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Unfortunately no details were given about what makes 50% of all bitcoin transactions “fraudulent” ? What does that even mean? * did someone try to send someth

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.

erk__ 5y ago
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 5y ago
  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 5y ago
    Have you ever heard the phrase "money laundering"?
    - flotzam 5y ago
      Yes, and it's almost always used as a vague catch-all
      - mr_cyborg 5y ago
        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-explained/ https://www.stpaulschambers.com/stages-of-money-laundering-e...
        flotzam 5y ago
        But how does any of that apply to the supposed "Steam purchases with stolen credit cards by way of Bitcoin" scheme?
        mr_cyborg 5y ago
        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
        flotzam 5y ago
        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 5y ago
        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 5y ago
        > 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 5y ago
        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 5y ago
      How can you launder money on steam? Buying swords or funny hats? Buying hundreds of games and then never play any?
      - weird-eye-issue 5y ago
        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 5y ago
        They are not more liquid than BTC itself. Why not just sell the BTC directly?
        hypertele-Xii 5y ago
        I guess games and cosmetics sell easier than crypto scams.
        netheril96 5y ago
        You got it backwards. It is much easier to sell crypto "scams" than games and cosmetics. At any given time, there are a lot of people ready to buy your BTC. For games and cosmetics, not so many.
        weird-eye-issue 5y ago
        Bitcoin is so liquid you can cash out millions within seconds. Source: I've done it
        mbesto 5y ago
        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__ 5y ago
      Why would they go over Steam? If they already have their assets in BTC they could simply put them in a mixer.
- TrapLord_Rhodo 5y ago
  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 5y ago
    Perhaps stolen credit cards have checks in place to immediately flag them as fraudulent?
    - rosndo 5y ago
      No.
      - NicoJuicy 5y ago
        Yes. What do you think a chargeback is?
        rosndo 5y ago
        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 5y ago
        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.
- scotty79 5y ago
  How would steam know what was used to pay for bitcoin they received?
  - jayd16 5y ago
    Conceivably, the public ledger aspect of the technology.
    - gruez 5y ago
      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 5y ago
        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 5y ago
        > 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.
- rhino369 5y ago
  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?
- tenuousemphasis 5y ago
  You can't really buy bitcoin with a credit card because the seller would likely lose a ton of money to chargebacks.
lucb1e 5y ago
> * 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 5y ago
  If it was double spend, I imagine we would have heard the news. It's probably illegitimate money.
  - lucb1e 5y ago
    Why? Double spends are not hard to do from a technical point of view.
  - Banana699 5y ago
    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.
paulgb 5y ago
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.)
- londons_explore 5y ago
  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.
- TrapLord_Rhodo 5y ago
  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 5y ago
    Oh cool so a centralized payment system except stupid complicated. Sounds like another winning crypto invention to me.
    - sebzim4500 5y ago
      Not sure about the others but Solana is not centralized.
skybrian 5y ago
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 5y ago
  Yes, this is colloquially known as "money laundering". It's one of Bitcoin's most promising use-cases!
  - skybrian 5y ago
    I know, I’m asking how feasible it is with Steam.
    - bena 5y ago
      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 5y ago
  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.
mmaunder 5y ago
“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=LDnnGZj2HKboLoOoejU1nQ https://twitter.com/nikzh/status/1356335970300416001?s=20&t=...
- SilasX 5y ago
  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 5y ago
    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 5y ago
      > 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 5y ago
        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.
jpollock 5y ago
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 5y ago
  >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.
  - bastawhiz 5y ago
    Did steam charge a transaction fee for refunds? If not, there's your answer.
    - isodev 5y ago
      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.
  - j-bos 5y ago
    Reminds me of the old gamestop greentext
  - withinboredom 5y ago
    As an American living outside of America, getting non-US investment accounts is impossible, and most US banks don’t want non-residents investing, and lying about your address can get you in hot water with the IRS (are you, or are you not living in the US?). Crypto companies follows much the same pattern and in some cases you can buy crypto but can’t cash out. If you could buy a game with bitcoin and get cash-money in a refund, this is quite viable. We haven’t even started talking about money laundering…
Beltalowda 5y ago
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.
- dehrmann 5y ago
  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 5y ago
  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...
  - devoutsalsa 5y ago
    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 5y ago
      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).
bena 5y ago
> 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.
isodev 5y ago
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.
vhold 5y ago
Another possibility is that people were using it for money laundering. One method is to create lower-than-shovelware games, buy them with shadily acquired cryptocurrency, stolen credit cards or scammed gift cards and take real money payment from Valve. Egregious example: https://mmofallout.com/valve-bans-yet-another-laundering-game/ https://mmofallout.com/valve-bans-yet-another-laundering-gam...

