Ten Minute Delay vs POS | Bitcointalksearch.org

Mobius

hero member

Activity: 988

Merit: 1000

Quote from: btchris on August 10, 2014, 08:24:35 AM

Quote from: BitCoinDream on August 10, 2014, 04:11:37 AM

This does not solve the problem. Services like BitUndo can reverse Tx within 10 minutes even if Tx fee is paid.

Services like BitUndo can attempt to reverse a tx before the next confirmed block, but they remain very unlikely to succeed (even as per their own FAQ). BitUndo depends on miners running a customized version of bitcoind, and thus far the interest in doing so has been pretty low.

The reason their success rate has been so low is because their hashrate is low. As a result of their low hashrate they are able to mine few blocks. They are only able to reverse unconfirmed transactions when they mine a block prior to the TX being confirmed.

tspacepilot

legendary

Activity: 1456

Merit: 1081

I may write code in exchange for bitcoins.

Quote from: TheAccountant on August 07, 2014, 09:12:11 AM

Yes, I did mean point of sale.

It looks to me that it would be possible to double spend/over spend if the goods/services are provided before the payment has cleared the blockchain. For example, I buy a laptop at the Apple Store, I submit a payment (knowing my wallet doesn't have enough in it). They see the pending transaction and I leave the store with my product. Ten minutes later they find the transaction fails on the blockchain.

Right, if you were buying an expensive product I think they might want to see that you get a confirmation before they let you leave the store. However, if you think about it, almost all restaurants let you consume the food before you pay anyway, no matter if its btc or cash you've already eaten by the time they give you the bill. Just like you can send a bad transaction and then run, you can also just plain run without sending the bad transaction. Restaurants already work on a "shame" system anyway where you just risk getting shamed if you don't pay.

Pony789

hero member

Activity: 882

Merit: 1000

Quote from: btchris on August 10, 2014, 08:24:35 AM

Quote from: BitCoinDream on August 10, 2014, 04:11:37 AM

This does not solve the problem. Services like BitUndo can reverse Tx within 10 minutes even if Tx fee is paid.

Services like BitUndo can attempt to reverse a tx before the next confirmed block, but they remain very unlikely to succeed (even as per their own FAQ). BitUndo depends on miners running a customized version of bitcoind, and thus far the interest in doing so has been pretty low.

Basically the pool is just trying to find the next block with the "new tx" before any other pools finding the next block with the "original tx".
So unless that pool has a significant hashrate (say, 5% of total network hashrate), it is not really a big deal.

btchris

hero member

Activity: 672

Merit: 504

a.k.a. gurnec on GitHub

Quote from: BitCoinDream on August 10, 2014, 04:11:37 AM

This does not solve the problem. Services like BitUndo can reverse Tx within 10 minutes even if Tx fee is paid.

Services like BitUndo can attempt to reverse a tx before the next confirmed block, but they remain very unlikely to succeed (even as per their own FAQ). BitUndo depends on miners running a customized version of bitcoind, and thus far the interest in doing so has been pretty low.

DoraTheBTCexplorer

newbie

Activity: 28

Merit: 0

We need something, transactions are too slow Embarrassed

BitCoinDream

legendary

Activity: 2394

Merit: 1216

The revolution will be digital

Quote from: wasserman99 on August 09, 2014, 10:22:03 PM

Quote from: Bizmark13 on August 09, 2014, 10:33:05 AM

Quote from: lynn_402 on August 09, 2014, 07:20:50 AM

Quote from: jbrnt on August 07, 2014, 01:35:44 PM

When bitcoin is popular enough, there will be a few payment systems that will handle transactions off the blockchain. So, the average 10 minute block time will be irrelevant.

Won't we have the same problem that we have now with Paypal though; overpriced transaction fees because of too much middlemen?

Most of it would probably be automated. And there would be multiple companies competing against each other in the same space for lower fees. Have you ever had a Cryptsy account? You can use trade keys there to instantly transfer coins to other members with no fees and since the whole process is completely internal, all transfers are completely off the blockchain.

This would involve trusting a third party (cryptsy in your example) which is something that is generally against the principles of bitcoin. I think there is very little risk for merchants of a transaction not confirming (and/or a double spend attack) as long as the transaction is under a certain amount. A merchant could also have a rule that a TX must have at least "x" TX fee in order for them to accept it as 0/unconfirmed.

