Bitcoin - we have a problem.

[AliceWonder]

It takes days for a wire transfer or a check to clear with massive fees

You really need to look at what bitcoin is equivalent to.

Wire transfers are almost instant now - and cheques are being phased out.

You need quick confirmation times otherwise you will never be able to purchase items in shops - if someone is trying to pay at the checkout and they have to wait a few hours before they can take their goods - it is not going to work

There are green addresses that can alleviate some of that, though I personally don't care if bitcoin ever makes it into the local walk-in market. I just want to use it in the digital world.

You might not personally care - but for Bitcoin to be a success issues like this need to be resolved.

Your response sums up quite nicely how most of the bitcoin community behaves. I am ok Jack but screw the rest of you.

The more time I spend on this forum the greater my concerns are about the long term viability of this project.

There may as well never have been a whitepaper because so few people understand why Bitcoins were created.

I don't think so, I don't think bitcoin needs instant transactions to be successful.
And there are green addresses that allow that for those who do really need it so the problem is just ignorance of those who need it but don't know about green addresses.

https://en.bitcoin.it/wiki/Green_address

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[dashingriddler]

If half of the network goes down, it would take 4 weeks to adjust the rate. But on the other hand bfl and avalon has started shipping more of the pre ordered units so it could still compensate to some extent. If we successfully touch the next difficulty change whether higher or lower, it is a new life to start with. so i guess i m not that much bothered if one or few mining farms goes offline - more over this will be an incentive for new ones to take birth

[atariguy]

It takes days for a wire transfer or a check to clear with massive fees

You really need to look at what bitcoin is equivalent to.

Wire transfers are almost instant now - and cheques are being phased out.

You need quick confirmation times otherwise you will never be able to purchase items in shops - if someone is trying to pay at the checkout and they have to wait a few hours before they can take their goods - it is not going to work

There are green addresses that can alleviate some of that, though I personally don't care if bitcoin ever makes it into the local walk-in market. I just want to use it in the digital world.

You might not personally care - but for Bitcoin to be a success issues like this need to be resolved.

Your response sums up quite nicely how most of the bitcoin community behaves. I am ok Jack but screw the rest of you.

The more time I spend on this forum the greater my concerns are about the long term viability of this project.

There may as well never have been a whitepaper because so few people understand why Bitcoins were created.

I don't think so, I don't think bitcoin needs instant transactions to be successful.
And there are green addresses that allow that for those who do really need it so the problem is just ignorance of those who need it but don't know about green addresses.

https://en.bitcoin.it/wiki/Green_address

Tell me how I'm supposed to do any transaction in person if we have to wait 2 hours for confirmations? They'll have to start putting movie theaters on every corner to help pass the time. And if you have to pay for breakfast and buy gas on your way to work, you won't get there until it's lunchtime.

[justusranvier]

Tell me how I'm supposed to do any transaction in person if we have to wait 2 hours for confirmations?

Entire consumer economies function based on a payment method (charge card) which has confirmation times measured in weeks or months and yet merchants still somehow find a way to make it work..

[AliceWonder]

Tell me how I'm supposed to do any transaction in person if we have to wait 2 hours for confirmations? They'll have to start putting movie theaters on every corner to help pass the time. And if you have to pay for breakfast and buy gas on your way to work, you won't get there until it's lunchtime.

I don't think bitcoin is the best solution for every transaction scenario. Just like I don't think Linux is the best operating system for every computing scenario.

With respect to paying for things in person, for small value items there's a certain amount of trust. You trust that the person isn't going to reverse the transaction and if they do, you either eat the cost (happens a lot in business now) or you file a police report.

For things like buying gas, I expect a layer between bitcoin and the gas pump if that ever takes off. As in once a week, I pay coins to my gas card and once they are credited, I can use the gas card at the gas pump.

Infrastructure will be built on top of bitcoins to deal with a lot of that, very profitable infrastructure.

[spiral_mind]

While ASICminer certainly has a large chunk of the network they do have a profit motive to maintain their hashing power or sell that equipment. That generally will keep their contribution to the network fairly constant.

