Thursday, November 28, 2019

In-game virtual items as a form of criminal money

A few weeks back Vice had an interesting story about Valve, a game maker, putting an end to trade in various in-game items because "worldwide fraud networks" had been using these items to "liquidate" their gains. You can see the blog post from Valve here:
"Why make this change? In the past, most key trades we observed were between legitimate customers. However, worldwide fraud networks have recently shifted to using CS:GO keys to liquidate their gains. At this point, nearly all key purchases that end up being traded or sold on the marketplace are believed to be fraud-sourced."
Having not played a video game since the original Super Mario Bros, this all sounded all very strange to me. But I couldn't resist digging a little deeper. After all, strange media-of-exchange are a major theme here on the Moneyness blog.

Let's set the stage. Anyone who plays Valve games can access something called the Steam Community Market. Players can go to this market to buy and sell in-game items from each other. So for instance, a Counter-Strike: Global Offensive game player may want to buy (or sell) a "skin" which is a texture that can make their gun look fancier. Some skins are apparently quite rare and valuable.

To make a purchase, players will need to have some funds in their Steam Market wallet. Wallets can be funded by credit card or a gift card. The catch is that once funds are on Steam, they cannot be directly transferred to other players. I can't send $100 in Steam balances directly from my Steam wallet to my friend's Steam wallet. Funds can only be used to buy items from other players. Furthermore, there is no way to cash-out of the system. Once money is deposited into Steam, it never leaves.

Now let's get to the fraud stuff, and we'll circle back to Steam later. Say that I'm a fraudster. My shtick is to dial up corner stores, claim that there is a bomb hidden in one of the aisles, and ask for a ransom of $5000 or I will set it off. The store owner has 30 minutes buy five $1000 MoneyPaks, then text me their PIN numbers. Upon which I quickly load the funds into my reloadable Green Dot prepaid debit card, the bomb being a hoax. (I kid you not, this is a true story).

Below is another variation of the scheme, the fraudster claiming to be law enforcement:

There are many versions of these prepaid scams.

In any case, say I pull this threat off fifty times. This leaves me with $250,000 and a pile of prepaid cards. The Green Dot cards aren't linked to my identity, so I needn't worry. But I really want to do something with my money, say buy a house. To do so I will somehow have to get the $250,000 into my bank account, and probably quickly before the money gets frozen. How do I do this safely? Obviously I can't just directly transfer the money from my card to my account. The authorities will connect the dots pretty quick and arrest me. I need to obfuscate the transaction chain.

And that's presumably where Valve's Steam Community Market comes in. If I can send the stolen funds through a market like Steam, maybe I can throw off anyone who comes after me.

First, I go to as many drug stores as I can and use my prepaid cards to buy up Steam gift cards. I'd have to buy around 500 or so $500 cards. And then I upload the $250,000 in card value to a bunch of online Steam accounts that I've created.

Remember, Valve doesn't allow for cash-outs, so the money is effectively frozen in Steam. This is where the items listed on the Steam Market come into play. I now buy $250,000 worth of skins or some other digital knick-knack. These items are now my get-out-of-jail card.

I proceed to sell the items I've stockpiled to other players who desire them for legitimate in-game use. The important thing here is to get actual dollars in return, not Steam dollars. I won't use Steam's in-game market for this, but third-party venues like OPSkins, Bitskins, or Each of these sites provides an external trading venue where buyers and sellers of in-game items can meet and advertise prices. They also offer a wallet and escrow service to ensure neither buyer nor seller scams the other.

Since I'm in a rush to sell my virtual items, I'll probably lowball my prices on OPSkins, which means I may only get $150,000 for the original $250,000 I've spent. This is a great deal for regular game players. They don't have to fund a Steam account with, say, a $100 credit card transfer. Instead they can buy items from me for $70 on OPSkins and sell them on Steam for $100, saving themselves $30!

