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Since the author didn't bring this up, I think that the biggest technical problem with bitcoin is that it takes 10 minutes to verify a transaction. It can't be

Since the author didn't bring this up, I think that the biggest technical problem with bitcoin is that it takes 10 minutes to verify a transaction. It can't be used in real stores until someone figures out a way to get that down to under a minute.

shazow 15y ago
You can include a transaction bounty (traditionally 0.01 BTC) with your payment which the verifiers receive if they're the first to verify your payment. Effectively, this puts your transaction at the top of the priority queue. When you're connected to a healthy number of peers, this can bring down the verification time down to seconds. Another approach is to have "trusted sources" which are Bitcoin banks/ewallets. If your customer is using a Bitcoin bank like eWallet to send a payment, you can pretty much assume that the transaction is valid based on the source, without verification. Either way, this is merely a short term problem. As more Bitcoin infrastructure springs up (more banks, more verification hubs, more incentive on transaction fees rather than mining, when mining gets too expensive) then these problems will be organically mitigated. If the Bitcoin infrastructure were to remain the way it is now forever, it won't scale for many other reasons (like requiring peers' wallets to store significant transaction history that could grow at the rate of gigabytes per hour with "real world" volume).
- arst 15y ago
  You can include a transaction bounty (traditionally 0.01 BTC) with your payment which the verifiers receive if they're the first to verify your payment. Effectively, this puts your transaction at the top of the priority queue. When you're connected to a healthy number of peers, this can bring down the verification time down to seconds. Isn't transaction verification tied to block generation, and isn't block generation limited to about 1 every 10 minutes?
  - shazow 15y ago
    Someone correct me if I'm wrong, but I don't think transaction verification is tied to generating new blocks. From how I understand it, verification involves: 1. Confirming the privately-signed transaction against the public key of the source wallet (transactions not forged). 2. Confirming against the historical transaction chain that the coins actually belong to the source wallet (coins not forged). 3. Passing the verified transaction along to other peers.
    - Groxx 15y ago
      The generating of new blocks is what sets the transaction "in stone". And the more blocks past a transaction's inclusion, the harder it is to reverse that transaction - more blocks = more certain you have actually received the money. Prior to being included in a block, it's entirely possible for the payer to issue the same money to multiple recipients. Once it's in, it's assured that only one is included, and others are therefore invalid. So it's in recipients' best interests to wait for a few blocks before totally accepting something as "paid".
      - shazow 15y ago
        Ah that makes sense. Thanks for the explanation.
  - Groxx 15y ago
    It is. Transaction fees are (theoretically) supposed to provide incentive to be a block solver, and the solver can choose what transactions to include and what to ignore, so it's in their best interest to include ones that have fees. As usage increases, this means more and more work for the solvers, so they're more likely to drop things they can't make money on.
eof 15y ago
People accept checks.. edit: When someone sends you a transaction, it registers more or less immediately. It is only the confirmations in the blockchain (that happen every ~10 minutes) that give you confidence that the coins were not double spent.
- ceejayoz 15y ago
  Checks have legal penalties for passing fakes. Not so for bitcoin.
  - eof 15y ago
    I was really just commenting on the technical side. From a technical standpoint bitcoins are far more convenient than checks; which have been successful by any measure. There is no reason there couldn't be a law that says "it is illegal to attempt to defraud merchants by trying to double spend bitcoin." From a technical standpoint, if you send me a payment and I have no reason to mistrust you (similar to my accepting a check for payment), seeing the payment show up in my account immediately is pretty satisfactory. Further if it becomes a problem, services similar to clearcoin could pop up; allowing users to 'store' coins in a trusted third party, like a generalized escrow-service that companies could trust. So unlike clearcoin which has coins transfered per-transaction, they might offer a service where you can just store your coins there, and business will trust unconfirmed transactions from clearcoin; thus they wouldn't have to trust you. Really though, I doubt it will become any more of a problem than bad checks are.
    - rprasad 15y ago
      Which still brings us back to the fundamental flaw of bitcoin: it is a fiat currency without a fiat. If bitcoin transactions are only trustworthy in jurisdictions with laws governing such transactions (i.e., none), it is safer and more convenient to simply use the local currency. And of course, governments will not voluntarily protect transactions in competing currencies. Bad checks are an enormous problem. One of the reasons that merchants favor credit cards, despite the high transaction fees, is that the incidence of non-payment fraud is both lower and less costly. If Bitcoin is susceptable to nonpayment fraud, it is a non-starter as far as widespread adoption is concerned.
DenisM 15y ago
This is easy to do - a payment proxy company will spring up that will accept buyer's bitcoin payment and remit a different bitcoin to the seller, minus their commission. That payment company will pool the risks, develop profiles for users they trust more, develop technical and other expertise to predict and prevent fraud etc. The seller will then work only with reputable payment proxies to instant payments, or directly with buyers who don't mind waiting.
Groxx 15y ago
That's largely solved by intermediaries, though. Much of our current economy can be re-created on top of Bitcoin. In this case, a credit card like intermediary would guarantee the transaction once they saw it, providing insurance against duplicate spending, so the recipient can get their money regardless. Intermediaries kind of defeat part of the purpose of a decentralized system, but very very importantly, they're optional with such a system.

