Does bitcoin PoS requires an processing center?

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Hello,

here is a video of the BitPay NFC-enabled PoS https://www.youtube.com/watch?v=GydkZrgv-YA and it is interesting how does that work? I'm familiar with bitcoin basics only  so far and here what is I can think about:

1. Merchant creates a payment request. That request contains a merchant BTC address for accepting payments and payment id.
2. Customer initiates the NFC connection and receive payment credentials. His wallet software proceeds that data and send payment to the  merchant with paymentId attached.

And now the tricky part - how PoS is notified that payment has arrived? It's silly to think that every merchant has its own processing center with bitcoind running on it , and informing PoS about arrived payment, isn't it?
Also I do not think that customer transfer money to the PoS, because that will require 2 transactions in the end of the day and... well, that is not secure at all.

But schema that involves processing center operated by BitPay kills the decentralization idea, and requires more effort than the first option. What do you think about that?

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[jonald_fyookball]

Not everyone needs to run a full node.  Third party services arguably 'decrease decentralization' to the extent that people use them instead of their own node, but it's not a problem because there are enough (thousands) full nodes already.

I don't know the details of Bitpay but I'm sure will notify you by an alert , report, etc that a payment has come in.

[PolarPoint]

And now the tricky part - how PoS is notified that payment has arrived? It's silly to think that every merchant has its own processing center with bitcoind running on it , and informing PoS about arrived payment, isn't it?

The merchant do not need a node, the PoS terminal waits for a acknowledgment from BitPay to say payment has arrived. It's just like the credit card system.

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PolarPoint,  thabk you. I have  fee ither questions:
1) how do they process transaction so quick - afaik it is possible to cancel it before firsr confirmation? I was told that first cinfirmation takes up to ten minutes.
2) how does processing center gets notified about transaction? Bitcoind has hooks and is able to notify other software that payment is commited or they use some kind of longpolling,  or mayb it's a home-rolled solution?
I fiund few topics on the internet created in  2012, like http://bitcoin.stackexchange.com/questions/5097/bitcoin-api-how-can-i-identify-new-incoming-payments and bqck in tgat timw the best way was patch, but since it's outdated, maybe something changed in bitcoind itself?

[jonald_fyookball]

PolarPoint,  thabk you. I have  fee ither questions:
1) how do they process transaction so quick - afaik it is possible to cancel it before firsr confirmation? I was told that first cinfirmation takes up to ten minutes.
2) how does processing center gets notified about transaction? Bitcoind has hooks and is able to notify other software that payment is commited or they use some kind of longpolling,  or mayb it's a home-rolled solution?

I'm just guessing, but I would venture to say that Bitpay shows your money instantly but it isnt actually credited to you for withdrawl until after a certain number of confirmations.

Also, probably no one except Bitpay knows about their exact stack.

May I ask exactly what it is you're trying to accomplish?

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I'm learning elixir in my spare time and processing center is just right use case to train skills.

[DannyHamilton]

1) how do they process transaction so quick

If certain conditions are met, it is VERY difficult to keep a transaction from being confirmed.  Risk can be reduced to an acceptable level by monitoring the bitcoin network and watching for high risk situations.

- afaik it is possible to cancel it before firsr confirmation?

Have you ever even tried sending or receiving a bitcoin transaction?

There isn't any reliable method to "cancel" a transaction.  Most transactions that meet some simple conditions will confirm no matter what you do to try to "cancel" it.

I was told that first cinfirmation takes up to ten minutes.

You were told incorrectly.

A blocks will be solved "on average" every 10 minutes. Under some circumstances it can be very likely that a transaction will be confirmed in the next block. That can sometimes happen within a few seconds.  Under some circumstances it can take over an hours.  If the transaction doesn't meet certain conditions, it may not be included in the next block and then could take hours or even days.  There are steps the sender can take to increase the likelihood that the transaction will be confirmed in the next block.

2) how does processing center gets notified about transaction?

That depends on the processing center, but I would expect most processing centers to monitor the bitcoin network and watch for transactions and blocks.

Bitcoind has hooks and is able to notify other software that payment is commited or they use some kind of longpolling,  or mayb it's a home-rolled solution?

I would expect the best processing businesses to create their own node for monitoring the bitcoin network.

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ok, I figured out how to do the get notification about transaction, but there is one more thing -  how to match payment request and transaction?
Deductively, transaction should contain some unique id by which it will be possible unambiguously identify the payment request. There is something called OP_RETURN which is advertised as  a way to add a small junk (80bytes) of random data to the bitcoin transaction.
Is it a way to go?

[achow101]

ok, I figured out how to do the get notification about transaction, but there is one more thing -  how to match payment request and transaction?
Deductively, transaction should contain some unique id by which it will be possible unambiguously identify the payment request. There is something called OP_RETURN which is advertised as  a way to add a small junk (80bytes) of random data to the bitcoin transaction.
Is it a way to go?

Ideally each payment request returns a new Bitcoin address so that no addresses are reused. Each Bitcoin transaction has a unique ID which is a sha256 hash of the contents of the transaction. Thus, the transaction that sends to a particular address which was generated for a particular payment request is the transaction for the payment. The txid is not really necessary, but can be used to confirm that the payment was actually sent to that address if the customer provides the txid of their payment.

[TrueBeliever]

In theory a merchant could perform a wallet to wallet transaction with their customer, but in that case the merchant might require the customer to wait in the store for 1 confirmation (~10 minutes) - not very user friendly.

As mentioned above, it is not possible to cancel a legitimate btc transaction.  The payment processor can analyze the propagation of the transaction through the network, if the transaction is not being rejected by nodes and is propagating at an expected rate then it is expected to be confirmed.  So the payment processor can 'approve' a payment in seconds.

In addition the payment processor can provide dynamic btc price based on btc/fiat rate, and convert the received btc to fiat immediately.  Unfortunately most merchants still work primarily in a fiat ecosystem so they need to receive fiat.

So in answer to your question, in theory merchants can transact in btc without using a payment processor, however they would miss out on the value added services that the processor provides.

[BIT-Sharon]

And now the tricky part - how PoS is notified that payment has arrived? It's silly to think that every merchant has its own processing center with bitcoind running on it , and informing PoS about arrived payment, isn't it?

The merchant do not need a node, the PoS terminal waits for a acknowledgment from BitPay to say payment has arrived. It's just like the credit card system.

Referring to the credit card system, how could we get bitcoin credit cards? What's the overdraft limit of it?

[funkenstein]

And now the tricky part - how PoS is notified that payment has arrived? It's silly to think that every merchant has its own processing center with bitcoind running on it , and informing PoS about arrived payment, isn't it?

The merchant do not need a node, the PoS terminal waits for a acknowledgment from BitPay to say payment has arrived. It's just like the credit card system.

Referring to the credit card system, how could we get bitcoin credit cards? What's the overdraft limit of it?

You could order them from e-coin, xapo, or anyone else currently offering them.  The ones I have used have no overdraft possible, they act as debit cards.