Instant payments (Was: Why bitcoin won't make it)

[eugene2k]

Got your attention now, didn't I?  

Anyway, I'd like to talk about one of the disadvantages of bitcoin over other digital currencies. Non-instant payments. In today's world we're used to instant payments. We go to the mall, pay with our credit card at the checkout and we're done, we use various digital currencies and payment systems online to again make payments in seconds. This is not possible with bitcoin even with 0 confirmations, and "0 confirmations" approach is quite insecure to be widely used. So in order for instant payments to be possible we need to have the payment confirmed in a faster way. The only one I can think of is by having trusted parties managing the money, thus when a trusted party confirms the money has been sent, you can be sure you'll receive a payment. In effect, these trusted parties are basically banks. However, because it's very easy to set up such a bank, because it takes few resources, anyone can create such banks. And this leads to the main question of this topic: how do we make sure fraudulent banks do not get included in the system? Or perhaps I'm going about this the wrong way entirely? What are your thoughts?

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[bitfreak!]

The only one I can think of is by having trusted parties managing the money, thus when a trusted party confirms the money has been sent, you can be sure you'll receive a payment.

MY-BIT-COIN-DOT-COM

[drrussellshane]

The only one I can think of is by having trusted parties managing the money, thus when a trusted party confirms the money has been sent, you can be sure you'll receive a payment.

MY-BIT-COIN-DOT-COM

Yep.


Part of the idea of bitcoins is self-ownership.

You don't really own something unless it is in your possession and is free and clear.

[zby]

Got your attention now, didn't I?  

Anyway, I'd like to talk about one of the disadvantages of bitcoin over other digital currencies. Non-instant payments. In today's world we're used to instant payments. We go to the mall, pay with our credit card at the checkout and we're done, we use various digital currencies and payment systems online to again make payments in seconds. This is not possible with bitcoin even with 0 confirmations, and "0 confirmations" approach is quite insecure to be widely used. So in order for instant payments to be possible we need to have the payment confirmed in a faster way. The only one I can think of is by having trusted parties managing the money, thus when a trusted party confirms the money has been sent, you can be sure you'll receive a payment. In effect, these trusted parties are basically banks. However, because it's very easy to set up such a bank, because it takes few resources, anyone can create such banks. And this leads to the main question of this topic: how do we make sure fraudulent banks do not get included in the system? Or perhaps I'm going about this the wrong way entirely? What are your thoughts?

This is also my conclusion - this is the next step for bitcoin.  I think the chances are good here - because there is such a low barrier to entry for the 'banks' there should be much competition between them and the market should fix the trust problems.  Maybe this is where cooperation with Ripple (http://ripple-project.org/) could bring much benefits?

Please change the title of this thread.

[killer2021]

I agree with you.

I am sure eventually there will be a bitcoin bank that helps speed up transactions. It'll be like using a prepaid debit/credit card. You'll put 50 btc on the card. When you go to spend the btc the bank will act as the intermediary to quickly process the transaction. If the merchant wants cash, then the bank sends the cash. If the merchant wants btc then it will send btc.

Going to be interesting to see how the bank actually makes money though.

[digigalt]

Bitcoin won't make it because people don't actually believe in or want a crypto-currency that is anonymous or untraceable. Look at what has happened every step of the way. Bitcoin was supposed to be decentralized, but people flocked almost entirely to a single exchange: Mt. Gox. People wanted a currency that was anonymous - until they got ripped off. People wanted a currency that wasn't beholden to corrupt banking institutions - now you're on the verge of creating bitcoin banks. How long until there's Bitcoin equivalent to the SEC?

[Alex Beckenham]

The only one I can think of is by having trusted parties managing the money, thus when a trusted party confirms the money has been sent, you can be sure you'll receive a payment.

MY-BIT-COIN-DOT-COM

Um, he said 'trusted'.