I then have OPSkins wire the $150,000 I've earned to my genuine bank account. And now I buy a house. Voila, I've hidden the source of the my money by running it through Steam. Somewhere between converting my prepaid funds into Steam gift cards, and then buying digital items with them, and then selling them, a would-be law enforcement agent will likely lose my scent.

Now that's roughly what I think that Valve is talking about in its blog post when it talks about "fraud networks", add or subtract a few steps. I wouldn't know, I'm just a writer.

What about Valve's response to the fraudsters? From what I gather, one of the most liquid items on the Steam Market are Counter-Strike: Global Offensive (CS:GO) keys. The price of keys is quite stable. Valve sells them at a fixed price, whereas the price of other goods are set by the Steam community, and fluctuate. And so keys have become a sort of currency. By adopting keys as their exit route, fraudsters would have made them even more liquid, and thus better capable of serving as a medium of exchange.  

Valve's defence is to freeze keys. "Starting today, CS:GO container keys purchased in-game can no longer leave the purchasing account," it said. This effectively cuts off any fraudster from existing the system... via the key route. However, there remain many other CS:GO items that folks can buy on Steam and sell on third-party exchanges like OPSkins. And there are other games that provide in-game items, like Dota 2 and Team Fortress 2. One wonders if some other item will become a go-to digital currency for fraudsters now that the CS:GO key route has been terminated. On Reddit, a few players speculate that Dota 2 Arcanas will take the place of CS:GO keys.

Usage of in-game virtual items as a bridge currency of sorts isn't without precedent. When conditions are right, instruments that we don't traditionally use as money, like CS:GO keys, get recruited for that purpose. Usually this occurs because there is some sort of hurdle or friction that prevents mainstream media-of-exchange from functioning, and only an exotic instrument can overcome that speed bump.

Equities are one of the more common exotic media-of-exchange. For instance, to avoid exchange controls Zimbabweans have traded in the inter-listed shares of Old Mutual, lifting them from the Zimbabwe Stock Exchange to London. Argentinians used American Depository Receipts in 2001 to dodge the "corralito". I wrote about both of these here.

More recently, gold was recruited as a payments rail for evading Obama's sanctions.

Heck, even I'm guilty. In Canada, retail foreign exchange conversion fees are ridiculously high thanks in part to our banking oligopoly. So I use Norbert's Gambit to get around the blockade. The gambit involves using dual-listed stocks or ETFs as a bridging asset between U.S. dollars and Canadian dollars. Debit card fraudsters are doing the same when they use CS:GO keys as a go-between asset for cleaning their money.

The desire to engage in trade is voracious. Blockades may be put up, but people will devise all sorts of ingenious monetary solutions for getting around them.

Friday, November 22, 2019

Notes from an inter-planetary monetary anthropologist

My work as an inter-planetary monetary anthropologist has brought me to dozens of different planets to study their monetary systems. The monetary system of the most recent planet that I visited, the planet of Zed in the Xv2 galaxy, falls into the same classification as the systems on Vigil X and Earth (which I last visited in 1998 and, according to other anthropologists, hasn't changed much).

As on Earth, markets on Zed tend to lie towards the free end of the spectrum. Zedians can own property. And property rights are enforced. Zedians often put their savings in institutions much like banks and earn interest. Banks in turn lend to individuals and business.

However, one of the oddities of the planet of Zed is that its inhabitants universally adhere to an economic religion, Zodlism. One of the strictures of Zodlism is that all monetary instruments must yield at least 2% interest. Even a transactional account, say like Earth's checking accounts, must offer the account holder a minimum 2% per annum.

This requirement is based on the Zodlist stricture that anyone who is temporarily deprived of an object to the benefit of someone else deserves a minimum reward for their sacrifice. Banks that fail to meet the 2% requirement risk censure from the planetary religious organism, the Zodl Council, and ostracism by customers. (For a full account of Zodlist economic doctrine, see Smith & Elf33, pgs 450-512).

