Due to Bitcoin network fees, customer loses $10 trying to buy $25 game on Steam

https://www.reddit.com/r/CryptoCurrency/comments/7e7wsq/shady_business_of_bitpay_buy_29_game_on_steam/

by mbgaxyz • 9 years ago

115 70 9 years ago

makomk7• 9 years ago

Editorialized title that omits the key role BitPay's policies played and blames this on Bitcoin's network fees. BitPay's policy of failing transactions if they don't confirm within 15 minutes has always been broken, because even if the transaction gets into the next block there's a reasonable chance (about 25%, I think) that no block will be mined within the next 15 minutes.

sillysaurus3• 9 years ago

The customer doesn't care whose fault it is. All they know is they lost $10 when trying to use BTC as cash.

Trundle• 9 years ago

"Due to Bitcoin network fees"

makomk7• 9 years ago

Maybe not to the customer, but it matters in general because Bitpay and others are pushing Bitcoin Cash as a solution to this on the basis that it has lower fees because of its bigger block size (also because no-one is using it, so the blocks are almost always far below the Bitcoin block size). They likely stiffed him on the transaction fees for the return transaction too; the Bitcoin client's recommended fees are already on the conservative side, and they charged more.

Dylan16807• 9 years ago

The customer doesn't care whose fault it is.

That's usually used as justification for the customer blaming the company they were doing business with. (Which makes a lot of sense; it's that company's job to insulate the customer.) Weird to see you using it the opposite way.

Lazare4• 9 years ago

Actually the main reason they lost $10 would seem to be the fact they transferred the wrong amount of BTC.

mrb3• 9 years ago

A trivial solution would be to increase the block size, but unfortunately Bitcoin Core developers refuse to do it, under the pretext that it will "increase centralization". In reality, a reasonable (2-4×) increase wouldn't. The amortized cost of running a full node able to support 2-4 times larger blocks is only $5 per month (http://blog.zorinaq.com/full-node-on-5-dollars/). The block propagation delay has also largely been solved with Compact Blocks which transmit a nominal 1MB block in ~20kB. Also, at least 2 on-chain scaling technologies are being developed that would easily let us increase block sizes: UTXO commitment sets can reduce long-term blockchain storage by 50×, and Graphene reduces the size of a 1MB broadcasted block by another order of magnitude, down to ~2kB.

nadaviv4• 9 years ago

We've already got a 2x block-size/capacity increase in the form of SegWit.

increase the block size, but unfortunately Bitcoin Core developers refuse to do it

This is simply untrue.

alanfalcon2• 9 years ago

That’s not true at all in practice. If it were then we’d be seeing 2x as many transactions confirming after SegWit went live (we’re not).

cryptodogemoon2• 9 years ago

What?

The core developers (employed by Blockstream) have intentionally kept the block size at 1MB in order to support the product they're attempting to develop (lightening network layers) which lets them facilitate federated payment processors siphoning fees out.

It's a red herring to claim larger blocks increase centralization when it's just data storage. Drives are cheap. Centralization already happened once sha256 ASIC hardware was produced enmasse, preventing normal users from earning block rewards. The Bitcoin devs are lost in political dogmas, rather than improving the software for users.

Thankfully there's alternative iterations.

makomk7• 9 years ago

There's no such thing as a trivial change to the bitcoin consensus rules, especially when that change requires everyone to upgrade their software at once on pain of financial loss. We're talking something that's never been done before in the entire history of Bitcoin.

Also, running a full Bitcoin node on a machine with a spinning rust disk and a relatively small amount of RAM is going to be hell - especially if that disk is heavily shared - because it has to do a lot of random reads from the chain state DB in order to retrieve outputs referenced by the transactions, with the number of reads scaling linearly with the block size. I think some of this may be skipped during the initial block download these days, but you can hit 1 minute plus per block easily just with the existing block size limit. It looks like the hosting provider he chose has some kind of SSD cache of unspecified size which might have helped, if everything fitted in it.

hendzen• 9 years ago

There's no such thing as a trivial change to the bitcoin consensus rules, especially when that change requires everyone to upgrade their software at once on pain of financial loss. We're talking something that's never been done before in the entire history of Bitcoin.

You mean... like this? https://en.bitcoin.it/wiki/Value_overflow_incident

vita17• 9 years ago

We're talking something that's never been done before in the entire history of Bitcoin.

That is false. There were even rollbacks in the early days. Don’t talk about a subject you haven’t personally experienced or taken the time to research.

mrb3• 9 years ago

«a lot of random reads»

This is not true at all. On the last 10 blocks (495808-495817, ~6000 seconds) there were 22,277 txns and 49,746 txn inputs. That means a full node needs to look up on average only 8.3 inputs per second in the UTXO database. Assuming 1 I/O per lookup, that's 8 IOPS, which is a trivial workload, even on a non-SSD setup.

