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I keep hearing about Bitcoin being used to pay for commodities, but will this actually ever scale? With a maximum transaction rate of ~3.5 transactions per seco

I keep hearing about Bitcoin being used to pay for commodities, but will this actually ever scale? With a maximum transaction rate of ~3.5 transactions per second, won't any practical application of Bitcoin for the masses eventually have to be implemented by a bunch of trusted third parties operating off the blockchain and bundling transactions? At that point, we seem to be back to using credit card companies who just happen to use the blockchain for clearing transactions with each other.

dennist 10y ago
You may me right that there might have to be third parties for scalability. But depending on how this is done, you might not have to trust them in order to use them (in the worst case, they could refuse your transactions or delay them but not steal your money). So you might give up some privacy and rely a little on third parties for lower transaction fees or speed, but as long as everything is still using the blockchain you'd still have the choice to transact without a third party if you're willing to pay the premium for it (perhaps large or international remittances).
deleted 10y ago
[deleted]
kang 10y ago
There are scaling solutions like lightning network being built and the blocks are not full. Also for a cup of coffee you don't need so much security so go use litecoin or something, why not.
- repomies691 10y ago
  Why wouldn't I just use some trustful centralized solution for a cup of coffee? In fact, I myself prefer to use credit card for these, where I don't actually have to trust the payment method provider, but the payment method provider trusts me to pay the bill one month later. I don't see how bitcoin can compete on this sector, except for privacy issues.
  - rrobukef 10y ago
    You really do have to trust your payment method provider to protect you against fraud. You have to trust it not to committing fraud. Your payment method provider does not 'trust' you to pay the bill. They trust that they have the bigger stick and better lawyers.
    - hueving 10y ago
      >You really do have to trust your payment method provider to protect you against fraud. You have to trust it not to committing fraud. Any major credit card provider in the US provides this with no hassle. I've had people steal my number with 4 different credit card providers and the only thing I've had to do is call them and identify the bad charges. The only inconvenience is the 3 minute phone call and waiting a week for a new card.
      - brighton36 10y ago
        Credit cards are always preferable over bitcoin. You only use bitcoin because you have to. Not because you want to
      - Natanael_L 10y ago
        Which results in a high administrative overhead
  - not_anit_woman 10y ago
    I live in a small town and Every time Mr. Shreak of Shreak's IGA sees me pull out my credit card he gives me a bit of a look and has complained several times to me about the fees he pays. If I could have the convenience of electronic (credit card) payment but without the guilt trip form Mr. Shreak I'd use it.
  - paavokoya 10y ago
    No one is saying you wouldn't. The major benefit of bitcoin is a global currency with predictable monetary policy. Bitcoin works anywhere the internet does without any need for third-party. Just because I have the freedom to drive my own car doesn't mean I don't take public transit or taxis every now and then.
repomies691 10y ago
Many bitcoin "transactions" are actually offchain transactions already. For example, with bitcoin debit cards you have bitcoin wallet, and then everytime you swipe your card, your account balance is deducted. Or at bitcoin marketplace, you have a wallet, and all transactions you do within the site are done offchain. Only deposits and withdrawals are done onchain. So yeah, pretty much looks like the bitcoin is already kind of settling layer.
emagdnim2100 10y ago
My theory is that bitcoin will end up serving as the stable reserve currency for various specialized altcoins. This is already happening a bit - take a look at the price (and market cap) of bitcoin versus something like Ethereum (smart contracts) or Monero (quick, very anonymous transactions).
rtpg 10y ago
Realistically, what will happen is major service providers that are holding your coins will have an overlay network that has higher trust requirements. Higher transfer rates, faster resolution. Only do "real" bitcoin transactions a couple times a day between players. Basically how all other high-frequency markets work.
- Natanael_L 10y ago