Interestingly, banknotes (which on Zed are issued by all sorts of different institutions and individuals, unlike Earth which confines that role to central banks) also pay 2% interest. Each note has a sensor in it that records how much interest the note has accrued. Any Zedian can access unpaid balances by uploading them to their account or claiming them at a trading post when making a purchase. Zed is a little further ahead than Earth in this respect, which still hasn't bothered digitizing its banknotes.

While I was visiting Zed, the planet's economy was facing an unprecedented economic slowdown. With optimism sapped, borrowing on Zed had been plummeting. Zedians were simply too afraid about the future to take out loans to fund business expansion or enlarge their underground shelters. In response to this decline in loan demand, bankers had been trying to make loans more attractive to the Zedian public by pushing lending rates ever closer towards 2%. 

Bankers have even been entertaining the revolutionary idea of lending at rates below 2%, say to 1.5%.

This would leave Zedian banks and note issuers in an odd position. If they only earn 1.5% from borrowers while paying depositors the obligated 2%, banks would be effectively paying out more than they receive in interest. But this is the opposite of what banks are supposed to do! They would soon go out of business. (Any Zedian could make a risk-free profit by taking out a bank loan at 1.5% and depositing those funds at the bank to earn 2%.)

Pressure is building on Zed's religious leaders to alter the 2% rule. Some moderate Zodlists have proposed that a ceremonial 2% rate continue to be paid to depositors and banknote owners, but a fee be levied to claw back a part of the interest. So that if someone is paid 2 Zed in interest, the bank or banknote issuer will take back about half that in fees, ie. 1 Zed. This would allow issuers to 'synthesize' an interest rate of 1% while still conforming to the letter of Zodlism. Once this change is implemented, banks would be able to safely lend at 1.5% or so.

These pragmatists argue that at 2% per annum, borrowing it just too expensive for most people. The planet requires an interest rate of 1.5% if lenders are to be successful in luring the public back into taking on loans. They further argue that when would-be borrowers are priced out of the market, the downturn is exacerbated and prolonged. But strict Zodlists refuse to budge. The idea of earning just 1% on banknotes appalls them. "It's unnatural!" they cry.

The debate certainly reminds me of my time on Earth. Historically, Earth's religions also set limits on interest rates. But whereas Zodlism dictates a minimum interest rate on deposits, Earth tended to set a maximum rate on loans. These rules were referred to as usury laws. Perhaps Zed could learn from its distant planet, since Earth (or at least parts of it) saw it fit to end usury laws long ago. I feel like this softening is likely to happen. In their survey of 450 planetary monetary systems, LeGuin & Xsszym find that law and religious practices tend to bend to planetary economic exigencies. 

Unfortunately, I never saw the resolution to Zed's 2% debate. My ship had arrived to take me to the next planet. Perhaps I can come back one day to see if Zedians have solved the problem.

Addendum: In 2019 I returned for a quick return visit to Earth. Who would have guessed, but they are facing many of the same problems that Zed is experiencing!

Thursday, November 14, 2019

"Controllable anonymity"

Reuters and Coindesk report that that the People's Bank of China's imminent central bank digital currency (CBDC) is going to have a feature called controllable anonymity. Perhaps some wires have been crossed in the translation, but it'd be hard to come up with a more Orwellian piece of double speak than this. Plenty of people on Twitter are sneering.

But in this post I'm going to take China's side, if only tepidly.

None of the news articles have made much of an effort to explain controllable anonymity. But we've actually known about this feature for quite some time. Back in 2018, the project's head, Yao Qian, provided a short description of it. It's not as Orwellian as it seems.

China's new CBDC, otherwise known as the Digital Currency Electronic Payment (DCEP) platform, requires users to provide their real identities when they sign up. In the link above Yao calls this real-name at back-end. So the People's Bank of China will be privy to the identity of each user. This is to guard against money laundering and tax evasion. So not much anonymity here.

The element of anonymity crops up in a different part of the transactions cycle. It seems that a payee will be able to control what sort of information they throw off to the counterparties that they are dealing with. Yao calls this voluntary anonymity, presumably meaning that payors/payees can volunteer how much of their personal information they wish to leak out to stores, suppliers, customers, or whatnot. This sort of fine-grained control over one's data isn't something that you can do with, say, a credit card. If I buy groceries at Loblaw, who knows what sort of personal information they are collecting about me.