shazow 15y ago

You can include a transaction bounty (traditionally 0.01 BTC) with your payment which the verifiers receive if they're the first to verify your payment. Effectively, this puts your transaction at the top of the priority queue. When you're connected to a healthy number of peers, this can bring down the verification time down to seconds. Another approach is to have "trusted sources" which are Bitcoin banks/ewallets. If your customer is using a Bitcoin bank like eWallet to send a payment, you can pretty much assume that the transaction is valid based on the source, without verification. Either way, this is merely a short term problem. As more Bitcoin infrastructure springs up (more banks, more verification hubs, more incentive on transaction fees rather than mining, when mining gets too expensive) then these problems will be organically mitigated. If the Bitcoin infrastructure were to remain the way it is now forever, it won't scale for many other reasons (like requiring peers' wallets to store significant transaction history that could grow at the rate of gigabytes per hour with "real world" volume).

arst 15y ago
You can include a transaction bounty (traditionally 0.01 BTC) with your payment which the verifiers receive if they're the first to verify your payment. Effectively, this puts your transaction at the top of the priority queue. When you're connected to a healthy number of peers, this can bring down the verification time down to seconds. Isn't transaction verification tied to block generation, and isn't block generation limited to about 1 every 10 minutes?
- shazow 15y ago
  Someone correct me if I'm wrong, but I don't think transaction verification is tied to generating new blocks. From how I understand it, verification involves: 1. Confirming the privately-signed transaction against the public key of the source wallet (transactions not forged). 2. Confirming against the historical transaction chain that the coins actually belong to the source wallet (coins not forged). 3. Passing the verified transaction along to other peers.
  - Groxx 15y ago
    The generating of new blocks is what sets the transaction "in stone". And the more blocks past a transaction's inclusion, the harder it is to reverse that transaction - more blocks = more certain you have actually received the money. Prior to being included in a block, it's entirely possible for the payer to issue the same money to multiple recipients. Once it's in, it's assured that only one is included, and others are therefore invalid. So it's in recipients' best interests to wait for a few blocks before totally accepting something as "paid".
    - shazow 15y ago
      Ah that makes sense. Thanks for the explanation.
- Groxx 15y ago
  It is. Transaction fees are (theoretically) supposed to provide incentive to be a block solver, and the solver can choose what transactions to include and what to ignore, so it's in their best interest to include ones that have fees. As usage increases, this means more and more work for the solvers, so they're more likely to drop things they can't make money on.

eof 15y ago

People accept checks.. edit: When someone sends you a transaction, it registers more or less immediately. It is only the confirmations in the blockchain (that happen every ~10 minutes) that give you confidence that the coins were not double spent.

ceejayoz 15y ago
Checks have legal penalties for passing fakes. Not so for bitcoin.
- eof 15y ago
  I was really just commenting on the technical side. From a technical standpoint bitcoins are far more convenient than checks; which have been successful by any measure. There is no reason there couldn't be a law that says "it is illegal to attempt to defraud merchants by trying to double spend bitcoin." From a technical standpoint, if you send me a payment and I have no reason to mistrust you (similar to my accepting a check for payment), seeing the payment show up in my account immediately is pretty satisfactory. Further if it becomes a problem, services similar to clearcoin could pop up; allowing users to 'store' coins in a trusted third party, like a generalized escrow-service that companies could trust. So unlike clearcoin which has coins transfered per-transaction, they might offer a service where you can just store your coins there, and business will trust unconfirmed transactions from clearcoin; thus they wouldn't have to trust you. Really though, I doubt it will become any more of a problem than bad checks are.
  - rprasad 15y ago
    Which still brings us back to the fundamental flaw of bitcoin: it is a fiat currency without a fiat. If bitcoin transactions are only trustworthy in jurisdictions with laws governing such transactions (i.e., none), it is safer and more convenient to simply use the local currency. And of course, governments will not voluntarily protect transactions in competing currencies. Bad checks are an enormous problem. One of the reasons that merchants favor credit cards, despite the high transaction fees, is that the incidence of non-payment fraud is both lower and less costly. If Bitcoin is susceptable to nonpayment fraud, it is a non-starter as far as widespread adoption is concerned.

DenisM 15y ago

This is easy to do - a payment proxy company will spring up that will accept buyer's bitcoin payment and remit a different bitcoin to the seller, minus their commission. That payment company will pool the risks, develop profiles for users they trust more, develop technical and other expertise to predict and prevent fraud etc. The seller will then work only with reputable payment proxies to instant payments, or directly with buyers who don't mind waiting.

Groxx 15y ago

That's largely solved by intermediaries, though. Much of our current economy can be re-created on top of Bitcoin. In this case, a credit card like intermediary would guarantee the transaction once they saw it, providing insurance against duplicate spending, so the recipient can get their money regardless. Intermediaries kind of defeat part of the purpose of a decentralized system, but very very importantly, they're optional with such a system.