins are
         | completely separate and it wouldn't even have registered
         | anywhere and show up in the statistic. As far as I know the
         | addresses are also distinct between coins (so it's not even
         | physically possible) but there are so many now and I've been
         | out of that world for a few years now so that might have
         | changed.
         | 
         | > * did a client claim he payed and did the payment seem to
         | fail on his end?
         | 
         | You mean like opening a support case, claiming they have paid?
         | 
         | > * did a client not realise that you as payee also pay for the
         | network fee?
         | 
         | That sounds possible. In this case, Steam's bitcoin client
         | would indeed detect the transaction but it would never be mined
         | and thus never really spent.
         | 
         | My first thought was a double spend, though, or perhaps that
         | the source money was illegitimately obtained (e.g. later
         | determined to be laundered money or so).
        
           | marcosdumay wrote:
           | If it was double spend, I imagine we would have heard the
           | news.
           | 
           | It's probably illegitimate money.
        
             | lucb1e wrote:
             | Why? Double spends are not hard to do from a technical
             | point of view.
        
             | Banana699 wrote:
             | Bitcoin's protocol doesn't prevent a double-spend for a
             | 'short' amount of time after payment, it just guarantees
             | that, eventually*, exactly one of those spends would be
             | seen and counted as valid by all compliant nodes (as long
             | as at least 51% of the network is compliant nodes).
             | 
             | But nothing prevents a minority attacker from branching the
             | chain with their own alternate history at any point,
             | although if they did it to a 'historical' block - one deep
             | behind in the chain - then they're doomed from the start,
             | they could never build an alternate chain longer with the
             | main network racing them. Their only hope is waiting for a
             | spend to become in a valid block then immediately start
             | another branch with a double spend, hoping they could
             | convince enough of the network to accept their version of
             | the blockchain where the second double spend is actually
             | the legit one. This gets harder and harder the more blocks
             | build on the main branch, if 5 or 6 blocks build on a
             | block, it's pretty much impossible for all intents and
             | purposes to invalidate that block. (Unless, again, the
             | attacker cares enough to secure computing firepower greater
             | than or equal to 51% of the overall network)
             | 
             | *: "Eventually" is a probalistic statment, theoritically an
             | alien super computer with unimaginable power could rewrite
             | the whole blockchain from 2009 till now in the time it
             | takes one of ours to boot, the blockchain protocol
             | constantly adjusts a parameter that makes mining a valid
             | block always takes, on average, 10 minutes. Assuming no
             | sudden computing advances, this will always compensates for
             | increases in gradual computing power such that you always
             | need the majority's support for dictating what's the
             | longest branch.
        
           | ipaddr wrote:
           | Sending the wrong type of coins btc vs bch will result in you
           | losing those coins. That's not fraud..
        
       | tiahura wrote:
       | And of the 50% that were legit, what percentage was with stolen
       | or fraudulently obtained bitcoins?
        
       | kova12 wrote:
       | What exactly does it mean "fraudulent transaction" in the context
       | of bitcoin? It's not like you can use someone else's account
       | number to purchase stuff.
        
         | Duralias wrote:
         | Money laundering I'd imagine.
         | 
         | Criminal creates shit game, buys game using crypto and gets
         | paid out in fiat because *very* few developers would accept
         | being paid in crypto.
        
           | rosndo wrote:
           | This does precisely nothing to "clean" the money as it
           | doesn't eliminate the direct link between you and the dirty
           | bitcoins.
        
             | Duralias wrote:
             | Forgive my ignorance, but does, for example, ransomware
             | payments in, for example, bitcoin make the bitcoin "dirty"?
             | 
             | The only context I have heard "dirty" coins in is if they
             | have been stolen from a crypto platform, or I think stolen
             | by a influential crypto bro.
        
               | rosndo wrote:
               | > Forgive my ignorance, but does, for example, ransomware
               | payments in, for example, bitcoin make the bitcoin
               | "dirty"?
               | 
               | Yep, also links to darknet markets and any other "bad
               | actors" whose addresses are known.
        