  Lighting Network is an overlay network that is low-trust and high-speed, thanks to its combination of multisignature transactions and payment channels. It settles on the blockchain on a predefined schedule (hours to weeks), with strong protection against theft and doublespends.
runeks 10y ago
The difference between VISA/Mastercard and an open, credit-issuing protocol on top of Bitcoin is huge, in my opinion. The reason VISA is wasteful and expensive is not that the idea of issuing credit is bad, but due to a lack of competition. No one's pressuring VISA to improve either on fees or technology, so they don't bother. In my view it's very simple: credit is extremely cheap to produce. If a retail merchant is willing to accept Bitcoin credit in exchange for his products, the consumer surely isn't going to insist on paying the higher Blockchain fee, and widespread bitcoin credit will become a thing. And credit (a promise) will always be cheaper than trustless systems (a guarantee), so I don't think the question is "either/or", but "how much do you want to pay per transaction?". If you're willing to pay ~$0.15 there's no reason to not use the Blockchain right now. If, however, you would like to send bitcoins to someone and pay, say, 1/100th of a cent in fees, the only solution that works right now is credit (issuing digital Bitcoin IOUs in exchange for payment channel payments). In short: it's extremely important to have cost in mind. Sure, if we could do everything trustlessly at the same cost as using a trusted third party, why not choose trustlessness? But this is not reality. Storing a public key and an IOU in a levelDB database (we don't even need SQL!) is many orders of magnitude cheaper than any trustless solution invented so far. I expect efficiency to improve for trustless solutions, but never enough to beat a trusted third party on cost. If you're buying a cup of coffee using Bitcoin and paying $0.15 in Blockchain fees, you've spent more in fees than if you used VISA! Is it truly a necessity that we embed your coffee purchase in a global ledger and store it on 10,000 independant nodes spread out across the globe? Or could less suffice in this particular case? It's also important to point out that an IOU clearing system on top of bitcoin would only introduce merchants to credit risk, not consumers. Consumers send real bitcoins to issuers (transferred trustlessly via payment channels), and get back an IOU with the merchant's public key on it. The consumer receives the product after handing over this IOU to the merchant, and will not (and should not) suffer if the issuer is unable to fulfill his obligation. So, without a doubt, it is necessary that merchants be vigilant in assessing the credit quality of their accepted issuers. But if you're a merchant, you're most likely involved in multiple credit relations already, and adding a new one - in exchange for extremely low fees - may be a risk worth the profit. After all, these IOUs are instantly redeemable, so as a merchant, you choose how often you want to ensure your income, by redeeming IOUs into bitcoins on the Blockchain.
amelius 10y ago
Are there any faster alternative cryptocurrencies on the horizon?
- brighton36 10y ago
  Many. They're all scams
  - not_anit_woman 10y ago
    Why? All of them? What makes Bitcoin legit but a github clone running with faster tx times a scam?
blazepower 10y ago
Hello there, Kindly I address you and sincerely this is not intended as spam or self promoting but a sincere invitation to all and my passion like all free minded individuals like a lot of you no doubt learned & clearly enlightened individuals to share with those that believe in the same ideals and in the process help you make a mega fortune up to 1000% returns or more in 5 years with options to withdraw earnings monthly or yearly which you can do anonymously too I want to introduce you to Bitcoin Private Bank & Blaze Power Corporation. Lets put this in perspective. If you deposit 1BTC today with Bitcoin Private Bank you are guaranteed to earn 16.67% interest every month this is guaranteed regardless of market conditions this is the banks base interest rate you will always get this no matter what which is better than keeping Bitcoin in a non interest bearing Bitcoin wallet this revenue can also help you mitigate the ever increasing Bitcoin transfer fees & constant rate fluctuations it is also safer than cold storage because the bank stands guarantor for your funds (better than FDIC). Cold storage is not entirely safe because you can lose or corrupt the hardware, key store even a paper wallet can be lost or stolen cold storage is not a fool proof solution (read on it gets better). But for the more ambitious individual there is even greater reward when you invest rather than just banking & I will elaborate. Looking at Blaze