I am the author of this blog.zorinaq.com post and I can assure you the real-world I/O workload I see on this $5/month node is negligible.

Amezarak3• 9 years ago

Also, running a full Bitcoin node on a machine with a spinning rust disk and a relatively small amount of RAM is going to be hell

Is anyone even actually doing that? Even several years ago when I last did it, the blockchain was 60+GB (now it's more than twice that) and you were never, ever going to get anything out of it other than heating the room up.

The way I thought most people were going was using something like Electrum, where you still have your own private wallet that nobody else controls, but you're not yourself a full node.

Razengan• 9 years ago

Curious: Is it not feasible to start a separate currency, say, “Bitcoin 2”, with the new rules and let people exchange at their own convenience?

CPLX• 9 years ago

And here I was thinking a trivial solution would be to pay using US dollars instead of bitcoin. I guess I don't understand technology.

Rallerbabs• 9 years ago

This is typical bcash spindoctoring.

It's not due to Bitcoin fees. It's due to BitPay's ridiculous fee mechanics.

Bitcoin works perfectly well when the mempool isn't being logjammed by 1-satoshi transaction spammers, in a misguided attempt to make bcash overtake Bitcoin.

Sometimes, the obvious solution isn't the right one.

Bigger blocks means more bandwidth is needed for blocks found by miners, which are transmitted across the whole network.

Our infrastructure isn't growing as fast as Bitcoin is.

Ergo, on-chain scaling doesn't work. Scaling can only realistically be done off-chain.

When in doubt, consult our boy Andreas:

https://www.youtube.com/watch?v=AecPrwqjbGw

There is no block size big enough that it will prevent transaction spammers from logjamming the mempool.

Big blocks are not in any way, shape or form a solution to any problem.

Sorry, bcash supporters...

Big blocks don't scale.

Full stop.

Lazare4• 9 years ago

From the second screenshot, the transaction value was 0.003857 BTC. From the guy's post, he transferred 0.003853 BTC. From the first screenshot, BitPay is saying he underpaid by 0.000004 BTC which would seem to be...100% correct?

I mean, obviously Bitcoin is a pretty silly way to buy a game on Steam, but this seems to be 100% user error.

...well, probably. There's some key info missing here, but this seems highly suggestive:

"BitPay emailed me saying I underpaid by 3 cents at the time, and said to refund me. I checked the price of bitcoin 0.003853 btc in usd is around $31 which was a lie on their part."

No, they said he underpaid by 0.000004 BTC. And the number he was googling is, coincidentally, 0.000004 BTC lower than the transaction value in his screenshot, so...

makomk7• 9 years ago

Unless BitPay have changed their policies, the exchange rate is only locked in for 15 minutes. If the transaction doesn't get its first confirmation before then, it expires and if the exchange rate goes up even slightly they consider the transaction underpaid. That's almost certainly what happened here. They used to be more sensible and only require the transaction to be broadcast to them within the 15 minute window, but they quietly changed it a few years back.

nadaviv4• 9 years ago

If the transaction doesn't get its first confirmation before then, it expires

I don't think that's true. To the best of my knowledge, they lock-in the rate if the transaction appears on the network within the 15 minutes window, regardless of when its confirmed.

Lazare4• 9 years ago

That's interesting. Their published terms of use do NOT say that, so if so that's shady as hell.

twiss• 9 years ago

Yeah, it seems plausible that he thought he had to pay $29 in BTC, and so googled and paid that - but it came out 0.000004 BTC lower. And later when he found that what he paid was now $31, he also thought "well that's more than what I had to pay".

mohamedmansour3• 9 years ago

Naw, BitPay tells you the exact amount to pay in BTC for a 15 minute window. Around 10 of my friends verified I paid the right price, I was projecting to the big screen to show how it works. For some reason the network fee to pay the miners screwed up in BitPay or the price they received wasn't the right price since bitcoin went down slightly within 2.5 hours. So at the end of the day, the consumer is to blame.

alanfalcon2• 9 years ago

Bitcoin was a perfectly reasonable way to buy a game on Steam in February last year. Of course my 0.035631 BTC purchase means I could have paid $15 cash and saved the coins and had $287 worth of BTC today. So maybe it wasn’t reasonable.

xbzbanna• 9 years ago

The fact that you used BTC for that purchase doesn't matter, you could also have decided to buy BTC instead of anything you bought with another currency.

