Topic: How to bring confidence to the crypto coin confirmation delay (Read 1980 times)

Look into Litecoin.

Bitcoin allows a merchant to DIY or there are service providers as well.   The reason this reminder of "well-connected node" is described frequently is because a merchant that does it the DIY approach without following that little detail will get ripped off in a race attack -- a study determined 100% success by an attacker is possible if not configured properly.  The worst part about it, the transaction will appear, then disappear with no trace as if it had never been made.  So that is just a caveat for those DIYers.

I like the idea of a wallet as well although this is actually starting to sound like a bank!

Ironic that bitcoin is the solution to banks, but for people to use them, it needs to act like one!

However, away from the politics and the geekery, I think this is possibly the route bitcoin needs to take to get mainstream acceptance.

I certainly see this as something with legs.  People saying that the merchant needs to have a well-connected node, etc, are thinking like geeks, not like merchants.  A merchant doesn't want to deal with any of this - they want a POS system that will let them get paid, minimum fuss, minimum chance of being ripped off.

I see a "bitcoin insurance" company that would insure against double spends, for a small fee (same ballpark as the tx fee), as a real opportunity once bitcoin gets out of geek/cutting edge territory and closer to mass market.  A company with a network of geographically distributed and well-connected nodes could detect a double spend in a matter of seconds.  And if the merchant transaction were routed via this company (which it almost has to be), and this company were connected to all the major pools, it could almost guarantee that its transactions were the ones that the network accepts.  Add to that some mining capacity and you've potentially got a business.  Add to that bitcoin wallet storage and security, currency conversion and hedging, integration with existing POS vendors, and you've maybe got a real B2B bitcoin solution.

IMHO

i posted the idea before in many different threads but here we go again

wouldnt it be great if people took escrow to another level....

people deposit coins while taking a morning shower
the coins get confirmed by the time you walk to your nearest starbucks.

starbucks shows their QR code and now starbucks knows they are receiving 100% confirmed funds.
the end. now walk away with your coffee. no 10 minute waits

the behind the scenes

think of the escrows database/service like mtgox. depositing coins into mtgox and using a mtgox code to move your bitcoins to another member(by changing the database ownership/balance of coins NOT moving across the blockchain). so starbucks can instantly withdraw proper confirmed coins to wherever they want or trade them instantly for dollar.

the service doesnt even have to use codes which a customer gives to starbuk. instead starbucks just has a QR code generator that has something like this encoded into it:

STARBUCKS-TXID12345-0.005BTC

the customers web app on their phone scans the QR Code, sees they need to pay starbucks 0.005BTC and they just press pay

i think magicaltux or bitpay should make a bigger thing out of their API so that places like starbucks can accept bitcoin without the waiting around/double spend threats.

my brain fart is now over.

What is Joe SIxpack's risk, and what his doubt, as he talks toward Mc SubKing's microphone from his car window to order a SubBurger?

That he might doubt that they accept bitcoins there is believable, also that he might doubt the microphone is equipped to process one-tap payments from a bitcoin one-tap card.

But how did he even come into possession of such things?

(I doubt he bought then a Mc SubKIng's...)

In short if its the consumer you are talking about, I am not sure how he ended up at Mc SubKing's at all in any context relating to bitcoins...

Lets maybe step back a bit, is here there to try to evengelise to them that they ought to accept his bitcoins?

Or is it assumed they already got talking into that yet their marketing department hasn't figure out how to motivate him to try this new currency they now espouse?

Or what?

(Is he wondering whether they are marking up the subs to cover the cost of finney attacks, or something?)

TL;DR Why is he even thinking about confirmation delay, is it a fast food joint or not?

-MarkM-

Here is a demonstration of how fast Bitcoin can be:

http://www.youtube.com/watch?v=SHQ-M6ZGy7Y

That is basically the perfect solution for small purchases such as buying fast food etc. It's faster than paying with any Debit card.

Fearing a double spend with $10 products is well, totally unnecessary. Simply make sure the receiving Bitcoin node is connected to well connected nodes and after 5-10 seconds there is no easy double spend. Seeing one with a $10 purchase is super unlikely. Simply accept without confirmation, that is the solution.

For expensive products green addresses are one solution, or waiting for a confirmation.

The risk and doubt I had in mind was for the consumer, not the retailer!

Everyone on this forum seems to think the mainstream public are just going to jump on Bitcoin as soon as someone tells them that its a good idea, but this just isn't true!

There is going to be huge amount of doubt, and fear regarding this new fangled hacker money and they will need a lot of convincing to use it.