Source: Technical Aspects of CBDC in a Two-Tiered System, by Yao Qian [link]

So the upshot is that China's CBDC will be providing a certain sort of privacy to users. Which reminds me about what Rodney Garratt and Morten Bech, two economists that specialize in payments systems, have written about payments anonymity. According to Garratt and Bech, there are two grades of payments anonymity. With third-party anonymity, a person's true identity is hidden from everyone who participates in a transaction, including the system operator. Banknotes are the best example of third-party anonymity, since the issuer—the central bank—has no idea who is using them.

Counterparty anonymity is less strong. This sort of anonymity prevails when personal information about the two counterparties to an exchange remain hidden from each other but the system operator is still privy to each user's identity. Yao's controlled anonymity presumably means that DCEP will provide Garratt and Bech's second sort of anonymity, counterparty anonymity.

Federal Reserve researchers like Charles Kahn, William Robers, and Jamie McAndrews have delved into the benefits of counterparty anonymity. The ability to cloak your information from sellers or payees reduces the risk of identity theft, the possibility that a counterparty might stalk you and rob you, or the odds of becoming a victim of direct advertising and other solicitations.

Here is Kahn:
"Suppose, for example, that I wish to make a perfectly legal transaction with a stranger but wish to ensure that there are no unpleasant ramifications down the road. It is not hard to think of examples where the information about the purchase of a good makes the individual vulnerable: a purchase indicating that the individual has high wealth, or a purchase that may be embarrassing, even if perfectly legal (certain medications, for example). More prosaically, making a purchase on the internet involves the revelation of identity in ways that make you subject to spam or harassment. In short, sometimes we want the ability to ensure that others cannot use the information in the history of our transactions against us."
Where does all this leave Chinese consumers with respect to payments privacy? It could be that they are worse off. If the People's Bank of China's new CBDC is being designed to replace cash, then on net Chinese citizens will lose the ability to transact in a way that is anonymous to all parties. Cash provides third-party anonymity, DCEP doesn't.

But it's also possible that Chinese consumers will be better off. If the new CBDC is designed as a complement to cash, then Chinese citizens may actually have more privacy options than before. Not only do they still have access to cash's third-party anonymity, but they also will gain strong digital counterparty anonymity. Surprisingly, this would mean that they will end up with more information-cloaking tools than us Westerners.

Once again I'm reminded of something Charles Kahn wrote. Privacy needs are different, so we should "expect a variety of platforms to emerge for specific purposes." In this context e-cash probably won't "play all the privacy roles that physical cash currently plays," says Kahn. It is possible that this multi-faceted approach to privacy is what is playing out in China.

Wednesday, November 6, 2019

From unknown wallet to unknown wallet

Antony Lewis recently published a useful article on stablecoins. In it he describes something called "permissioned pseudonymity". In traditional payments systems, people only get to access to payments services after opening an account. This requires that they provide suitable identification. So these systems are not pseudonymous. Usage and personal identity are linked.

Stablecoins operators, on the other hand, sever this link. Users can transfer stablecoins to other users without providing personal information. John Doe can pay Jane Doe, no questions asked. Antony calls this permissioned pseudonymity because regulators permit pseudonymous usage of stablecoin networks.

The above payment is an example of permissioned pseudonymity. It is a $30 million transfer between two unknown wallets along the USD Coin stablecoin network. The operator of this network, Centre, may have no idea who did this transfer.

I do wonder how long regulators will allow pseudonymous usage of stablecoins to continue. Most of the rules surrounding payments emanate from the Financial Action Task Force (FATF), a global committee of regulators that meets together every once in a while to determine how to fight ghoulies like money laundering and terrorist financing. The FATF guidelines are in turn applied by local regulators in each country with some modifications, and monitored by FATF for compliance.