Although in an environment where the main national currency experiences deflation like bitcoin, you do actually see people responding to the incentive by reducing current purchases, which is bad for economic growth.

wmf• 9 years ago

This is why it's better to pay using QR codes because you can't mistype the amount.

PatchMonkey• 9 years ago

It almost looks like Bitpay and Steam resolved the price conversion at separate times. Where the upward trend screwed the customer.

Lazare4• 9 years ago

I've never used Bitpay, but according to their docs, the process is:

1. The merchant tells Bitpay the USD value of the transactions

2. Bitpay calculates a BTC value based on current exchange rates

3. Bitpay sends an invoice to the customer valid for 15 minutes

4. If the transaction to transfer BTC is broadcast on the network prior to the invoice expiring, Bitpay will honour their initial quote.

5. Once 6 blocks have confirmed the transaction, Bitpay transfers the original USD amount to the merchant

So in this case, Steam doesn't do the price conversion at all, only Bitpay does. And Bitpay only does it once, when the invoice is issued. It appears that the user either transferred an incorrect amount, OR he waited more than 15 minutes to start the transaction, OR (as some are suggesting) Bitpay is being nefarious and not honouring their quote.

mohamedmansour3• 9 years ago

Hi @Lazare, I am the dude who posted that reddit post.

The $25 game cost me 0.00424232 BTC (around $32.96 USD at that time). I transferred that much to them, but the network fees for some reason raised within that 2.5 hours. 3 cents. And they cancelled it. The fees were 0.00038932 BTC

It is messed up. Sending money from Coinbase to BitPay, for $29 resulted in $32 dollar in fees.

Nevertheless, this experiment showing a bunch of friends (~10) why Bitcoin is the worst payment provider. Network fees are not calculated correctly, transaction fees too. And at the end, this 3 cents difference from the transaction fees made a big deal.

And worse of all, customer support doesn't exist for the consumer at all when they pay for Bitcoin.

petercooper2• 9 years ago

I'm admittedly green when it comes to the day-to-day workings of Bitcoin but put some money into it on Coinbase a few weeks ago.

I decided to see how easy it was to use for transactions, so I bought $2 of credit with an online service. But the payment service this other company used charged a $6 fee of some kind, and there was also a $8 'transaction fee' for the Bitcoin itself, meaning it cost around $16 to get my $2 of credit :-D I decided I'd probably stick with it as an investment instead of a currency..

Amezarak3• 9 years ago

I really don't see the value of using Bitcoin as a currency either. The transaction fees are absolutely ridiculous and confirmations take hours, sometimes days. I bought some a long time ago and was trying to move them around a couple weeks ago and it was an absolute nightmare.

wolco• 9 years ago

If you want a transaction that makes it possible to be untrackable back to yourself then bitcoin is the new cash.

16 dollars is a crazy amount in some cases and peanuts in others.

canoebuilder• 9 years ago

Out of curiosity, with your less than stellar experience actually using it, what makes you view it as an attractive investment?

petercooper2• 9 years ago

Ponzi scheme / not everyone is "on the boat" yet. If Bitcoin does hit a million dollars one day, I'd be kicking myself, so have a small "I'm OK with losing this" amount invested now.

namlem• 9 years ago

An investment? It's in the middle of a huge bubble. As soon as people realize how worthless it is, BTC is going to come crashing down.

notyourday• 9 years ago

That's because the current state of the crypto currencies is CryptoScam designed to fleece the consumers.

idibidiart2• 9 years ago

Also like I said removal of net neutrality regulations means ISPs esp big ones can kill Bitcoin by blocking the default port used by the Bitcoin client and ISPs can more than just blocking a certain port. ISPs can identify and block all P2P traffic (anything that is not being sent or received to/from an approved central service) and do it in the name of protecting MPAA member revenue or whatever blanket execuse like killing off encrypted p2p communication like Signal et al)

swarnie_• 9 years ago

Is Net neutrality going to be the next "Russian hackers" which gets shoe horned in to and blamed for everything?

idibidiart2• 9 years ago

Get informed. Don't talk out of your ass\:

https://www.coindesk.com/eroding-net-neutrality-hurt-bitcoin...

lossolo• 9 years ago

I have paid ~180$ dollars of fee couple of days ago while sending around 600 dollars. Tx was around 6 KB though. I was using wrong client for transaction (I had newest bitcoind-qt with fee set manually and older client with automatic fees) and fee was automatically set to that amount.

tek-cyb-org• 9 years ago

and so the BCH propaganda has started...

mohamedmansour3• 9 years ago

BitPay loves BCH, maybe they are doing this just to screw with peoples mind?

Due to Bitcoin network fees, customer loses $10 trying to buy $25 game on Steam

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