[zby]

Pure systems are pipe-dreams.  A bit of centralization on a decentralized framework is a good compromise.  Provided that the decentralized economy is what governs - and more importantly that the super-nodes are subject to competition in between them.  I think that the situation with exchanges will improve and it already started to improve.

[bitfreak!]

The only one I can think of is by having trusted parties managing the money, thus when a trusted party confirms the money has been sent, you can be sure you'll receive a payment.

MY-BIT-COIN-DOT-COM

Um, he said 'trusted'.

Why don't you trust MyBitcoin? I have used them for a while and they've been fine, most of my BTC is also held by them. They also offer a great payment gateway for merchants.

[Alex Beckenham]

The only one I can think of is by having trusted parties managing the money, thus when a trusted party confirms the money has been sent, you can be sure you'll receive a payment.

MY-BIT-COIN-DOT-COM

Um, he said 'trusted'.

Why don't you trust MyBitcoin? I have used them for a while and they've been fine, most of my BTC is also held by them. They also offer a great payment gateway for merchants.

Because they never returned a 10 btc over payment. It either went to the merchant, or it went to mybitcoin.com... both are claiming it went to the other. I'm inclined to believe the merchant.

In addition, it took more than 3 weeks to even get back a response from mybitcoin.com to tell me they weren't going to help.

[beeph]

bitcoins are going to be used to pay overseas suppliers where 10 mins is instant, compared to 2 weeks which is my typical wire xfer time to china.
also it's relatively large payments.. this is actually a perfect solution to this and if you've EVER

dealt with a new supplier in china.. and waited for a week on the 30% down payment and wondered for a week if he wasnt just gonna disappear/get shutdown/whatever... this is a GODSEND.

[Hawker]

bitcoins are going to be used to pay overseas suppliers where 10 mins is instant, compared to 2 weeks which is my typical wire xfer time to china.
also it's relatively large payments.. this is actually a perfect solution to this and if you've EVER

dealt with a new supplier in china.. and waited for a week on the 30% down payment and wondered for a week if he wasnt just gonna disappear/get shutdown/whatever... this is a GODSEND.

+1

The sheer awfulness of trying to get small amounts money in and out of China is what got me interested in Bitcoin. 

[Alex Beckenham]

The sheer awfulness of trying to get small amounts money in and out of China is what got me interested in Bitcoin. 

Likewise with South Africa, really strict limits on international transactions there.

[Keefe]

Funny I run across this thread right now...
I'm in the USA and do business with someone in China regularly. But it's annoying paying fees to banks for moving money back and forth. He recently got into bitcoin mining and will be selling at least some of it, so paying me with bitcoins instead of trying to sell bitcoins locally will be win-win! It's the same situation in the other direction as well.

[Crystal Excursion]

bitcoins are going to be used to pay overseas suppliers where 10 mins is instant, compared to 2 weeks which is my typical wire xfer time to china.
also it's relatively large payments.. this is actually a perfect solution to this and if you've EVER

dealt with a new supplier in china.. and waited for a week on the 30% down payment and wondered for a week if he wasnt just gonna disappear/get shutdown/whatever... this is a GODSEND.

Great Point... +1

[walidzohair]

you can use something like mybitcoin or any other service that back your dollars with BTC for instant debiting.. but again this is a little part of your money that you want to go shopping with and not a general Bitcoin solution for all uses.

In my opinion the way we used to buy and see things will change too as we use Bitcoin more and more specially the idea of the trusted middle-man as they already make a lot of all the world transactions.

[patvarilly]

bitcoins are going to be used to pay overseas suppliers where 10 mins is instant, compared to 2 weeks which is my typical wire xfer time to china.
also it's relatively large payments.. this is actually a perfect solution to this and if you've EVER

dealt with a new supplier in china.. and waited for a week on the 30% down payment and wondered for a week if he wasnt just gonna disappear/get shutdown/whatever... this is a GODSEND.