Power market share 100% (there is no direct competitor i.e based on rate of production & service revenue from wholesale discounted power supply). The actual growth rate of Blaze Power Corporation is thus in excess of this, 1BTC investment in Blaze Power Corporation today would net you $3,000,000.00 in 5 years, that is $50,000.00 earned every month for a 1BTC investment this is not theory or speculation, ponzi or a pyramid but based on actual performance & energy market fundamentals. Obviously like any other IPO (Google, Facebook, Twitter, Microsoft including early days of Bitcoin etc) the trick is to buy as many shares as you can then watch the value of your shares grow as the company expands rapidly & watch yourself go from Bitcoin to Millionaire in a short space of time. Impossible? Well unlike Facebook, Google, Twitter or Microsoft we actually have a world changing tangible product worth trillions & a life critical & essential service (Unlimited Electricity which ironically is also the backbone of all Bitcoin mining, the major overhead & determines the difference between break even or bankruptcy in Bitcoin mining thus how can you go wrong?). What or who is Blaze Power Corporation? Well I will elaborate. I am CEO of Blaze Power Corporation. My company is here http://www.blaze-power.eu http://www.blaze-power.eu and just like Germany we have a big drive toward the eradication of the Nuclear danger & threat. We have created a revolutionary new way to create power without nuclear waste or hot fission radioactive reaction. We have invented reactive power reactor or Fueless Energy Acquisition Reactor "FEAR Tech™" as we acronym it (see the website) worth untold billions even trillions of EUR/GBP/USD whichever you prefer. You can invest in this marvelous technology with Bitcoin (or regular Bank Transfers if anonymity is of no concern to you) through a Bitcoin offshore investment bank https://www.bitcoin-bank.trade https://www.bitcoin-bank.trade to also help raise awareness in the future of Green Energy, privacy which are all under threat. DO NOT take my word for it just read the Testimonials & see what existing clients have to say. To put this into perspective (see Bitcoin Bank) for every 1BTC you invest today you are guaranteed to have more than $30million USD in share value alone within 5 years if of course you do not sell your shares this is factoring in the rate of growth of Blaze Power Technology thus for every 1BTC or more you invest now you are a guaranteed millionaire in 5 years. Checkout both websites and have an open mind do not miss out like those caught sleeping in the early days of Microsoft when people laughed at Bill Gates when he stated that software would outsell hardware when it comes to computing, this then is one of those moments thus this is the time to get in your chance, it's not too late. Spread the word and let us make a difference business wise & conscious. Visit YouTube and keyword FUKUSHIMA danger 2016 you are also saving the world & making a big difference. You are not safe as long as Nuclear reactors still exist this is your chance to make a mega profit & save the world at the same time. Before you get skeptical take a look at what famous individuals in history said (as pointed out by a savvy investor at Bitcoin Bank) and quote: “The horse is here to stay, but automobiles are only a novelty, a fad.” Horace Rackham, 1903 “Rock & Roll will be gone by June” Variety Magazine 1955 “Remote shopping while entirely feasible will flop” Time Magazine 1968 “Television will not last. It is a flash in the pan.” Mary Summerville 1948 “Next Christmas, the I-Pod will be dead, finished, gone, kaput.” Alan Sugar 2005 “There is no likelihood man can tap the power of the atom.” Robert Millikan, 1923 “The telephone has too many shortcomings to be seriously considered as a means of communication.” William Horton 1876 “I predict the internet will soon go spectacularly supernova and in 1996 catastrophically collapse.” Robert Metcalf 1995 “The cinema is little more than a fad.” Charlie Chaplin 1916 “The idea that calvarly will be replaced with these iron coaches is absurd.” Field Marchsall Haig, 1916 talking about the tank “Fooling around with alternating current is just a waste of time. No one will ever use it.” Thomas Edison 1889 “I think there is a world market for maybe five computers.” — Thomas Watson, chairman of IBM, 1943. “There is no reason anyone would want a computer in their home.” — Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977. PS*: An idea? Buy one of our Free Electricity Generators & use them to power your rigs & mine Bitcoin for free. We have the power! -- Best regards Tony Blaze Unlimited Power, simply exciting isn't it? http://www.blaze-power.eu http://www.blaze-power.eu