FATF regulations are supposed to be technology-neutral. In short, the same principles apply to new technologies and incumbent technologies alike. This makes sense. We probably don't want regulators to picking winners and losers by setting one set of requirements for companies A-E and another set for F-J. The competition for market dominance only begins after they've complied with the same rulebook.

So far FATF hasn't had much to say on stablecoins. But you can be sure that something is in the works, and it isn't likely to be good for stablecoin operators. The problem is that granting permissioned-pseudonymity to stablecoin operators contradict technology-neutrality. It sets one set of standards for bank accounts and another for stablecoins.

Banks are already obliged to collect the personal information of all their account holders. If two people transfer $30 million along the bank payments network, you can be sure that the banks who manage these accounts have already gone through the costly process of collecting personal information. 

Why should stablecoins like USDC and PAX be exempt from this obligation?

Antony suggests that stablecoins qualify for an exemption because they meet regulatory concerns through other sensible means. Because stablecoins use blockchains, and blockchains record transactions, the information trails left by pseudonymous stablecoin users can be traced and monitored for suspicious activity. The stablecoin issuer can then toggle a kill switch and freeze potentially dangerous addresses.

This makes sense. But if stablecoin issuers can avoid identifying its customers by implementing a process of monitoring and freezing, it seems to me that the incumbent technology, the bank account, should also be granted the same opportunity. After all, account-based systems can do kill switches and tracing just as well as stablecoins can.

For instance, say that Citibank were to set up its own pseudonymous account payments network, call it Citibank HushAccounts. Customers can open a HushAccount without providing personal information. They can then use the HushAccount network to trade balances pseudonomously to other account holders. Citibank bankers monitor HushAccount transactional patterns and freeze anything that looks odd. Personal information only needs to be provided when a user wants to cash out of the HushAccounts system.

Of course, we already know that Citibank can't implement HushAccounts. It's illegal. Which underlines my point about technology-neutrality. Why can a stablecoin like USD Coin get away with pseudonymity but Citibank can't?

Let me put it differently. If stablecoin issuers can get away with not collecting user ID, then expect to see Citibank make a few cosmetic changes to its traditional account-based system so that it qualifies as some sort of stablecoin blockchain thingy. And now that it needn't collect as much information about its customers, it can fire a bunch of its compliance staff. Other banks would copy it. Soon we'd get hyper-stablecoinization. Every bank account would be converted into a stablecoin. But FATF rules aren't supposed to favour any one technology.

So for the sake of maintaining neutrality, I wouldn't be surprised to see regulators put an end to pseudonymous stablecoin usage. Stablecoin issuers will only be able to give out addresses to people who have passed through some sort of know-your-customer process.

There's a second possibility. As Antony points out, there is one notable regulatory exception to universal identification in payments. In many parts of the world, people can buy prepaid debit cards (or in Europe, e-money) without providing any ID. This provides the card owner with pseudonymous access to the Visa or MasterCard networks. I've written about these cards before (in fact, it's one of the most popular posts I've ever written). You can also trek over to my article at Sound Money Project on the topic.

Stablecoins, like prepaid debit cards, might be granted their own exemption.

There is a caveat to pseudonymous prepaid access. Regulators have set a very low ceiling for the amount of pseudonymous value that prepaid cards or e-money wallets can hold. In the case of the U.S. it's just $1,000. (In Europe, it's just 150 euros). Anything above that and a prepaid card holder must submit identification. There are other limits too. In the U.S. the cards must be non-reloadable, and people can't use them for person-to-person payments, at ATMs, or for international purchases. This makes for an extremely constricted payments product.

Regulators believe that by keeping the pseudonymous prepaid ceiling low and reducing the features that a card offers, they achieve two things. The risk of money laundering and terrorist financing are minimized. At the same time the unbanked and those without ID still get access to the retail payments system.