This does not solve the problem. Services like BitUndo can reverse Tx within 10 minutes even if Tx fee is paid.

wasserman99

sr. member

Activity: 476

Merit: 250

Quote from: Bizmark13 on August 09, 2014, 10:33:05 AM

Quote from: lynn_402 on August 09, 2014, 07:20:50 AM

Quote from: jbrnt on August 07, 2014, 01:35:44 PM

When bitcoin is popular enough, there will be a few payment systems that will handle transactions off the blockchain. So, the average 10 minute block time will be irrelevant.

Won't we have the same problem that we have now with Paypal though; overpriced transaction fees because of too much middlemen?

Most of it would probably be automated. And there would be multiple companies competing against each other in the same space for lower fees. Have you ever had a Cryptsy account? You can use trade keys there to instantly transfer coins to other members with no fees and since the whole process is completely internal, all transfers are completely off the blockchain.

This would involve trusting a third party (cryptsy in your example) which is something that is generally against the principles of bitcoin. I think there is very little risk for merchants of a transaction not confirming (and/or a double spend attack) as long as the transaction is under a certain amount. A merchant could also have a rule that a TX must have at least "x" TX fee in order for them to accept it as 0/unconfirmed.

BowieMan

full member

Activity: 154

Merit: 100

Is there life on Mars?

Quote from: Bizmark13 on August 09, 2014, 10:33:05 AM

Quote from: lynn_402 on August 09, 2014, 07:20:50 AM

Quote from: jbrnt on August 07, 2014, 01:35:44 PM

When bitcoin is popular enough, there will be a few payment systems that will handle transactions off the blockchain. So, the average 10 minute block time will be irrelevant.

Won't we have the same problem that we have now with Paypal though; overpriced transaction fees because of too much middlemen?

Most of it would probably be automated. And there would be multiple companies competing against each other in the same space for lower fees. Have you ever had a Cryptsy account? You can use trade keys there to instantly transfer coins to other members with no fees and since the whole process is completely internal, all transfers are completely off the blockchain.

We'll see how things play out and I also believe that Bitcoin can really remain the mere back-bone-protocol, while actual services for customers are done 'off-chain'. But then again many people praise the blockchain and as soon as the speed or scalability of Bitcoin is discussed they say "yeah, but we can just leave out the blockchain later'

Bizmark13

sr. member

Activity: 462

Merit: 250

Quote from: lynn_402 on August 09, 2014, 07:20:50 AM

Quote from: jbrnt on August 07, 2014, 01:35:44 PM

When bitcoin is popular enough, there will be a few payment systems that will handle transactions off the blockchain. So, the average 10 minute block time will be irrelevant.

Won't we have the same problem that we have now with Paypal though; overpriced transaction fees because of too much middlemen?

Most of it would probably be automated. And there would be multiple companies competing against each other in the same space for lower fees. Have you ever had a Cryptsy account? You can use trade keys there to instantly transfer coins to other members with no fees and since the whole process is completely internal, all transfers are completely off the blockchain.

lynn_402

sr. member

Activity: 462

Merit: 253

Quote from: jbrnt on August 07, 2014, 01:35:44 PM

When bitcoin is popular enough, there will be a few payment systems that will handle transactions off the blockchain. So, the average 10 minute block time will be irrelevant.

Won't we have the same problem that we have now with Paypal though; overpriced transaction fees because of too much middlemen?

TheAccountant

newbie

Activity: 44

Merit: 0

Thank you to everyone for your replies. It was very helpful.

Bizmark13

sr. member

Activity: 462

Merit: 250

Quote from: jbrnt on August 07, 2014, 01:35:44 PM

When bitcoin is popular enough, there will be a few payment systems that will handle transactions off the blockchain. So, the average 10 minute block time will be irrelevant.

Exactly, and while off-chain transactions do have some associated risk (e.g. a payment system's hot wallet could be hacked into during the ~10 minute timeframe) and invites a degree of centralization regarding payments, the damage would be contained to ~10 minutes worth of transactions and the convenience would certainly be worth it.

For example, I could envision something similar to the old Inputs.io wallet becoming popular. You would have a personal hot wallet which would contain a small amount of coins to be used like an actual wallet which could spend or receive coins immediately. Every ~10 minutes, the payment system would submit changes to its users' balances to the blockchain allowing the off-chain transactions to be cemented into the blockchain forever.