erk__ 5y ago

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 5y ago
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 5y ago
  Have you ever heard the phrase "money laundering"?
  - flotzam 5y ago
    Yes, and it's almost always used as a vague catch-all
    - mr_cyborg 5y ago
      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-explained/ https://www.stpaulschambers.com/stages-of-money-laundering-e...
      - flotzam 5y ago
        But how does any of that apply to the supposed "Steam purchases with stolen credit cards by way of Bitcoin" scheme?
        mr_cyborg 5y ago
        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
        flotzam 5y ago
        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 5y ago
        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 5y ago
        > 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 5y ago
        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 5y ago
    How can you launder money on steam? Buying swords or funny hats? Buying hundreds of games and then never play any?
    - weird-eye-issue 5y ago
      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 5y ago
        They are not more liquid than BTC itself. Why not just sell the BTC directly?
        hypertele-Xii 5y ago
        I guess games and cosmetics sell easier than crypto scams.
        netheril96 5y ago
        You got it backwards. It is much easier to sell crypto "scams" than games and cosmetics. At any given time, there are a lot of people ready to buy your BTC. For games and cosmetics, not so many.
        weird-eye-issue 5y ago
        Bitcoin is so liquid you can cash out millions within seconds. Source: I've done it
        mbesto 5y ago
        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__ 5y ago
    Why would they go over Steam? If they already have their assets in BTC they could simply put them in a mixer.
TrapLord_Rhodo 5y ago
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 5y ago
  Perhaps stolen credit cards have checks in place to immediately flag them as fraudulent?
  - rosndo 5y ago
    No.
    - NicoJuicy 5y ago
      Yes. What do you think a chargeback is?
      - rosndo 5y ago
        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 5y ago
        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.
scotty79 5y ago
How would steam know what was used to pay for bitcoin they received?
- jayd16 5y ago
  Conceivably, the public ledger aspect of the technology.
  - gruez 5y ago
    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 5y ago
      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 5y ago
        > 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.
rhino369 5y ago
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?
tenuousemphasis 5y ago
You can't really buy bitcoin with a credit card because the seller would likely lose a ton of money to chargebacks.

lucb1e 5y ago

> * 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 5y ago
If it was double spend, I imagine we would have heard the news. It's probably illegitimate money.
- lucb1e 5y ago
  Why? Double spends are not hard to do from a technical point of view.
- Banana699 5y ago
  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.

paulgb 5y ago

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.)

londons_explore 5y ago
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.
TrapLord_Rhodo 5y ago
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 5y ago
  Oh cool so a centralized payment system except stupid complicated. Sounds like another winning crypto invention to me.
  - sebzim4500 5y ago
    Not sure about the others but Solana is not centralized.

skybrian 5y ago

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 5y ago
Yes, this is colloquially known as "money laundering". It's one of Bitcoin's most promising use-cases!
- skybrian 5y ago
  I know, I’m asking how feasible it is with Steam.
  - bena 5y ago
    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 5y ago
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.

mmaunder 5y ago

“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=LDnnGZj2HKboLoOoejU1nQ https://twitter.com/nikzh/status/1356335970300416001?s=20&t=...

SilasX 5y ago
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 5y ago
  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 5y ago
    > 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 5y ago
      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.

jpollock 5y ago

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 5y ago
>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.
- bastawhiz 5y ago
  Did steam charge a transaction fee for refunds? If not, there's your answer.
  - isodev 5y ago
    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.
- j-bos 5y ago
  Reminds me of the old gamestop greentext
- withinboredom 5y ago
  As an American living outside of America, getting non-US investment accounts is impossible, and most US banks don’t want non-residents investing, and lying about your address can get you in hot water with the IRS (are you, or are you not living in the US?). Crypto companies follows much the same pattern and in some cases you can buy crypto but can’t cash out. If you could buy a game with bitcoin and get cash-money in a refund, this is quite viable. We haven’t even started talking about money laundering…

Beltalowda 5y ago

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.

dehrmann 5y ago
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 5y ago
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...
- devoutsalsa 5y ago
  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 5y ago
    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).

bena 5y ago

> 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.

isodev 5y ago

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.

vhold 5y ago

Another possibility is that people were using it for money laundering. One method is to create lower-than-shovelware games, buy them with shadily acquired cryptocurrency, stolen credit cards or scammed gift cards and take real money payment from Valve. Egregious example: https://mmofallout.com/valve-bans-yet-another-laundering-game/ https://mmofallout.com/valve-bans-yet-another-laundering-gam...