         | swid wrote:
         | The people who buy the game then resell the key on other
         | websites for less than you find it on steam. They can buy many
         | licenses when the game is on sale, so even if there is no
         | chargeback, the devs can lose money through these methods.
         | Otherwise it is still a money laundering tactic.
         | 
         | Here's a blog post where they talk about this eco system.
         | 
         | https://factorio.com/blog/post/fff-303
        
           | flotzam wrote:
           | OK that kind of makes sense: "fraud" = making geographical or
           | time-limited price discrimination less effective
        
           | kova12 wrote:
           | I'm failing to understand why is this considered fraudulent.
           | Buy low sell high, this is how all trade works. People buying
           | multiple keys for resale is just an unintended consequence of
           | underpricing the product.
        
             | swid wrote:
             | If the purpose is to avoid KYC laws and turn bitcoin to
             | cash, it isn't hard to understand why Steam wants to avoid
             | these types of customers.
             | 
             | Also, they aren't buying low and selling high, they are
             | buying low and selling even lower because they are okay
             | with a lossy conversion.
        
         | chii wrote:
         | i suspect that steam was using a payment processor which
         | identified that the coins were on a blacklist of sorts, and was
         | not legitimately acquired (e.g., either stolen, or purchased
         | with stolen money etc).
        
           | hashimotonomora wrote:
           | How does Walmart compare to that regarding purchases with
           | ill-gotten cash?
        
             | subash_8848 wrote:
             | Thankfully there is no distributed ledger keeping track of
             | every little thing so we don't have to worry about that.
        
             | anonymousab wrote:
             | If cash could tell you whether it was illegally acquired
             | then I'm sure many businesses would refuse to accept
             | illegal cash.
        
             | temp8964 wrote:
             | Because cash can't be easily identified as stolen, so the
             | problem does not exist.
             | 
             | Just like the electricity cost of bank transaction cannot
             | be easily quantified, so the problem does not exist.
             | 
             | Those problems only exist in Bitcoin. /s
        
               | bena wrote:
               | No one says that the electricity cost of a bank
               | transaction can't be quantified. They say it's far
               | cheaper than bitcoin.
               | 
               | Because it is.
               | 
               | Bitcoin by its very nature wants to expand to consume
               | every possible unit of energy it can.
        
             | ajross wrote:
             | Walmart (like all large retailers) spends a ton of effort
             | trying to address e.g. laundering efforts with gift cards,
             | actually. Google around for all the press releases about
             | how they partner with the FBI, etc... They absolutely
             | recognize that they're part of the laundering chain (and
             | that this makes them liable to punishments under AML
             | statutes, of course).
        
               | reaperducer wrote:
               | _Walmart (like all large retailers) spends a ton of
               | effort trying to address e.g. laundering efforts with
               | gift cards, actually_
               | 
               | For example, you can't buy a gift card in an Apple Store
               | without signing a statement promising that you're not
               | buying the gift card because a stranger online told you
               | to.
               | 
               | Sounds ineffective on the surface, especially to jaded
               | tech-types, but it's enough to give real people in the
               | process of being scammed an opportunity to think about
               | what they're doing.
        
             | georgyo wrote:
             | Cash is completely fungible because there is no clear trace
             | of money from one person to the next.
             | 
             | If someone steals 100k of cash, there is a very low
             | probability that the serial number of those bills were
             | recorded somewhere. And even if they were, you couldn't
             | easily trace the money though complex systems.
             | 
             | Bitcoin on the other hand is a complete and open ledger.
             | When these large heists that constantly happen, it is
             | trivial to identify the transactions that happen
             | afterwards.
             | 
             | Cash is actually anonymous and Bitcoin is only pseudo-
             | anonymous.
        
               | iszomer wrote:
               | Which iirc was the basis for "cleanly mined" btc with
               | little to no transaction history on-chain and
               | tumbler/mixer services that attempted to obfuscate it.
        
               | hashimotonomora wrote:
               | The fact that it's difficult or expensive to track does
               | not mean it cannot be. Technically it's possible to force
               | every cash handling business to scan (just like you scan
               | an UPC) each bill.
        
               | bena wrote:
               | "This note is legal tender for all debts, public and
               | private."
               | 
               | If I buy you lunch today, you can pay me back next week.
               | We're not "cash handling business[es]", so we wouldn't
               | have to scan.
               | 
               | Second, I don't think it's technically possible. For
               | companies that do business across state lines, sure, but
               | within a state's border, interstate commerce laws don't
               | apply. Each state would have to enact a similar law. And
               | best of luck with that.
        
