Topic: Economics of transactions in Bitcoin is a fail (Read 2483 times)

Go ahead. I'm sure Tony would gladly pay you for it if it's actually better.

When a competitor is wrong is often wise to convince them they are correct.


Merchant forward to Bitpay, no prominent TOS was displayed on Bitpay. Braindead payment service. I could code something better than Bitpay in 3 days or less, excluding the FX hedging.

I think the only "Bitards" here are the ones trying to use Localbitcoins with BitPay (which, depending on how it is being used, may be violating BitPay's TOS)

Your argumentation skills are terrible and you are not doing yourself or any alternative currencies any favors by screaming until you're red in the face that you're right. No one responds well to that, even those that may not be indoctrinated by bitcoinomics yet.

Well well Atlast you will be riding on my coattails since I opened up the mindset in this forum for your (and others') altcoins. Over the top and all.   So please don't thank me when the door hits me in the butt.

That is a good point.

See this other thread for some specific calculations.

This is just plain nonsense - you don't require a fee higher than 0.0002 (a tenth of what you just stated - and even 0.0001 is generally just as good) for most transactions and I am still successfully doing transactions with no fees (provided they are not for tiny amounts, are not very large in number of bytes and are reasonably well aged).

How do you explain that subway franchise owner accepting them if they are too slow?

I send an email confirmation of order at 1 network confirm. I could easily do it at 0 confirms, were I a brick and mortar business selling products like sandwiches that are worth less than the effort it would take to reverse a 0 confirmation transaction for a $5 sandwich.

So even in the incredibly unlikely event someone reverses their $5 0 confirm transaction, over the course of the day it would have more than paid for itself in debit fee savings.

Objectively, it is very hard to be objective when pointing out bitcoin's flaws could hurt you very heavily in the wallet. That is not to agree with AnonyMint as he is often way too over the top, but appealing to authorities who have lots of skin in the game is not a great argument.

Processing time and transaction costs are becoming a real issue. Here's the current list of Mt. Gox transactions not confirmed for 2 hours. No-fee transactions take a long time, and now, so do 0.001BTC fee transactions.  It looks like the fee required to get fast processing is now 0.002BTC, or about $0.42.

Processing a debit card transaction via ACH typically costs $0.34 for a small merchant, and you get a confirmation in seconds.

Bitcoin is too slow for retail.

Interized you did not address the points in the OP whatsoever.

All you did was claimed hours delays don't matter and we don't need to put our transactions on the block chain. Ubiquitous offchain transactions means we are right back to where we were before Bitcoin.

OP doesn't understand that any company always and usually has some sort of delay before processing your order. (for anything, Bitcoin, PayPal, Credit Card, etc.)

BTC is no different. We have a verification process that is much better. You need to wait for the confirmation, or infact once you sent the coin the user just forgets it and the company can email/contact them once delivery is on the way.

Any business can "add on" to Bitcoin.

Bitcoin backbone doesn't need to change based on one opinion, you can freely design what you describe off the back bone as well as endless other features you can think of.

The ability to literally instantly buy anything has proven to have a negative effect on any economy time and time again.

Credit Card companies could simply hold your BTC for instant buying, again just one more way to build off the back bone.

Cool at least they got the meaning.

Those who deserve it are offended, which is intended. And those who don't deserve it, hopefully know it is not directed at them.

I tried to be polite to the Bitards when I entered this forum back in late March. Start at my oldest posts and judge for yourself if you want.

And I was attacked and slandered unrelentingly. So now it is payback time. They don't respect a weak, polite, humble person.

It's not always what you say, it's how you say it. For example, I see you throwing around the word "bittard" now. Really? It doesn't help your cause to talk like that, even if you are right and they are stupid. Leave that kind of talk to the trolls.

No. I think computer scientists are also not capable of doing due diligence on bitcoin. Only an economist who is also a computer scientist can. I believe I have that rare combination (MoonShadow would of course pounce on this and try to attack my credibility as an economist, and I will let my posts on economics stand on their merits for each reader to judge).

Do you really think Bitards would listen to me even if I tried my best to sugar coat what they don't want to hear?

I believe that judgment of arrogance is for the most part "this is the only guy telling us what we don't want to hear, thus he must be arrogant".

I state what I believe to be correct. I correct myself when I am shown to be wrong. Like any human I am fallible and not omniscient. For example, look at this mistake I made last week. See the overall discussion.

What I don't appreciate is arrogant novices who litter me with nonsense arguments (argumentation by ignorance = filibuster) because they don't have the capability to comprehend, yet they think they do. This is the Dunning-Kruger effect. I don't have this problem usually with a knowledgeable developer such as JoelKatz because of the objective difference between objectivity and subjectivity. I would think they would appreciate the DD I am doing for them, and appreciate the opportunity to weigh all arguments. Instead they are so emotionally and financially fixated on the Bitcoin dream, they will aggressively resist any counter-balancing DD.

I am not referring to you. I am thinking more of some of the posts in Transactions Withholding Attack thread or some of the posts I deleted from the ponzi-bubble thread. You did not go on and on asserting your certainty without a logical argument or argument by ignorant filibuster.

Are you saying that only computer scientists are capable of doing due diligence on bitcoin? I have read the opinions of many other computer scientists, and that is good enough for me. You are an extremely arrogant person who thinks you are smarter than everyone else. Maybe that is true, but your attitude is not conducive to making people listen to you. I do not care about your personality, but I am watching your debates with other computer scientists, and until you can convince some of them, I am skeptical of your extreme pessimism. But I am open-minded, and I wish you success with the development of your altcoin.

