The Dark Side of Gaming Gift Cards: A Cryptocurrency Comparison

• Blockchain Interoperability and Fragmented Currencies
• The Role of Gift Cards
• The Intersection of Metaverse Activities and Unbanked Individuals
• Fortnite V-Bucks: The Default Transaction Flow for Unbanked Users
• Gift-Card Fraud Vs. Cryptocurrency Fraud
• Gift-Card Scams in the Digital World
• Cryptocurrency Vs. Robux
• Does Bitcoin Fix This?

Blockchain Interoperability and Fragmented Currencies

Fragmentation of currencies presents a fascinating subject in the world of cryptocurrency, particularly in the arena of blockchain interoperability. ETH, for instance, offers security spanning numerous layer-2s, while USDC exists in different, non-fungible wrapped forms like abcUSDC and xyzUSDC. This fragmentation isn't exclusive to digital currencies. Physical assets, such as money, also experience this division. A dollar in hand isn't the same as a dollar in a bank account.

The Role of Gift Cards

Consider gift cards. Likely, many people possess a few, especially following the holiday season. Earlier this year, a Bankrate survey estimated that unused gift cards hold roughly $23 billion nationally, equating to about 0.1 percent of the M2 money supply. Gift cards, when stripped of their attractive packaging, are simply a numerical code that opens the door to a digital cash equivalent. They're a halfway point between cryptocurrency and a debit card, providing a less secure but more accessible function than Bitcoin$42,260 -0.64% or Ether.

The Intersection of Metaverse Activities and Unbanked Individuals

This unique position of gift cards within the financial ecosystem introduces some interesting dynamics in online commerce. One such dynamic involves metaverse activities and the unbanked members of the wider population. This is illustrated by the Fortnite V-Bucks Gift Card, which is not as user-friendly as one might imagine.

Fortnite V-Bucks: The Default Transaction Flow for Unbanked Users

Fortnite V-Bucks, the in-game currency used by Epic Games to monetize gamers' fear of missing out, takes a central role in metaverse currencies. The Fortnite metaverse is a present-day reality for young players, where the virtual goods (skins) they acquire can hold as much weight as real-life accessories. However, the process of converting a V-Bucks gift card into in-game currency is far from straightforward and can prove confusing for users unfamiliar with internet search queries. Converting V-Bucks gift cards into in-game currency presents a surprising example of poor user experience even for those familiar with the equally challenging UX of cross-chain interoperability.

Gift-Card Fraud Vs. Cryptocurrency Fraud

Gift-card fraud presents a significant issue, especially in the case of the V-Bucks gift card which requires a login on a third-party site for digital conversion. This, however, presents an opportunity for fraud prevention and detection, similar to anti-money-laundering (AML) measures layered on top of the Bitcoin and Ethereum$2,315 -2.42% networks. While it's amusing to imagine a world without these controls, such a scenario would likely not improve the gaming experience or overall online security.

Gift-Card Scams in the Digital World

Gift-card scams in the real world are abundant and elaborate, involving a variety of questionable activities from alleged fraudulent charity tax rebates on Home Depot gift cards to compromised Starbucks loyalty points accounts. Cryptocurrencies like Bitcoin and Ether, due to their inherent lack of such controls, are used for extralegal purposes like laundering proceeds from fraud to funding of dissident movements in Hong Kong and evading capital controls in Turkey.

Cryptocurrency Vs. Robux

Roblox, another successful MMORPG, has its own in-game currency known as Robux. Despite having less cultural impact and earning potential than Fortnite, it has a large player base of young, unbanked individuals. Robux demand has expanded beyond the game into areas like click fraud, forming a complex ecosystem of scams and frauds involving gift cards across different platforms and locales.

Does Bitcoin Fix This?

Though Bitcoin's permissionless networks offer paths for various uses, some cryptocurrency projects seem to find a more suitable alternative in a system closely resembling gift cards. There are potential opportunities for an open-source approach to make gift cards more composable or programmable. However, the incentives for issuers to create such a shared trust layer are currently unclear. Web3 builders are tasked with finding user experiences where open and composable networks render traditional business models obsolete.

Edited by Jonathan Stoker