It might not be worth using if you're buying a burger or something, but something like this would allow you to purchase more expensive things like a laptop or a smartphone without having to wait tens or hundreds of minutes for the transaction to confirm.

jbrnt

hero member

Activity: 672

Merit: 500

When bitcoin is popular enough, there will be a few payment systems that will handle transactions off the blockchain. So, the average 10 minute block time will be irrelevant.

lynn_402

sr. member

Activity: 462

Merit: 253

Quote from: Tammy Chan on August 07, 2014, 01:13:41 PM

Quote from: lynn_402 on August 07, 2014, 12:26:41 PM

How easy would it be for someone with a mobile wallet to try to send a fake transaction, and get away with 0-confirmation transactions?

Nope you can't send a fake transaction.
You may try to double spend a 0-confirmation tx, but if the first tx has no unconfirmed inputs and has at least min tx fee, the double spending attempt is very very unlikely to be successful.

That's good to hear, thanks for your answer.

Tammy Chan

hero member

Activity: 820

Merit: 1000

Quote from: lynn_402 on August 07, 2014, 12:26:41 PM

How easy would it be for someone with a mobile wallet to try to send a fake transaction, and get away with 0-confirmation transactions?

Nope you can't send a fake transaction.
You may try to double spend a 0-confirmation tx, but if the first tx has no unconfirmed inputs and has at least min tx fee, the double spending attempt is very very unlikely to be successful.

Tammy Chan

hero member

Activity: 820

Merit: 1000

Quote from: Datcracktho on August 07, 2014, 10:01:53 AM

POW is better, we just need it to be faster, like QUark.

Quote from: some1 on August 07, 2014, 10:29:10 AM

If you are intrested in PoS have a look at NXT: http://nxt.org/

PoS is more eco-friendly than PoW: no GHash of power needed to keep the network running.

NXT generates new blocks at the rate of about 1 per minute, so transactions propagate faster.

NXT is tring to implement instant transactions too...

Please check post #4 by OP again, the POS in the thread title stands for "Point of sale" rather than "Proof of stake".

kingama

member

Activity: 94

Merit: 10

Quote from: lynn_402 on August 07, 2014, 12:26:41 PM

How easy would it be for someone with a mobile wallet to try to send a fake transaction, and get away with 0-confirmation transactions?

An outright fake transaction would not be accepted by any Bitcoin nodes and would not be propogated through the network. Only valid transactions (multiples of them that spend the same unspent transaction outputs) pose any threat of theft.

kingama

member

Activity: 94

Merit: 10

Quote from: TheAccountant on August 07, 2014, 09:12:11 AM

Yes, I did mean point of sale.

It looks to me that it would be possible to double spend/over spend if the goods/services are provided before the payment has cleared the blockchain. For example, I buy a laptop at the Apple Store, I submit a payment (knowing my wallet doesn't have enough in it). They see the pending transaction and I leave the store with my product. Ten minutes later they find the transaction fails on the blockchain.

That sort of problem is impossible because the bitcoin network and all nodes on it will reject a transaction that spends more than it has available. The real issue is the double spend, whereby you have two wallets and have one spend at Apple and another spend the same funds back to yourself at yet another address. The only sure protection is to wait for confirmations. Short of that, merchants can protect themselves by connecting to miners, not allowing incoming connections, and connecting to the Bitcoin network at multiple points to be as sure as possible that the transaction that paid them is the one which gets confirmed.

The proposal to have a "replace by fee" facility would blow away that last type of mitigation leaving only confirmations as the solution. The reason is that a transaction which is seen can be replaced later (but before it is confirmed) by one that has a higher fee. So even if you are looking at the network at multiple points and see only the payment which goes to you, it could be replaced up to 10 mins or more later to send funds back to the thief.

lynn_402

sr. member

Activity: 462

Merit: 253

How easy would it be for someone with a mobile wallet to try to send a fake transaction, and get away with 0-confirmation transactions?

RodeoX

legendary

Activity: 3066

Merit: 1147

The revolution will be monetized!

There are ways to mitigate the risk of taking bitcoin without full confirmation. One is scale. Just like when you use your credit/debit card at McDonald's. They aren't really worried about fraud because it would cost more to commit bank fraud than the value of your purchase. the same could be done for small bitcoin purchases. If I were selling a $5 item, I would be ok with 0 confirmations. If I were selling a $50 item I would want at least 1. If I were selling a car, I would want 6. It should not be inconvenient to wait an hour for a car. One could also use a payment processor like bitpay. They will take on the risk for a fee. In the future I bet there will be even more options.

Topic: Ten Minute Delay vs POS (Read 1653 times)