dennist 10y ago

You may me right that there might have to be third parties for scalability. But depending on how this is done, you might not have to trust them in order to use them (in the worst case, they could refuse your transactions or delay them but not steal your money). So you might give up some privacy and rely a little on third parties for lower transaction fees or speed, but as long as everything is still using the blockchain you'd still have the choice to transact without a third party if you're willing to pay the premium for it (perhaps large or international remittances).

deleted 10y ago

[deleted]

kang 10y ago

There are scaling solutions like lightning network being built and the blocks are not full. Also for a cup of coffee you don't need so much security so go use litecoin or something, why not.

repomies691 10y ago
Why wouldn't I just use some trustful centralized solution for a cup of coffee? In fact, I myself prefer to use credit card for these, where I don't actually have to trust the payment method provider, but the payment method provider trusts me to pay the bill one month later. I don't see how bitcoin can compete on this sector, except for privacy issues.
- rrobukef 10y ago
  You really do have to trust your payment method provider to protect you against fraud. You have to trust it not to committing fraud. Your payment method provider does not 'trust' you to pay the bill. They trust that they have the bigger stick and better lawyers.
  - hueving 10y ago
    >You really do have to trust your payment method provider to protect you against fraud. You have to trust it not to committing fraud. Any major credit card provider in the US provides this with no hassle. I've had people steal my number with 4 different credit card providers and the only thing I've had to do is call them and identify the bad charges. The only inconvenience is the 3 minute phone call and waiting a week for a new card.
    - brighton36 10y ago
      Credit cards are always preferable over bitcoin. You only use bitcoin because you have to. Not because you want to
    - Natanael_L 10y ago
      Which results in a high administrative overhead
- not_anit_woman 10y ago
  I live in a small town and Every time Mr. Shreak of Shreak's IGA sees me pull out my credit card he gives me a bit of a look and has complained several times to me about the fees he pays. If I could have the convenience of electronic (credit card) payment but without the guilt trip form Mr. Shreak I'd use it.
- paavokoya 10y ago
  No one is saying you wouldn't. The major benefit of bitcoin is a global currency with predictable monetary policy. Bitcoin works anywhere the internet does without any need for third-party. Just because I have the freedom to drive my own car doesn't mean I don't take public transit or taxis every now and then.

repomies691 10y ago

Many bitcoin "transactions" are actually offchain transactions already. For example, with bitcoin debit cards you have bitcoin wallet, and then everytime you swipe your card, your account balance is deducted. Or at bitcoin marketplace, you have a wallet, and all transactions you do within the site are done offchain. Only deposits and withdrawals are done onchain. So yeah, pretty much looks like the bitcoin is already kind of settling layer.

emagdnim2100 10y ago

My theory is that bitcoin will end up serving as the stable reserve currency for various specialized altcoins. This is already happening a bit - take a look at the price (and market cap) of bitcoin versus something like Ethereum (smart contracts) or Monero (quick, very anonymous transactions).

rtpg 10y ago

Realistically, what will happen is major service providers that are holding your coins will have an overlay network that has higher trust requirements. Higher transfer rates, faster resolution. Only do "real" bitcoin transactions a couple times a day between players. Basically how all other high-frequency markets work.