If FATF were to allow stablecoins to offer a limited amount of pseudonymity, the ceiling for it would probably be quite low, much like prepaid debit cards. No more $30 million person-to-person payments, just $20-$2000 ones. After all, it's hard to make an argument for why genuinely needy folks without IDs would need to make million dollar stablecoin transactions. 

I should point out here that I'm not saying that I'm a fan of FATF and its mission to unveil every single transaction. I've written many times about the benefits of financial anonymity. And a lot of smart people that I read think that the cost of enforcing anti-money laundering rules far outweighs any benefits that it provides. All I am saying is that I suspect that permissioned pseudonymity for stablecoins isn't going to last very long, in its current form. It'll either be banned altogether, or a very low ceiling will be set on it.

P.S. If I had to predict, I'd go with a ban. It's easy to get around a ceiling. If the ceiling is set at $1000, then users can set up 1000 pseudonymous accounts in order to get $1 million in pseudonymity.

Saturday, November 2, 2019

Bitcoin, 11-years in

Satoshi's first email [source]

Eleven years ago, Satoshi Nakamoto announced the bitcoin whitepaper to the world. Coinbase, a large cryptocurrency exchange, recently celebrated this milestone with a retrospective.

I'm going to remix Coinbase's narrative to tell a different account of bitcoin's last 11-years.

The thing that fooled us all for a while, myself included, is that we all thought bitcoin was solving a monetary or payments problem. It was labelled a coin, after all, and coins fall within the realm of monetary economics. To further complicate matters, Satoshi told his story using phrases like "electronic cash system" and "non-reversible transactions". Perhaps we deserve to be forgiven for not seeing bitcoin's underlying nature. After all, tearing down the existing monetary system and building a new one was a fresh and exciting narrative.

Anyways, Coinbase still believes this old tale. "As with other technologies, money has gone through many upgrades over the years," its marketing team writes. "Bitcoin is the latest breakthrough in a technology that’s millennia old."

What is now apparent is that bitcoin was never a monetary phenomenon. No, bitcoin is a new sort of financial betting game. It is a digital, global, highly-secure, and fairer version of the old-fashioned chain letter.

The premise behind bitcoin-the-game is that the current wave of buyers must guess when (or if) a subsequent wave of buyers will emerge, this second next wave's participation being contingent on when (or if) they believe a third wave of buyers to emerge. If they guess right, the early birds win at the expense of the late ones. And they can win a lot of money, as Coinbase points out in its post:

Source: Coinbase

Think of bitcoin as a pure mind game, a Keynesian beauty contest in which we "devote our intelligences to anticipating what average opinion expects the average opinion to be." Those old fashioned chain letters that you (or your parents) used to get in the mail were an early type of beauty contest. The price that Alice was willing to place on a chain letter was a function of whether she expected the next recipient, Bill, to play by the rules and send it on, Bill's expectation in turn depending on the odds that Jack would join the game.

But chain letters had a major flaw. The chain order could be easily compromised by a fraudster who miscopied the list and put their name at the front. Bitcoin fixes this by introducing robustness to chain letter-type games. Bitcoin's blockchain is an unbreakable public record of where in line game players stand. Altering this chain order would require tremendous amounts of computer power, as Coinbase illustrates in this chart:

Coinbase: Source

Bitcoin-the-game has been spectacularly successful. As Coinbase points out, it "went from an idea in 2008, and a first transaction in 2009, to over 27 million users in the US alone in 2019, or 9% of Americans." Below, Coinbase has charted the number of active bitcoin addresses that have been created over the years:

Source: Coinbase

Why did bitcoin-the-game succeed?

First, it's a fun and cutting-edge game. Many people dream of thrusting themselves out of financial obscurity into millionaire land. Bitcoin is a technologically-sophisticated way to get there. No one wants to play grandpa's lottery.

Secondly, the way that bitcoin is designed helps it spread. Most of the legacy financial games that bitcoin competes with (poker, lotteries, sports betting) are regulated by the government. Strict rules prevent game providers from reaching a wide audience. For instance, online casinos may be prevented from serving out-of-state players, problem gamblers may be banned, and those who are under 18 must be excluded. These financial games are usually centralized. This means they are hosted on a single website, or at a physical location like a casino, or by a government-run lottery corporation. Which makes it easy for regulators to shut down game providers who break the rules.