I think the biggest worry when it comes to ASICminer and centralization is the threat of their operation being shut down by the Chinese government. If they become aware of Bitcoin they would likely see it as an obvious weakness to attack. If ASICminer was shut down all at once there would definitely be big problems for Bitcoin.

I've read from a Chinese person who posted here that even though state TV mentioned Bitcoin they really are not aware of it yet. That might change as it becomes a bigger deal and more people use it.

[atariguy]

Tell me how I'm supposed to do any transaction in person if we have to wait 2 hours for confirmations?

Entire consumer economies function based on a payment method (charge card) which has confirmation times measured in weeks or months and yet merchants still somehow find a way to make it work..

Weeks or months?? We're in the 21st century now, we don't use mechanical Visa machines with carbon paper anymore...

[rovchris]

While ASICminer certainly has a large chunk of the network they do have a profit motive to maintain their hashing power or sell that equipment. That generally will keep their contribution to the network fairly constant.

I think the biggest worry when it comes to ASICminer and centralization is the threat of their operation being shut down by the Chinese government. If they become aware of Bitcoin they would likely see it as an obvious weakness to attack. If ASICminer was shut down all at once there would definitely be big problems for Bitcoin.

I've read from a Chinese person who posted here that even though state TV mentioned Bitcoin they really are not aware of it yet. That might change as it becomes a bigger deal and more people use it.

They have a motive to maximise their profit without any resilience is the issue.

I can guarantee they have no disaster recovery site as I doubt they would have a second data centre full of ASIC's just sitting around not mining in the event the primary centre goes down.

To me this is a price they should have to pay - it is their duty to ensure they do not disrupt the network and the transaction times considering they are profiting so heavily. Not doing this is a disservice to the rest of the community.

Basically they should not be so f**king greedy - they are behaving in the exact manner bitcoins were meant to stop. I find it amazing how tolerant everyone is of this behaviour.

[rovchris]

Tell me how I'm supposed to do any transaction in person if we have to wait 2 hours for confirmations?

Entire consumer economies function based on a payment method (charge card) which has confirmation times measured in weeks or months and yet merchants still somehow find a way to make it work..

Weeks or months?? We're in the 21st century now, we don't use mechanical Visa machines with carbon paper anymore...

LOL spot on man

[justusranvier]

Weeks or months?? We're in the 21st century now, we don't use mechanical Visa machines with carbon paper anymore...

Since you're such an expert on how electronic payments work, you can describe the process of what happens when you swipe your card and how those various steps map onto the same process in Bitcoin, right?

[Kluge]

Just in case this hasn't been brought up, this has brought other coins to their knees in the past. With a lot of the altcoins, there's a spike of interest, then everyone quickly moves on to the next coin. It's not a big problem if you're frequently adjusting difficulty, and adjusting difficulty too often can present its own problems (if it were changed every ~1 day, ASICMiner and a couple other major players could collude to shut their miners off for a day, then flip them all on when difficulty changes to try easier double-spends -- the flip-side to that would be that longer difficulty windows would also give malicious miners more time to try double-spends at an "artificially" lowered difficulty).

Kind of a "fucked if we do," "fucked if we don't" situation, and we're in a pretty critical time right now, where there are a few people and companies making up over a quarter of the network. Just be glad Voorhees isn't running ASICMiner and trying to do artificially lower difficulty to "encourage development." :p

Actually, hash rate's spiking to such an extreme, we might find ourselves with a 7-day difficulty window, which I'm not sure has happened yet (except maybe in the first weeks of Bitcoin's existence). This is obviously very dangerous, and people should be waiting for more confirmations during these times (6 is probably still more than enough) when network hash rate is increasing at such a shocking rate.

[Quantum_Negatum]

Altcoins provide a powerful incentive to undermine Bitcoin's network.

Consider a situation where Bitcoin's price declines to, or stagnates at, a level that is no longer considered profitable by the miners or pools with the most hashing power. Suppose further that one of these miners/pools has enough power to sustain a prolonged 51% attack, or launch short but repeated attacks, sufficient to irreparably damage confidence in Bitcoin. This would result in immediate and intense competition among the most popular alts for Bitcoin's throne.

