Bitcoin Forum

I was looking for arguments for the future of altcoins (specifically LTC but also others). Advocates of LTC usually site LTC's value proposition as being higher due to it having 4x the block rate and an ASIC-resistant hashing algorithm. Many BTC advocates say that these changes are not substantial enough.
Addressing the fact that altcoins can have faster block rates--are cryptocurrencies meant/intended to be used directly for quick transactions (such as transactions a person would make with a credit card)? Do you think that third-party 'handlers' will arise to speed up transactions to credit card-like speeds by immediately insuring a transaction and then waiting for several blocks of authentication behind the scenes and holding the sender/payer responsible so that the seller of goods doesn't have to? Such third-party providers would make the block times nearly irrelevant and make direct transactions synonymous with bank wire transfers and not very common for people to do directly. Thoughts?

The speed of a transaction or the alleged 'slowness' of BTC isn't really a problem. You only really need to wait for one confirmation regardless. Once you've sent the money the majority of the time it's as good as received.

but if it is 10 minutes confirmation time then you need to wait 10 minutes where as a coin with, lets say 1 minute confirmation, you just need to wait 1 minute so it still makes a difference right

You don't need to. Read my post again.

Confirmations are needed so that you know that the chance of a double spend is close to nothing. Double spends aren't as easy as you think, it's quite a hassle and not worth if used for small transactions. The risk is for the seller, but he can take into account the chance of some losses because of this. And with bigger transactions it would be wise to wait to see a few confirmations.

Edit: typo, clarification

Imagine if you went to the supermarket and every single person took 10 minutes to pay... The wait would be outrageous. BTC works okay for online transactions at home but fails speed-wise in many instances. This is why I proposed the idea of a debit-like account (that functions similar to PayPal) so that a person can instantly send BTC to another user without the wait (the idea being that the transaction security is handled by the third-party so that sellers don't have to).

The risk of double spend is minimal. Cheques and credit payments can bounce or be reversed or somebody might pay you with fake money which you don't spot. All forms of payment have weaknesses but Bitcoin's are minimal at best and the vast majority of the time are without problems.


You don't need to wait. The confirmations already make it close to nothing. It's not as difficult and as big a problem as you think. Payment processors will probably insure against any loses within regards to this anyway, just like credit cards do, so moot point.

I agree, we'll likely see some 3rd parties come into the mix as BTC develops into a mainstream payment, including insurance. I don't really like the idea as that adds overhead costs, but likely a necessary burden. To add to that; while yes, confirmations are desirable to minimize risk, BTC is also capable of off-chain transactions. There could be more risk involved, however, given the proper scenario to protect all parties, these can be done instantly.

http://lightspeedindia.wordpress.com/2014/01/13/bitcoin-2014-top-10-predictions/

Maybe that will help you... it divides altcoins into 3 categories and gives some predictions on them ;)

In many ways bitcoin is more of a commodity, while LTC, PPC and many other digital currencies may be used more as actual currencies.

This is in the long term of course - once the mainstream realises there are other cryptocurrencies besides bitcoin :)

There was an interesting article on Wired just the other day about how we are seeing many, many niche currencies appearing, which may ultimately end up serving different communities, societies and cultural groups: http://www.wired.co.uk/news/archive/2014-01/13/dogecoin-and-the-era-of-personal-currency

It's a currency first and foremost regardless of what it's currently used more as.

The third category that it proposes are ones with higher value propositions due to innovation. It doesn't mention if a x4 block speed combined with scrypt hashing would be sufficient innovation to overcome the value that btc has accrued due to the network effect.

Yes it was designed as a currency (and it has a much larger ecosystem than any other crypto) but it is mostly used as a commodity / investment vehicle at this stage. I think this will probably change over the next year or two (especially with overstock's success, and others).

But I believe other coins will also be used much more as currencies over the next year or two - once the mainstream catches on.

It's only used as an investment because of its current volatility due to its infancy. It will steady out eventually.

Lets say someone buy a car, then he would have to wait 10 minutes for first confirmation right? to be safe that is

Can you buy a car with a creditcard in ten minutes? You'll probably get a call from your bank, and the paperwork will take longer than ten minutes anyway. Can you also count the money out and check every note isn't a fake in ten minutes?. They'll know who you are anyway since you have to prove many things before you can buy a car. And if in doubt, just wait for the confirmations. It's not a big deal.

People buy groceries far more often than they buy cars.

Have you bought anything with Bitcoin?

I have bought a couple small things online which waited for 10 minutes to confirm the transaction. I didn't mind the wait online but if I made more transactions or wanted to do this on the go then the 10 minute wait would be a huge inconvenience.

But you don't need to wait for the full confirmations. It's very unlikely that the money won't get there once spent. As I mentioned before, payment processors will insure against lost money just like banks or credit card processors would.

The proof is in the pudding.

Idiots can argue that litecoins and peercoins are worthless, but the prices and graphs prove them wrong.

After waiting for a single block confirmation (taking up to 10 minutes), it is very unlikely that the transaction will be overwritten by a longer, differing block chain segment, yes; however, if your transaction is currently only accepted by half of the miners in the world (before being confirmed in a block) then there is about a 50% chance at that given period of time that a block will be found that doesn't include your given transaction, thus voiding it. It takes significant time to disseminate your transaction through the mining community and when it is, there is nothing that forces the given miners to accept your transaction into their currently working new block. Because of this, it is possible (and very likely if one does not include a transaction/finders fee) that a given transaction could be not successfully added to the chain.

Currently there are no payment processors that insure against such things which is what I was talking about when I suggested a PayPal-like transaction that would do the following:
1. Authenticate the sender and make sure that he/she has sufficient funds.
2. Reduce the balance in the sender's account.
3. Increase the balance in the receiver's account.
4. Confirm the seller that the transaction went through.
5. Proceed to issue a BTC transaction between the sender and receiver on the actual BTC network, making sure that it goes through and resending if it does not.
*Finishing step 5 will take up to 10 minutes but the transaction for the user would be confirmed after step 4, taking only a couple seconds at most and allowing for things such as groceries to be bought in a timely manner.

My thought process is that in order for altcoins to have longevity, their value propositions must be larger than the value that BTC has from the network effect. Currently, many altcoins site that their faster block rates give them a higher value proposition but once third party handlers get involved to speed up transactions to credit card-like speeds, the block rate won't give them much of an edge. The proof-of-work authentication model that BTC uses is costly (energy and hardware wise) but I have yet to see an alternative cryptocurrency (such as Ripple) implement a better system.
It makes sense that LTC/PPC have value currently because the faster transaction times actually gives them value but once third party transaction companies get involved to implement a PayPal-like system to speed up transactions, LTC and PPC will more than likely fall due to lack of innovation.