This is what my idea regarding confidence was all about.

Retailers are going to jump on bitcoin because they will understand the benefits to a better extent - but only the bigger ones - your mom and pop stores are still going to be a very difficult conversion from the comfort of big name banks and credit card issuers!

Not really.  Merchants accept some risk of chargebacks from employing credit and debit card payment processing networks.  They monitor it and weigh the cost/benefit.

Here's why they will accept some risk.  Selling a Mc SubKing presumably provides profit.

A race attack is not easy to perform (when the merchant is properly configured -- no incoming connections, and outgoing explicitly to well connected nodes and/or subscription to double-spend monitoring service).  And there are no guarantees that the attacker will succeed.

So if I as an attacker some how were to get success 5% of the time, that means I pay for and eat 19 Mc SubKings to get the 20th "free" (on average).

I bet the restaurant would take that customer's business any day of the week, even with those odds.   Fraud is illegal so the attacker would probably be easy to identify -- as the only one ordering a Mc SubKing wearing a full facemask.

If the attacker attempts the Finney attack, success is more likely but it is very expensive.  In that attack, the payment is only made after a block (containing the double spend transaction) has already been mined but is held from being broadcast.  It costs the attacker about $2 per second (at BTC/USD of $50) to perform this attack.   This attacker would be easy to identify also.   He's the one waiting at the counter for hours until his miner gets a block -- then screams frantically about getting a few Mc SubKings ordered, fast, and sends payment as soon as the QR code is presented.  As soon as the merchant accepts payment the mined block is released and the funds double spent.   The restaurant can know of this right away, so again, the attacker would never order anything that can't be hauled out to the getaway car in a matter seconds.   So the full facemask would probably be helpful there as well.


It does however expose the merchant to the same risk of a double spend attack that the OP is suggesting is the reason to wait for confirmations -- BitPay doesn't insure or protect against it happening, they simply notify the merchant (via the same channel as the original payment notification is sent).

Now there is a scenario where a merchant would not want to accept on 0/unconfirmed.  

A coin change machine at an unattended laundromat.   The attacker could try over and over to get a successful race attack.  For the unsuccesful attempts, the atacker gets quarters at face value.     Essentially if the items is high value purchase (above $100), or low margin, and can be purchased without revealing identity -- that's not a good candidate for 0/unconfirmed.  

There's other solutions that could be used as well ... green addresses, BTC payments through an Open Transactions server, Ripple, redeemable codes, and much more.   The problem that Square just had with their gift e-codes shows that regulations make it expensive to pass around digital credits (as money transmitter licensing and consumer protection regulations would need to be considered).    So Bitcoin may have an opportunity to go where others can't.

You may want to check out this thread I started:

Off-chain Transactions

Cypto will never be as fast as just handing cash to someone.  Even if you make an altcoin that is 100x faster than BTC in confirmations, those confirmations will be less secure than BTCs.

The best solution will be for trusted service providers that both parties can confirm.  For example, if someone made some sort of Bitcoin debit card...

How many threads are we going to have asking this question?  I feel like there's a new thread about this daily.

I think for example BitPay already does this optionally. It does not wait for confirmations for small amounts for some merchants. This is not a problem.

I think waiting for confirmation for small transactions is overkill.  Businesses could take the risk of getting a few double-spends every now and again - they're somewhat hard to pull off, especially when buying fast food.

"GPS, how long to the nearest Mc SubKings?"

"GPS, too soon, how long to the next on route?"

"GPS, order Mc Sub from aforementioned Mc SubKings..."



-MarkM-

If we are looking to bring bitcoin to the mainstream, it has to be easy, safe and advantageous for the public to use.

We already know, as geeky early adopters that there are plenty of reasons for using bitcoins rather than fiat, but it would seem to me that we need more!

Imagine the scene, a drive through selling Mc SubKings. They take the order, they accept the payment of 1.1 btc deliver the food, and then wait for the confirmation - for 40 minutes!  Even if they used Litecoin, there is a 2 minute delay - that's longer than it took to make the fast food!

For someone who doesn't have ideological reasons for using crypto coins - it sux!

So, what we need is a way to remove that doubt from the transaction.

There isn't really a technical solution I can offer, however, what if this is where business enters the equation?

What if I set up a company to insure the confirmation against fraud, double spending, or whatever might not let the transaction go ahead as planned?  We could then combine the advantages of credit cards (piece of mind) with the advantages of bitcoin (etc, etc) in a nice and consumer friendly package.

Does anyone think this idea has any legs?

Does anyone know anyone who could help me put this idea together?

Would love your feedback!