       | duxup wrote:
       | > There's a difference between what it should be and what it
       | really is currently in the real world.
       | 
       | I feel like that when I speak with bitcoin enthusiasts. Lots of
       | ideology that I don't necessarily disagree with... but the
       | ecosystem is something else...
        
         | ta988 wrote:
         | That's the thing if you talk to people from any political party
         | or ideology, there are some really general ideas that may not
         | be shocking. What matters is the reality of the actions of
         | those people and those they believe in.
        
         | vmception wrote:
         | The enthusiasts are excited and altering the network towards
         | what it should be, even if that's simply use and being an
         | addition to the collective conscious
         | 
         | Many saw something that wasn't done and go contribute
         | 
         | Others saw something as static
         | 
         | Others saw something as stagnant and went to contribute to
         | another network that experiences the same path towards its
         | ideals
        
       | TrapLord_Rhodo wrote:
       | i can pay for anything in the economy right now with BTC. It's
       | called a crypto debit card... look it up.
       | 
       | I don't understand this sentiment. A) 50% of btc transaction were
       | fraudulent makes zero sense. The technology behind BTC ensures it
       | can't be fraudulent. So unless someone wants to explain to me how
       | the hackers broke BTC's consensus to buy... videogames? it makes
       | noe sense.
        
         | nest0r wrote:
        
         | reaperducer wrote:
         | _i can pay for anything in the economy right now with BTC. It
         | 's called a crypto debit card... look it up._
         | 
         | Not every organization accepts debit cards. Look it up.
        
           | [deleted]
        
           | TrapLord_Rhodo wrote:
           | I don't think i've ever run into one here in the US that
           | didn't let me use my crypto card.
           | 
           | I don't even remember the last time i carried cash?
        
             | reaperducer wrote:
             | I'm in the U.S., too. You must not go very many interesting
             | places, or find yourself in very many interesting
             | situations.
             | 
             | I guess maybe a crypto debit card is good for people who
             | lead plain lives. Like hanging around town and going to the
             | movies and the candy store. But I require both cash and a
             | real credit card for my life. Debit cards have failed me
             | too often.
        
               | TrapLord_Rhodo wrote:
               | Okay - but now we are really picking at semantics here,
               | aren't we? If i changed my answer to everywhere who
               | accepts a debit card can accept crypto, does it really
               | change the sentiment of what i'm trying to convey?
               | 
               | Because at that point i can go on a tangent and say well,
               | the USD is actually accepted at less places than BTC
               | because i can use my debit card in mexico but you can't
               | use USD.
        
       | devit wrote:
       | How can a Bitcoin transaction be fraudulent?
       | 
       | They are irreversible and if the Bitcoin is stolen that's not the
       | merchant's problem.
       | 
       | The whole point of Bitcoin is to eliminate the possibility of
       | chargebacks and thus the need for merchant to care about whether
       | the buyer is in good faith and whether the money is stolen.
        
         | giaour wrote:
         | > They are irreversible and if the Bitcoin is stolen that's not
         | the merchant's problem.
         | 
         | This seems consistent with the bitcoin ethos but incompatible
         | how the economy and legal system work. If someone buys a
         | physical item from your physical store with a hot check, a
         | stolen credit card, or marked bills that were just stolen from
         | a bank, you don't get to keep the money, even if police aren't
         | able to recover the item you sold. This is normally referred to
         | as being defrauded.
        
           | olalonde wrote:
           | I do believe that you get to keep cash. I don't think I've
           | ever heard of an instance of "dirty cash" getting seized back
           | from a merchant. Do you have an example of that?
        
             | EamonnMR wrote:
             | https://en.m.wikipedia.org/wiki/Civil_forfeiture_in_the_Uni
             | t...
        
             | giaour wrote:
             | No, but I don't really have an example of a specific credit
             | card chargeback, either. At least in the US, the police can
             | seize the cash as evidence, and their duty is to return it
             | to the rightful owner, not whoever happened to have it at
             | the time of seizure.
        
         | jayd16 wrote:
         | Just because a computer says it's ok doesn't mean you can just
         | start dealing in stolen goods.
        
