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Isn't bitcoin too slow to be used for many transactions? Right now, you can walk into a convenience store, buy a pack of gum, pay with your credit card, and th

Isn't bitcoin too slow to be used for many transactions? Right now, you can walk into a convenience store, buy a pack of gum, pay with your credit card, and the transaction clears within ten seconds or so. From what I understand, a bitcoin transaction isn't set in stone (that is, the money could be double-spent) until it's placed in a block that someone mines - and to prevent problems with people mining the same block twice, multiple blocks. Since one block is mined every ten minutes, we're talking significant time to process a transaction. There are ways around this - but IIRC they involve an intermediary that both sides trust. That intermediary is unlikely to work for free, so it looks like there would still be a problem. It's possible that I'm misunderstanding something, or that someone has come up with a clever solution to this problem since I last checked - in which case, I'd like to know what the answer is.

dobbsbob 13y ago
Can always make another digital currency backed by bitcoin for these type of quick payments. No reasons Mpesa cant be backed by bitcoin instead of kenyan shillings
AndrewDucker 13y ago
It is theoretically possible to double-spend a bitcoin transaction in the first 20 minutes after you spend it. However, the cost of doing so (in processing power) is high enough that it's not worth doing for small amounts. So long as amounts over $100 wait for confirmation you should be fine.
- davmre 13y ago
  I don't understand where the cost comes from. Can't you double-spend at will until one of your transactions makes it into the blockchain? Until that point, as far as the Bitcoin network is concerned, you haven't actually spent any money. So it seems like you'd have ten minutes or so of double-spending ability, totally free, and only have to start using processing power if you want to extend beyond that ten-minute period (by forking a blockchain that excludes the transaction you intend to double-spend). My understanding of Bitcoin implementations is pretty vague, though, so I'd welcome correction if this isn't actually how it works.
  - AndrewDucker 13y ago
    Nope, you're right - you need a single confirmation before it would cost to double-spend. I was misremembering.
yumcoin 13y ago
There are issues to be aware of, but for small amounts it's perfectly reasonable to acknowledge a transaction without confirmations (this is known as a "zero-confirmation" transaction). For example, our service[1] clears transactions in seconds. [1]: https://yumcoin.com https://yumcoin.com
bdcs 13y ago
I think this may be a case of comparing apples to oranges. You're holding each method to different standards. Let's apply the same standards to each protocol: The credit card transaction can't be double spent after 180 days (or however long the chargeback period lasts). Bitcoin can't be double spent after your transaction is seen by the majority of mining nodes (ca. 10 seconds). Then, after a few blocks are mined (~30minutes) bitcoin offers unparalleled security. TL;DR: When comparing credit card transactions' vs bitcoin transactions' hardness, use similar metrics for confirmation.
- MichaelGG 13y ago
  While correct, it doesn't really address the issue: Bitcoin isn't useful for such scenarios. Chargebacks are not quite the same. There's an investigation and so on. I can't repeatedly take my credit card out, buy $2000 cameras, and claim I didn't. Bitcoin doesn't have that safety measure.
  - johnsoft 13y ago
    Bitcoin nodes will reject transactions that conflict with ones they have already seen. Once the transaction is broadcasted, the only way to replace it would be to mine the next block and include it yourself. The only other feasible way to double spend a merchant would be to scour the topology and find a client that has low latency to the merchant you are trying to defraud, but much higher latency to any significant hashing power. Unless they have their node configured to accept incoming connections, which is not recommended for merchant nodes, the attack is very difficult to pull off and requires a significant element of luck to work. There are also companies like BitPay that will absorb the risk of a double spend in addition to handling your payment logistics, for a fee less than the typical credit card fee.
baddox 13y ago
With credit cards, the transaction may be nearly instant, but there can also be chargebacks days after the fact. In the scenarios where instant transaction verification and/or chargebacks is in demand, companies can provide these financial services based on Bitcoin just like credit cards are based on USD or other centralized currencies.

dobbsbob 13y ago

Can always make another digital currency backed by bitcoin for these type of quick payments. No reasons Mpesa cant be backed by bitcoin instead of kenyan shillings

AndrewDucker 13y ago

It is theoretically possible to double-spend a bitcoin transaction in the first 20 minutes after you spend it. However, the cost of doing so (in processing power) is high enough that it's not worth doing for small amounts. So long as amounts over $100 wait for confirmation you should be fine.

davmre 13y ago
I don't understand where the cost comes from. Can't you double-spend at will until one of your transactions makes it into the blockchain? Until that point, as far as the Bitcoin network is concerned, you haven't actually spent any money. So it seems like you'd have ten minutes or so of double-spending ability, totally free, and only have to start using processing power if you want to extend beyond that ten-minute period (by forking a blockchain that excludes the transaction you intend to double-spend). My understanding of Bitcoin implementations is pretty vague, though, so I'd welcome correction if this isn't actually how it works.
- AndrewDucker 13y ago
  Nope, you're right - you need a single confirmation before it would cost to double-spend. I was misremembering.

yumcoin 13y ago

There are issues to be aware of, but for small amounts it's perfectly reasonable to acknowledge a transaction without confirmations (this is known as a "zero-confirmation" transaction). For example, our service[1] clears transactions in seconds. [1]: https://yumcoin.com https://yumcoin.com

bdcs 13y ago

I think this may be a case of comparing apples to oranges. You're holding each method to different standards. Let's apply the same standards to each protocol: The credit card transaction can't be double spent after 180 days (or however long the chargeback period lasts). Bitcoin can't be double spent after your transaction is seen by the majority of mining nodes (ca. 10 seconds). Then, after a few blocks are mined (~30minutes) bitcoin offers unparalleled security. TL;DR: When comparing credit card transactions' vs bitcoin transactions' hardness, use similar metrics for confirmation.

MichaelGG 13y ago
While correct, it doesn't really address the issue: Bitcoin isn't useful for such scenarios. Chargebacks are not quite the same. There's an investigation and so on. I can't repeatedly take my credit card out, buy $2000 cameras, and claim I didn't. Bitcoin doesn't have that safety measure.
- johnsoft 13y ago
  Bitcoin nodes will reject transactions that conflict with ones they have already seen. Once the transaction is broadcasted, the only way to replace it would be to mine the next block and include it yourself. The only other feasible way to double spend a merchant would be to scour the topology and find a client that has low latency to the merchant you are trying to defraud, but much higher latency to any significant hashing power. Unless they have their node configured to accept incoming connections, which is not recommended for merchant nodes, the attack is very difficult to pull off and requires a significant element of luck to work. There are also companies like BitPay that will absorb the risk of a double spend in addition to handling your payment logistics, for a fee less than the typical credit card fee.

baddox 13y ago

With credit cards, the transaction may be nearly instant, but there can also be chargebacks days after the fact. In the scenarios where instant transaction verification and/or chargebacks is in demand, companies can provide these financial services based on Bitcoin just like credit cards are based on USD or other centralized currencies.