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'50% of transactions were fraudulent' when Steam accepted Bitcoin for payments

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Re: '50% of transactions were fraudulent' when Steam accepted Bitcoin for payments

#231

Post by HWR_14 »

tomc1985 wrote: post #168
qvrjuec wrote: post #160

Earlier quoted context omitted.

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.

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?

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.

Re: '50% of transactions were fraudulent' when Steam accepted Bitcoin for payments

#232

Post by cuteboy19 »

devit wrote: post #105

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.

> 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

Re: '50% of transactions were fraudulent' when Steam accepted Bitcoin for payments

#233

Post by NicoJuicy »

rosndo wrote: post #111
NicoJuicy wrote: post #100

Earlier quoted context omitted.

Yes. What do you think a chargeback is?

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.

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.

Re: '50% of transactions were fraudulent' when Steam accepted Bitcoin for payments

#234

Post by HWR_14 »

jpollock wrote: post #61
janandonly wrote: post #2

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 bitcoi…

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 charg…

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.

Re: '50% of transactions were fraudulent' when Steam accepted Bitcoin for payments

#235

Post by schoen »

anonporridge wrote: post #203
TedDoesntTalk wrote: post #199

Earlier quoted context omitted.

> 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?

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 (has…

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.)

Re: '50% of transactions were fraudulent' when Steam accepted Bitcoin for payments

#236

Post by loyl »

rosndo wrote: post #123
pfooti wrote: post #96

Earlier quoted context omitted.

there's also banks.

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.

What bank are you using I am trying to send money to my family and no transaction works

Re: '50% of transactions were fraudulent' when Steam accepted Bitcoin for payments

#237

Post by mbreese »

devoutsalsa wrote: post #133
andai wrote: post #124

Earlier quoted context omitted.

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...

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

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).

Re: '50% of transactions were fraudulent' when Steam accepted Bitcoin for payments

#238

Post by doomroot »

kadoban wrote: post #227
doomroot wrote: post #143

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 a…

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.

> 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.)

Re: '50% of transactions were fraudulent' when Steam accepted Bitcoin for payments

#239

Post by doomroot »

LanceH wrote: post #208
doomroot wrote: post #143

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 a…

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?

These are called "orphan blocks" and they happen very regularly, like everyday.

https://bitcoin.stackexchange.com/questions/2170/how-often-f...

Re: '50% of transactions were fraudulent' when Steam accepted Bitcoin for payments

#240

Post by bavell »

anonporridge wrote: post #203
TedDoesntTalk wrote: post #199

Earlier quoted context omitted.

> 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?

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 (has…

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.
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