If the deviant miner/pool had invested in one or more of these alts before the attack, they stand to make a fortune afterwards. Further, if enough coins were purchased, the miner/pool could even control the early stages of competition with buy and sell walls. Such control could be used to maximize profits but is unnecessary, as the alts would rise in value without manipulative pressures while they are filling the void left by Bitcoin.

There is a fortune to be made through destroying Bitcoin.

[Rassah]

Weeks or months?? We're in the 21st century now, we don't use mechanical Visa machines with carbon paper anymore...

Since you're such an expert on how electronic payments work, you can describe the process of what happens when you swipe your card and how those various steps map onto the same process in Bitcoin, right?

I'm curious too.

[rovchris]

Weeks or months?? We're in the 21st century now, we don't use mechanical Visa machines with carbon paper anymore...

Since you're such an expert on how electronic payments work, you can describe the process of what happens when you swipe your card and how those various steps map onto the same process in Bitcoin, right?

I'm curious too.

It is to do with double spending - If a transaction took that long to be processed what is stopping you spending everything in your account 20 times over.

When purchasing on a card -there a several payment states - pre auth and post auth. So when you are online and purchase something from a website the value of the purchase is "reserved" on your account known as pre authentication.
e.g. You have £1000 and you spend £200 the £200 is immediately reserved as a pre auth transaction. If you checked you account balance at this point it would read as £1000 but you would only be able to spend £800. When the item is dispatched the transaction is changed to post auth and the £200 removed from the account. If the transaction were not immediately verified there is nothing stopping you spending more money than you have.

If a vendor does not immediately validate the transaction and tries to do it at a later point after you have spent all your money the bank would then just decline it and the vendor would have lost their product and revenue.

When purchasing in a shop it just goes straight to post auth and the money removed there and then.

So to equate to Bitcoin - if you pay for something with bitcoins and the vendor does not wait till the transaction is confirmed and you have left the shop - he would loose the product and bitcoins.

Just because the money does not immediately show in the vendors account (banks like to sit on it for a bit extra money for them) it does not mean it has not been debited from the purchasers account.

If you take cheques for example - that is why you have a cheque guarantee card - the bank is committing to that spend even if you do not have the money (but they will fine you and charge you interest when you are overdrawn) you can not do that with Bitcoins.

[justusranvier]

The point is that a merchant who accepts a card payment has to wait a lot more than 10 minutes in order to get the same assurance that a transaction will not be reversed as a 1-conf bitcoin transaction provides.

If you compare like to like, then Bitcoin is extraordinarily fast compared to the legacy payment system.

[AliceWonder]

When I go into a restaraunt, I get a nice meal before they even swipe my card.
I don't think lack of instant auth is a problem most places.

Some people will abuse it, just like they do now, and they eventually will be arrested for it.

[Rassah]

Does Bitcoin have a system wherein the clients will simply reject to accept and retransmit a transaction if they have said transaction in their memory pool, even if that transaction hasn't been included in a blockchain yet?

[atariguy]

Weeks or months?? We're in the 21st century now, we don't use mechanical Visa machines with carbon paper anymore...

Since you're such an expert on how electronic payments work, you can describe the process of what happens when you swipe your card and how those various steps map onto the same process in Bitcoin, right?

I actually used to work at a credit card company about 20 years ago and have since been involved in programming e-commerce applications, so yeah, I think I know a little about how it works.

[atariguy]

The point is that a merchant who accepts a card payment has to wait a lot more than 10 minutes in order to get the same assurance that a transaction will not be reversed as a 1-conf bitcoin transaction provides.

If you compare like to like, then Bitcoin is extraordinarily fast compared to the legacy payment system.

Ah, if you're talking about a transaction not being reversible, yes, that can take months. But that's actually another problem with Bitcoin - the typical consumer is going to get scared off by the irreversibility.

[justusranvier]

But that's actually another problem with Bitcoin - the typical consumer is going to get scared off by the irreversibility.

That is a theory which so far the evidence does not support, given that BitPay continues to see healthy growth in their transaction volume.