Amazing you would throw all your confidence into something that you are incapable of doing due diligence on. DD is a fundamental requirement of value investing.

I don't know yet either if the problem in the OP is widespread or not. I read many threads in the Bitcoin discussion subforum about delayed transactions. And most of the replies appear (on quick glance) to be of the sort, "you dummy, you need to include a transaction fee".

A full client was not run thus have no way of knowing if localbitcoins actually propagated and what transaction fee they included if any.

I do know that the same transaction worked between all the same parties before the recent increase in price. So appears that what changed was not the parties but rather the Bitcoin network! That is a fairly strong circumstantial evidence. However, circumstantial evidence is not proof.

As for people rebutting me for example on the Transactions Withholding Attack, no one has. Only JoelKatz was knowledgeable enough (an actual developer) and he conceded.

The rebuttals from non-developers are basically useless, they don't have enough technical knowledge and thus they have holes in their analysis.

I may have holes in my analysis and it will require a developer to debate it with me. So far, I have posted all the counter-balancing caveats I am aware of.

I am a technical neophyte. However, the vast majority of technically sophisticated people that I have read do not share your fatalistic outlook on bitcoin. Every time you make your argument against bitcoin, someone rebuts you. It is true, you could be the only one who sees reality. But I think that might not be the case.

Only a technical neophyte would make such a nonsense proclamation.

Programmers know that we must verify what is causing the problem, before we can pronounce if the problem is not due to contagion of issues in the protocol itself.

Additionally and orthogonal (to the issue of whether the protocol makes fixing it unlikely) that the protocol can allow such 3rd party failure is a failure in of itself. For example, perhaps the protocol could require some confirmation of propagation to convince the customer the transaction was sent, instead of assuming the customer is running a full node and can listen independently.

Those are problems for those businesses to solve, not problems with bitcoin itself. These difficulties are to be expected, but they do not make me any less confident in the ultimate success of bitcoin.

That is not as meaningful as the bonafide report in the OP of a problem between the two major third party transaction services for Bitcoin, localbitcoins (100,000+ customers?) and bitpay (10,000 merchants).

Obviously expiring invoices is a problem for Bitpay, else they wouldn't have a 15 minute expiry and they wouldn't have blogged about the issue.

Even if 95% are not having any problem, that would still be a fail for Bitcoin. 5% failure rate is not tolerable. Even 1% is arguably not tolerable.

What would be meaningful are some statistics on the delayed transactions rate, especially those sent from localbitcoins. If anyone has them, please share. Especially recent stats since the price and volatility went crazy in nominal terms.

Edit: I see that localbitcoins is not a recommended wallet for bitpay. Amazing. Could localbitcoins have been at fault and not propagated the transactions immediately? Their UI said the "transaction was sent" and "pending transaction" while waiting for the 1-confirmation.

I have never had any problem transacting in bitcoin.

But most companies operate in USD,

Use you own wallet to pay for stuff.

Sending medium size transactions from localbitcoins to a bitpay invoice are timing out on bitpay's 15 minute invoice expiration. I assume localbitcoins is propagating the transactions widely and with a non-zero transaction fee.

After some hour or hours the transaction shows up in the public ledger, then either bitpay or the merchant has to take FX exchange risk since so much time has elapsed. Most merchants don't want to hold BTC, they want to receive the number of dollars they expect to receive, because their expenses are paid in dollars, not BTC. With small enough periods between the quote of FX price and the actual FX transactions, the variance will probably average out over enough transactions. Yet larger delay periods increase variance and risk.

Also there is immense and unbearable delay and confusion for the customer.

Both the merchant and customer lose far more in lost time (emails back and forth, delays, etc) than any credit card transaction fee and chargeback rate.

This is a fail. It is going no where like this. Never can this be widely adopted. And as merchants are gaining experience with this, they will become discouraged about accepting Bitcoin payments. As a merchants' tolerance reaches the breaking point, they will finally dump Bitcoin and never come back (nor to any altcoin).

Ditto customers! No circumstance under which I would waste a couple of hours of my day on a transaction that would take less than a minute with a credit card, except maybe if I needed to be anonymous and was expert enough to jump through the VPN and Tor proxy hoops (thus not a mainstream transaction).

Businessmen don't have time to waste; that their most precious resource!

I don't know why Bitpay is not accepting 0-confirmation transactions in this case, at least to the point of telling the customer that the transaction was seen but not yet in the public ledger. So perhaps Bitpay could do FX immediately, while the merchant would withhold final delivery of goods or services until at least 1-confirmation. This may be poor integration between Bitpay and the merchant and this wouldn't surprise given how braindead the Bitpay invoice web page is, e.g. there is a button to pay and it links to a "bitcoin:" protocol which the browser doesn't understand. So the customer is left completely clueless after clicking that and thinks Bitpay is broken.

What is causing this technical problem with localbitcoin spends being delayed into the public ledger?

I suspect it is a contagion of issues:

1. Slow 10 minute block period.

2. Variable transaction fees with finite block size means during intense speculation, the higher bidders would go first. I did not verify whether blocks are overflowing with transactions.

3. Denial-of-service (even double-spend) attacks on miners perhaps means they reject many of the transactions with low transaction fees.

4. Miners with low processing power (all dedicated to winning a block solution) and bandwidth perhaps means they reject many of the transactions with low transaction fees or many transactions with any transaction fee.

5.