+1

The sheer awfulness of trying to get small amounts money in and out of China is what got me interested in Bitcoin. 

I posted this elsewhere, but this seems a more appropriate forum: immigrant workers sending remittances back home at the end of every month pay enormous fees to places like Western Union, which they would be extremely grateful to avoid.  Remittances are a huge money mover worldwide, about $325bn in 2010 according to the World Bank (http://siteresources.worldbank.org/EXTDECPROSPECTS/Resources/476882-1157133580628/MigrationandDevelopmentBrief16.pdf).  This is one of the main use cases I see for Bitcoins, and here, as in paying Chinese suppliers, 10 minutes is essentially instant, and you can verify then transfer yourself without an intermediary.

[dinzy]

The only one I can think of is by having trusted parties managing the money, thus when a trusted party confirms the money has been sent, you can be sure you'll receive a payment.

MY-BIT-COIN-DOT-COM

Um, he said 'trusted'.

Why don't you trust MyBitcoin? I have used them for a while and they've been fine, most of my BTC is also held by them. They also offer a great payment gateway for merchants.

Because they never returned a 10 btc over payment. It either went to the merchant, or it went to mybitcoin.com... both are claiming it went to the other. I'm inclined to believe the merchant.

In addition, it took more than 3 weeks to even get back a response from mybitcoin.com to tell me they weren't going to help.

I lost 0.5 BTC when Mybitcoin went down.  It was sent from the pool automatically, but did not show up in my account.  I have contacted them and am awaiting a response.  However it does tend to diminish any trust. 

[eugene2k]

MY-BIT-COIN-DOT-COM

Suppose they become the main bitcoin bank, and if they offer instant transaction confirmation already this will attract merchants and users. If there aren't any competitors, they could one day decide to charge you 10% on all transactions. And so you have a choice: either have instant transactions that cost 10% more or not have instant transactions. Now, this is a very far-fetched situation, and more than likely there will be more banks in the future offering instant transaction confirmations. Everyone wants to jump on the band wagon once they know that it's profitable, don't they. So more than likely is that we'll have more bitcoin banks popping up that offer the same basic service to merchants - instant confirmations. Now here's where it becomes a problem: as there are many banks, they compete with each other for users, so the market is fragmented (especially considering an almost nonexistent barrier of entry). For users that might not be so much of a problem as it is a benefit, but think about merchants for a bit and you realize that it's beneficial for merchants to work with as many banks as possible that would allow them to receive instant payments. It would be a huge pain in the ass to review each bank, not to mention that it's also a risk to rely on this instant confirmation before the transaction is actually confirmed by the network. Now lets forget about these issues for a moment and focus on the experience of a user that tries to pay with bitcoin: the user clicks a "pay with btc" button on the website and is shown a page with a list of banks to choose from, now the user has to search through the hundreds of banks on that page just to fucking make a payment. Compare this with paypal or google-checkout and it's obvious that the user will prefer other payment options to bitcoin.

[qwk]

The problem of instant payments is easily solved.
Not even a high level of trust is required for that, so you don't need a real bank or something. As long as you are willing to trust a minor amount of your bitcoins for a very limited period of time to any instant wallet service, it will work out.
It would be very easy to implement, which may or may not be a good means of protection against centralization like with mtgox.

I proposed that in another thread:
http://forum.bitcoin.org/index.php?topic=25426.0


Of course, you might also like the highly centralized way of mtgox, they are doing roughly the same thing, but both parties need to be their established customers. Which is why i think it goes against the general principles of bitcoin.
You can find info on this here:
http://forum.bitcoin.org/index.php?topic=25307.0


Or maybe Atlas is right with his EasyCoin concept, which would also be a more centralized approach:
http://forum.bitcoin.org/index.php?topic=25771.0


I personally prefer my design, it is very easy to deploy and not prone to a high level of centralization. But the others are a little more advanced right now, while mine is more an idea right now.