But bitcoin is different. Because it is a decentralized and digital financial game, it can't be regulated or shut down. And so it can serve the entire globe with impunity. Which it has done by spreading into every crack and cranny on earth. As is illustrated by another of Coinbase's charts:

Source: Coinbase

Based entirely on whisps and storms of psychology, the price of bitcoin is inherently volatile. Its core volatility has stayed pretty much constant over the last 11-years. Users should expect the same for the next 11 years. Even if more people join a Keynesian beauty contest, the average opinion of the average opinion will always be a fickle, inconsistent thing, and so price will always be jittery.

So what about bitcoin-as-money? Yes, people do use bitcoin for payments. But this gets dwarfed by its popularity as a financial game. The problem is this. Bitcoin payment functionality is implemented on top of a highly volatile chassis, a fun but fickle beauty contest. Which hobbles the effectiveness of the payments platform. Regular folks won't use the stuff to pay. They don't want the value of their spending stash to fall by 20% overnight. And game players don't want to waste their tokens on buying goods & services. That could mean potentially missing out on a life changing jackpot. That's why the promise of mainstream bitcoin payments has died a thousand deaths over the last 11 years.

That being said, the demand for bitcoin in economically volatile regions such as Venezuela has hit record highs. Coinbase suggests that thanks to inflation and capital controls, bitcoin is finally being used as the electronic cash for which it was originally designed.

Source: Coinbase

Coinbase could be right. In places like the U.S. with functioning monetary systems, bitcoin is just too awkward to serve as a payments alternative. But in places where monetary breakdowns have occurred, regular folks may be more willing to put up with the inherent pitfalls of transacting with bitcoin. And so we finally get to see bitcoin-as-money emerging.That's a good thing.

But bitcoin's popularity in Venezuela is also consistent with the bitcoin-as-game narrative. When people are desperate to improve their lives, they may have little other option but to roll the dice. In Run Lola Run, Lola needs to quickly make 100,000 Deutschmarks to save her boyfriend's life. She races to a casino and plays roulette. Likewise, in the face of societal collapse,  Venezuelans may simply be gambling on whatever potentially life-changing bet they can find. Bitcoin is one such a bet. Unwinding what portion of Venezuelan usage is due to bitcoin-as-game versus bitcoin-as-money is tricky.

Coinbase goes on to spout the typical cryptocurrency industry nonsense about legacy payments. It claims that "sending an international wire transfer by major US banks costs around $45, can take days to process, and can be done only during banking hours." And here is the chart it uses:

Source: Coinbase

That may be a good critique from ten years ago. But with SWIFT gpi having rolled out a few years back, multinationals can make near real-time cross border payments using the traditional correspondent banking system. For individuals and small businesses, fintech Transferwise offers instant remittances over fiat rails. These can settle on weekends in nations like the UK, which have real-time retail payments systems. I've touched on this before.

Continuing along with hyperbole, Coinbase makes the claim that bitcoin remittance fees are minimal compared to fiat. But this ignores the sizable foreign exchange fees that one must pay when converting fiat into bitcoin and back into fiat. I've gone into this calculus before.

What's next for Bitcoin? asks Coinbase in closing. Let me give it a shot. It's possible that bitcoin-as-game will stay popular for a very long time. And if it does, that could be a good thing. As I've suggested before, there is a demand as-such for financial games and bets, specifically early-bird bets. Compared to many of the fly-by-night games out there, bitcoin provides a fair and trustworthy option.

What about the original vision that got us all so excited, bitcoin-as-money? Crippled by bitcoin's game-based engine, bitcoin payments are probably never going to move beyond the niche role that they currently occupy. That's better than nothing. When those on the fringes are temporarily cut off from the conventional payments system, they'll always have an option for making transactions. It might not be a user-friendly option, but at least it's there.