         | cuteboy19 wrote:
         | > The whole point of Bitcoin is to eliminate the possibility of
         | chargebacks
         | 
         | This is obviously false. There is absolutely nothing that
         | compels normal payments companies to honor chargebacks. Since
         | you don't need Bitcoin to complete this goal, this goal cannot
         | be Bitcoins purpose.
         | 
         | The reason that they do it is because being consumer friendly
         | is more important than being merchant friendly. Even merchants
         | would attest to this fact
        
         | mdoms wrote:
         | > if the Bitcoin is stolen that's not the merchant's problem
         | 
         | It is if half the transactions at the merchant eventually get
         | refunded.
         | 
         | > The whole point of Bitcoin is to eliminate the possibility of
         | chargeback
         | 
         | I'm sorry I'm having trouble keeping up with the "the point" of
         | Bitcoin is this week. So it's chargeback avoidance now?
        
       | lokar wrote:
       | There seems to be a basic misunderstanding on the part of the
       | pro-btc ppl here all saying "how is that fraud?" or "how is that
       | steams problem?"
       | 
       | If you run a business that can be used in a money laundering
       | scheme, even if you are not a victim, you have a legal
       | responsibility to try to limit/prevent that actually.
       | 
       | The crypto crowd may not like that, but it's not up to them.
        
         | rosndo wrote:
         | The basic misunderstanding is on your part.
         | 
         | "Money laundering" wasn't mentioned by anyone but you. Stop
         | inventing things.
         | 
         | This is about valve getting fucked because they were accepting
         | bitcoin payments with zero confirmations.
        
           | felipellrocha wrote:
           | Why take it personally? They brought up an important issue.
        
             | rosndo wrote:
             | I'm not taking anything personally, just calling him out on
             | his strawman.
        
           | lokar wrote:
           | Did you even read the other threads? It comes up almost every
           | time.
        
             | rosndo wrote:
             | So what? That's completely unfounded speculation by those
             | commenters supported neither by the article nor the actual
             | facts.
        
           | m348e912 wrote:
           | I'd like to know what Gabe meant by fraudulent too. The whole
           | idea of crypto is that if you send it and it's confirmed you
           | can't get it back, which makes fraud (on the payers side)
           | nearly impossible.
           | 
           | You brought up the point about zero confirmations. Zero-conf
           | itself is fairly reliable, it certainly doesn't account for
           | 50% transactions being fraudulent. Bitcoin introduced replace
           | by fee in 2016. In 2017, bitcoin transition fees were high,
           | and there was large increase in the bitcoin mempool, which
           | led to a backlog of stuck low-fee transactions.
           | 
           | Replace by fee adds a major loophole to zeroconf, low-fee,
           | stuck transactions could be rebroadcast with a higher fee and
           | sent somewhere else even after they were "received" but not
           | yet "confirmed" by Steam. Users could sign up, pay with
           | Bitcoin, steam sees the payment but doesn't want the user to
           | wait 3 days for confirmation, so steam completes the signup.
           | After that the user rebroadcasts the transaction back to
           | themselves with a higher fee and quicker confirmation. The
           | original transaction doesn't go through.
           | 
           | Here's and discussion on how reliable zero-conf is when RBF
           | is not part of the protocol and instead bigger blocks are
           | mined.
           | 
           | https://www.youtube.com/watch?v=TIt96gFh4vw
        
             | michaelmrose wrote:
             | Couldn't steam use longevity to decide whether to accept
             | crypto transactions and cancel entire accounts for
             | fraudulent activity?
             | 
             | Don't let bob create a new account with zero games and
             | double spend his way to a free game because he has nothing
             | to lose.
             | 
             | If Sam who has 100 games in his account with 10 year
             | longevity cheats you insist he make good on his transaction
             | or ban his account and don't ever let him create a new one
             | with the same name and billing address. Sam is highly
             | unlikely to value playing a singular game more than his
             | account.
             | 
             | This seems absolutely trivial to avoid problems with.
        
             | rosndo wrote:
             | I know this is about zero confirmation transactions because
             | I know people who were deliberately double spending on
             | Steam.
             | 
             | > Zero-conf itself is fairly reliable, it certainly doesn't
             | account for 50% transactions being fraudulent
             | 
             | Of course it does. Someone using this to spend the same
             | bitcoin multiple times will generate many times more
             | transactions than a regular user.
        
