"instant" payment system concept

[lukew]

Hi all, my first post and an idea I have been thinking about on and off for about a year.

I have been thinking about how a bitcoin payment could be made instantly, just as a "regular" visa/mastercard type transaction. A normal EMV/mag stripe card transaction isn’t actually instant, there is only an authorization made to take the funds at a later date. This amount is taken from an available balance, so although the funds are still there, they are unavailable for use.

Would a similar system work with the bitcoin network? If 2 wallets are held on the same system, and all bitcoins in them are verified, there would be very little risk in the system saying "ok, you want to spend 0.00021btc, and you have 0.00329 verified, yes, you can make this payment" and then subtracting from an available balance. At the receiving wallet, 0.00021btc would be added to the "unconfirmed balance" and the actual bitcoin transaction can happen in the background during a batch. This could potentially open up the possibility of paying using bitcoin as you do with any visa card, having a secure terminal and an RFID/smart card. As with traditional systems, the vendor accepting payments would pay a small fee for the service and the hardware, and the service provider (assuming it isn't run just for profit), would have the responsibility to investigate any fraud or disputes.

I'm thinking more of providing an easy to use method of using bitcoin that may help with general acceptance and provide a bit of safety for the general population. People like the safety net that a bank provides regarding fraud and disputes over goods/services. The ability to, quite frankly, be a careless asshat, knowing that someone else will fix it for them, seems to be all too common in people.

I've not really started this project beyond the idea itself, writing a bitmap handler to take a word-array and display it on an LCD and putting my horridly crap artistic skills to use to draw a concept for a terminal. I have a bad drawing and the bitcoin logo on a small LCD, that's about it.

I honestly know very little about the inner workings of the bitcoin network, how the the mining process actually works etc. I am an engineer however, specifically electronics, and also a strong believer in bitcoin. This idea has been floating around in my head for about a year, and if actually viable, I would like to pursue it, at least in the hardware/software/electronics aspect.

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[coinableS]

If 2 wallets are held on the same system

What you are describing sounds like a paypal, or even coinbase. These systems rely on a central party that is in control of the balances for everyone. It's basically just a number in a database and they add "BTC" when it's not actually BTC you are moving around. The number represents BTC but they transfer funds internally or "off-chain". With this additional convenience comes loss of control.

[jacee]

Isn't bitcoin transaction already instant?

Anyway I've read this one and I thought this one is a reason why bitcoins can't act like how a regular visa/mastercard works.

I quote:

Here’s the funny thing about bitcoins: they don’t exist anywhere, even on a hard drive. We talk about someone having bitcoins, but when you look at a particular bitcoin address, there are no digital bitcoins held in it, in the same way that you might hold pounds or dollars in a bank account. You cannot point to a physical object, or even a digital file, and say “this is a bitcoin”.

Instead, there are only records of transactions between different addresses, with balances that increase and decrease. Every transaction that ever took place is stored in a vast public ledger called the block chain. If you want to work out the balance of any bitcoin address, the information isn’t held at that address; you must reconstruct it by looking at the blockchain.

[melisande]

Bitcoin payment is already instant but the only thing that makes it sucks is the confirmation on the network and i dont think anybody can do anything about that.

[onemorexmr]

as said that would need some kind of centralized service like inputs.io was....if someone remembers how that played out you know why this is a bad idea.

lets just keep bitcoin trustless and live with conf-times

[lukew]

If 2 wallets are held on the same system

What you are describing sounds like a paypal, or even coinbase. These systems rely on a central party that is in control of the balances for everyone. It's basically just a number in a database and they add "BTC" when it's not actually BTC you are moving around. The number represents BTC but they transfer funds internally or "off-chain". With this additional convenience comes loss of control.

That's pretty much it. It's a separate service that accepts bitcoin as the currency that can be transferred in and out, just as with PayPal. The intention however is to use the "off-chain" nature to allow the use of cards, RFID tags, physical keys etc to allow purchase with an instant payment verification. Instant meaning within a few seconds.

I had briefly seen information about the inputs.io cock up. I would use a 1-way connection to a backend server. Simply sending batch information to the server, and if all data decrypts OK, the server send back an ACK. Same the other way. After a batch, the server will send all updates back, and upon decryption the front-end would send an ACK to the server. Nothing happening in real time, and no way to break into the back-end from the front-end, as the only response that can be sent is either ACK or NAK, and that is just upon decryption of the days transactions ready to be processed by the bitcoin network.

I do understand the anonymity aspect of bitcoin, however ATM's seem to be popping up everywhere, and from what I have seen, they seem to be the most convoluted, and frankly invasive ways of dealing with bitcoin. Government ID, biometrics, payments using bank cards. I'm not wanting to try and change the way everyone uses bitcoin, rather providing an interface for those that see it more as a stable currency, accepted world wide, and not at risk from world financial collapse than an anonymous method of buying things.

I suppose the biggest use case is, supposing this idea works, is well implemented and is adopted by retailers world wide, that you can go anywhere in the world, take your "bitcard" with you and have no exchange rates, no fees for using a card abroad, no trying to work out how much a hotdog is, and having 4096 bit RSA covering your transaction. There is also the security in the bitcoin side of the transaction having a delay, so here is time for disputes to be resolved (or not), before the bitcoin is sent.

The hardware side would remain closed (mostly) and security keys stored on volatile memory along with intrusion detection and self-erasure of crypto keys.

As a system for most of the current bitcoin users, it's utter crap, but I think it may be a help for those that want to be able to accept payments quickly such as retail or fast food, and those that are hungry and can't wait 15 minutes for a double cheeseburger!