Natanael_L 10y ago
Lighting Network is an overlay network that is low-trust and high-speed, thanks to its combination of multisignature transactions and payment channels. It settles on the blockchain on a predefined schedule (hours to weeks), with strong protection against theft and doublespends.

runeks 10y ago

The difference between VISA/Mastercard and an open, credit-issuing protocol on top of Bitcoin is huge, in my opinion. The reason VISA is wasteful and expensive is not that the idea of issuing credit is bad, but due to a lack of competition. No one's pressuring VISA to improve either on fees or technology, so they don't bother. In my view it's very simple: credit is extremely cheap to produce. If a retail merchant is willing to accept Bitcoin credit in exchange for his products, the consumer surely isn't going to insist on paying the higher Blockchain fee, and widespread bitcoin credit will become a thing. And credit (a promise) will always be cheaper than trustless systems (a guarantee), so I don't think the question is "either/or", but "how much do you want to pay per transaction?". If you're willing to pay ~$0.15 there's no reason to not use the Blockchain right now. If, however, you would like to send bitcoins to someone and pay, say, 1/100th of a cent in fees, the only solution that works right now is credit (issuing digital Bitcoin IOUs in exchange for payment channel payments). In short: it's extremely important to have cost in mind. Sure, if we could do everything trustlessly at the same cost as using a trusted third party, why not choose trustlessness? But this is not reality. Storing a public key and an IOU in a levelDB database (we don't even need SQL!) is many orders of magnitude cheaper than any trustless solution invented so far. I expect efficiency to improve for trustless solutions, but never enough to beat a trusted third party on cost. If you're buying a cup of coffee using Bitcoin and paying $0.15 in Blockchain fees, you've spent more in fees than if you used VISA! Is it truly a necessity that we embed your coffee purchase in a global ledger and store it on 10,000 independant nodes spread out across the globe? Or could less suffice in this particular case? It's also important to point out that an IOU clearing system on top of bitcoin would only introduce merchants to credit risk, not consumers. Consumers send real bitcoins to issuers (transferred trustlessly via payment channels), and get back an IOU with the merchant's public key on it. The consumer receives the product after handing over this IOU to the merchant, and will not (and should not) suffer if the issuer is unable to fulfill his obligation. So, without a doubt, it is necessary that merchants be vigilant in assessing the credit quality of their accepted issuers. But if you're a merchant, you're most likely involved in multiple credit relations already, and adding a new one - in exchange for extremely low fees - may be a risk worth the profit. After all, these IOUs are instantly redeemable, so as a merchant, you choose how often you want to ensure your income, by redeeming IOUs into bitcoins on the Blockchain.

amelius 10y ago

Are there any faster alternative cryptocurrencies on the horizon?

brighton36 10y ago
Many. They're all scams
- not_anit_woman 10y ago
  Why? All of them? What makes Bitcoin legit but a github clone running with faster tx times a scam?