               | m348e912 wrote:
               | You're right and I take it back. If Bitcoin didn't have
               | replace-by-fee, then maybe it would have been a more
               | accurate statement.
        
             | UncleMeat wrote:
             | > The whole idea of crypto is that if you send it and it's
             | confirmed you can't get it back, which makes fraud (on the
             | payers side) nearly impossible.
             | 
             | I consider "obtained somebody's credentials or private key
             | through illegal means and then used that to purchase a good
             | with stolen BTC" to be fraud. That the network considers
             | this to be a normal transaction is not relevant.
        
               | leereeves wrote:
               | I wonder, is there any legal precedent for that? Analogy
               | with other transactions could support either
               | interpretation. (Spending stolen cash is not fraud, but
               | using a stolen credit card is.)
        
           | httpsterio wrote:
           | I think assuming money laundering was a fair assumption as
           | the article only describes fraudulent activity and nothing
           | else on the matter.
        
             | rosndo wrote:
             | It's really not, the idea of laundering cryptocurrency
             | through Steam is ludicrous.
             | 
             | It works the other way around, people launder funds _from_
             | steam into cryptocurrency. Either by buying items with
             | stolen credit cards or by stealing steam accounts.
        
               | leppr wrote:
               | I don't see how that's ludicrous. There's a lot of dirty
               | money on both sides. One could easily imagine a scheme
               | where items or accounts loaded with games bought with
               | dirty BTC are sold for now cleaner fiat or crypto.
        
               | rosndo wrote:
               | This is the worst way imaginable to cash out dirty
               | bitcoins. You can clean your cryptocurrency without
               | paying Valve outrageous amounts for _dirty_ fiat currency
               | that you'll just have to launder again.
        
         | hungryforcodes wrote:
         | There is absolutely no definition of fraud that I read in the
         | article.
        
           | lokar wrote:
           | I was referring the the comment threads here
        
         | gjs278 wrote:
        
         | phil21 wrote:
         | > The crypto crowd may not like that, but it's not up to them.
         | 
         | I think you'll find many of the "crypto crowd" strongly
         | disagree with your assessment.
         | 
         | In fact, reality on the ground highly suggests it is indeed at
         | least partly up to them.
         | 
         | This is probably where the fundamental "talking past each
         | other" happens on forums like HN.
        
       | Lochleg wrote:
       | In my estimation, most of the activity done with people's
       | inventory on Steam, especially skins in major games, involve one
       | illicit scheme or another. I guess you can't or shouldn't stop
       | people from using their skins on gambling sites. However, it
       | doesn't seem like many of the metafeatures that the company
       | started to build around Steam actually serve regular gamers just
       | looking to enjoy themselves.
        
       | jlkuester7 wrote:
       | This sounds eerily similar to various debates regarding adult
       | content, that some companies (clearly not all becuause OnlyFans)
       | have decided that customer segment is not worth pursuing. Not
       | because there is no money in it, but just because it is not worth
       | the trouble...
       | 
       | I am specifically thinking of the drama between payment
       | processors and porn sites. I don't really think that Visa's
       | position is "porn = bad" or that they would deliberately sever a
       | profitable relationship with customers unless they were
       | experiencing or anticipating something bad for business.
       | 
       | Valve seems to be thinking in the same vein here, where it is
       | just not even worth trying to play the crypto game (pun
       | intended...).
        
       | DangitBobby wrote:
       | This article I think contains the original interview with Gabe.
       | It at least mentions the nature of the fraud [1]. He actually
       | says "the vast majority" which sounds like more than 50% to me.
       | 
       | > Another thing was that the vast majority of those transactions,
       | for whatever reason, were fraudulent, where people were
       | repudiating transactions or using illegal sources of funds and
       | things like that. And that's just out of control, right? You want
       | that number, realistically, in a couple of percent, not half of
       | all transactions turning out to be fraudulent transactions.
       | Similarly, with the actors that are currently in this NFT space,
       | they're just not people you really are wanting to be doing
       | business with. That doesn't say anything about the underlying
       | technology, it's just a reflection of the people right now who
       | are viewing it as an opportunity to rip customers off, or engage
       | in money laundering, or other things like that.
       | 
       | 1. https://www.rockpapershotgun.com/gabe-newell-interview-
       | steam...
        
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