blazepower 10y ago

Hello there, Kindly I address you and sincerely this is not intended as spam or self promoting but a sincere invitation to all and my passion like all free minded individuals like a lot of you no doubt learned & clearly enlightened individuals to share with those that believe in the same ideals and in the process help you make a mega fortune up to 1000% returns or more in 5 years with options to withdraw earnings monthly or yearly which you can do anonymously too I want to introduce you to Bitcoin Private Bank & Blaze Power Corporation. Lets put this in perspective. If you deposit 1BTC today with Bitcoin Private Bank you are guaranteed to earn 16.67% interest every month this is guaranteed regardless of market conditions this is the banks base interest rate you will always get this no matter what which is better than keeping Bitcoin in a non interest bearing Bitcoin wallet this revenue can also help you mitigate the ever increasing Bitcoin transfer fees & constant rate fluctuations it is also safer than cold storage because the bank stands guarantor for your funds (better than FDIC). Cold storage is not entirely safe because you can lose or corrupt the hardware, key store even a paper wallet can be lost or stolen cold storage is not a fool proof solution (read on it gets better). But for the more ambitious individual there is even greater reward when you invest rather than just banking & I will elaborate. Looking at Blaze Power market share 100% (there is no direct competitor i.e based on rate of production & service revenue from wholesale discounted power supply). The actual growth rate of Blaze Power Corporation is thus in excess of this, 1BTC investment in Blaze Power Corporation today would net you $3,000,000.00 in 5 years, that is $50,000.00 earned every month for a 1BTC investment this is not theory or speculation, ponzi or a pyramid but based on actual performance & energy market fundamentals. Obviously like any other IPO (Google, Facebook, Twitter, Microsoft including early days of Bitcoin etc) the trick is to buy as many shares as you can then watch the value of your shares grow as the company expands rapidly & watch yourself go from Bitcoin to Millionaire in a short space of time. Impossible? Well unlike Facebook, Google, Twitter or Microsoft we actually have a world changing tangible product worth trillions & a life critical & essential service (Unlimited Electricity which ironically is also the backbone of all Bitcoin mining, the major overhead & determines the difference between break even or bankruptcy in Bitcoin mining thus how can you go wrong?). What or who is Blaze Power Corporation? Well I will elaborate. I am CEO of Blaze Power Corporation. My company is here http://www.blaze-power.eu http://www.blaze-power.eu and just like Germany we have a big drive toward the eradication of the Nuclear danger & threat. We have created a revolutionary new way to create power without nuclear waste or hot fission radioactive reaction. We have invented reactive power reactor or Fueless Energy Acquisition Reactor "FEAR Tech™" as we acronym it (see the website) worth untold billions even trillions of EUR/GBP/USD whichever you prefer. You can invest in this marvelous technology with Bitcoin (or regular Bank Transfers if anonymity is of no concern to you) through a Bitcoin offshore investment bank https://www.bitcoin-bank.trade https://www.bitcoin-bank.trade to also help raise awareness in the future of Green Energy, privacy which are all under threat. DO NOT take my word for it just read the Testimonials & see what existing clients have to say. To put this into perspective (see Bitcoin Bank) for every 1BTC you invest today you are guaranteed to have more than $30million USD in share value alone within 5 years if of course you do not sell your shares this is factoring in the rate of growth of Blaze Power Technology thus for every 1BTC or more you invest now you are a guaranteed millionaire in 5 years. Checkout both websites and have an open mind do not miss out like those caught sleeping in the early days of Microsoft when people laughed at Bill Gates when he stated that software would outsell hardware when it comes to computing, this then is one of those moments thus this is the time to get in your chance, it's not too late. Spread the word and let us make a difference business wise & conscious. Visit YouTube and keyword FUKUSHIMA danger 2016 you are also saving the world & making a big difference. You are not safe as long as Nuclear reactors still exist this is your chance to make a mega profit & save the world at the same time. Before you get skeptical take a look at what famous individuals in history said (as pointed out by a savvy investor at Bitcoin Bank) and quote: “The horse is here to stay, but automobiles are only a novelty, a fad.” Horace Rackham, 1903 “Rock & Roll will be gone by June” Variety Magazine 1955 “Remote shopping while entirely feasible will flop” Time Magazine 1968 “Television will not last. It is a flash in the pan.” Mary Summerville 1948 “Next Christmas, the I-Pod will be dead, finished, gone, kaput.” Alan Sugar 2005 “There is no likelihood man can tap the power of the atom.” Robert Millikan, 1923 “The telephone has too many shortcomings to be seriously considered as a means of communication.” William Horton 1876 “I predict the internet will soon go spectacularly supernova and in 1996 catastrophically collapse.” Robert Metcalf 1995 “The cinema is little more than a fad.” Charlie Chaplin 1916 “The idea that calvarly will be replaced with these iron coaches is absurd.” Field Marchsall Haig, 1916 talking about the tank “Fooling around with alternating current is just a waste of time. No one will ever use it.” Thomas Edison 1889 “I think there is a world market for maybe five computers.” — Thomas Watson, chairman of IBM, 1943. “There is no reason anyone would want a computer in their home.” — Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977. PS*: An idea? Buy one of our Free Electricity Generators & use them to power your rigs & mine Bitcoin for free. We have the power! -- Best regards Tony Blaze Unlimited Power, simply exciting isn't it? http://www.blaze-power.eu http://www.blaze-power.eu