bitcoin is failing in replacing fiat in physical shops

[franky1]

The premise that people would attempt to double-spend real world micro transactions (e.g. get free coffee or even a cart of groceries) is absurd.

so no one  has ever went to those self serve refreshment or icecream machines and took a little extra while no one is looking, or made sure it was nearly overflowing to maximise their purchase of something under £$2

[roslinpl]

"bitcoin is failing in replacing fiat in physical shops"

it never was mention to do replace anything but it will soon or later change the world

[Brangdon]

There are so many examples which spring to mind if you've ever worked in a retail operation. Here's another one of the top of my head - a hardware retailer takes an order from a known customer with an account.

As soon as we're talking about customers with accounts, we're no longer in the same ballpark as the original post. I don't have an account at every place I buy coffee. I shouldn't need to. I don't have an account at the three supermarkets I use. If they want me to carry their loyalty card(s), that's up for negotiation. This stuff is clearly a layer on top of Bitcoin, and it clearly should be optional, only used where it adds value.

No.  This would not require or imply "printing Bitcoins out of thin air".

I think the idea is that often when you have an account, you don't have bitcoins any more. You have an IOU for bitcoins. There is a number of coins that you owe to the account, or it owes to you, and these can exist only in the account records, not in the block chain. The off-chain transactions are not subject to the same public scrutiny. For example, some people are concerned that MtGox have been indulging in fractional reserve banking. I don't think they have, but it's hard to prove without access to their internal accounts.

Personally I think FRB will inevitably happen sooner or later with bitcoin, for better or for worse.

in the near future what will happen is that you will put a pocketmoney amount into a bitpay/coinbase account and simply tell the cashier to debit your account for the total. this way the coins are verified (as they have been preconfirmed when u deposited) and is faster then the cashier getting a QR code, printing it, showing it to you and then you fiddling around with your phone to pay them.

this will be done simply by a nfc in your phone coded to you bitpay/coinbase account.

You need to separate the "faster because of NFC" from the "faster because of payment processor". There's no reason why NFC can't be used for on-chain transactions. People are only using QR because it's currently more widely supported. Bitcoin isn't tied to QR codes.

Yeah I never understood how confirmation can be so slow when bitcoin has so much mining power.

The slowness is required as part of the "proof of work", which is at the core of Bitcoin's security design against double-spending. When the mining power increases, the protocol deliberately makes mining harder so it doesn't get any faster.

Other crypto-currencies use other times than 10 minutes. In practice using 5 minutes or even 1 minute doesn't help as much as you'd expect, because it's still too long to wait in retail. It has a downside in that it leads to more resources wasted on discarded blocks.

[Armis]

This whole malleability fiasco has shown once again that zero confirmation transactions can not be trusted.

since its not practical waiting for 10 minutes for a payment to clear when buying coffee it seems to me that bitcoin will never go mainstream in physical shops.
any solution involving a third party to clear payments defeats the whole purpose of bitcoin.

any third party will effectively turn into a bank along with all the classical fractional reserve practices we have today.

nah, if I own a large stake in btc and have a chain of convenience stores I would always allow my customers to buy with btc as long as I know who my customer is.

I'm not insulting my customer over a $5 cup of coffee if I see the payment I wait for the confirmations, if the confirmation never arrrive when the customer returns we discuss it.   Everyone that has anything to do with btc SHOULD know that it is not perfect.

[toknormal]

As soon as we're talking about customers with accounts, we're no longer in the same ballpark as the original post. I don't have an account at every place I buy coffee. I shouldn't need to. I don't have an account at the three supermarkets I use

Whenever you don't pay with physical cash(paper money) you are paying with an account - either charging to a store account or a debit account or a credit card account.

The emergence of Cryptocurrencies on the scene will not change this. You will still be paying from an "account" - it will just be a cryptocurrency account.

We will not see blockchain transactions at the point of sale on any kind of scale (e.g. large stores and supermarkets) where there is a high turnover of sales.

[DannyHamilton]

We will not see blockchain transactions at the point of sale on any kind of scale (e.g. large stores and supermarkets) where there is a high turnover of sales.

Why not?  We see cash transaction there?

[Armis]

As soon as we're talking about customers with accounts, we're no longer in the same ballpark as the original post. I don't have an account at every place I buy coffee. I shouldn't need to. I don't have an account at the three supermarkets I use

Whenever you don't pay with physical cash(paper money) you are paying with an account - either charging to a store account or a debit account or a credit card account.

The emergence of Cryptocurrencies on the scene will not change this. You will still be paying from an "account" - it will just be a cryptocurrency account.

We will not see blockchain transactions at the point of sale on any kind of scale (e.g. large stores and supermarkets) where there is a high turnover of sales.

you might not see "blockchain transactions" but you will see some indication that the transaction is "ok" ie: the red light turn green, or a final receipt, after the  requisite number of confirmations is achieved.

[erik777]

This is an opportunity for a parody if someone can replace the word "body" with "bitcoin" in this video:

https://www.youtube.com/watch?v=vWz9VN40nCA

[19lam]

maybe you should change the coin ? if you want fast transactions

http://www.youtube.com/watch?v=5-KoD7Eg-1A

[toknormal]

you might not see "blockchain transactions" but you will see some indication that the transaction is "ok" ie: the red light turn green, or a final receipt, after the  requisite number of confirmations is achieved.

No. We will not. Please go back and read my previous posts about this. Confirmations and blockchain transactions have nothing to do with how Bitcoin sales will be conducted on a large scale. It doesn't matter what type of currency is in use - US Dollars, Euro's, Bitcoins, Litecoins, squirrels, pigs, barrels of oil, Storepoints - ALL these currencies get handled and WILL be handled by payment processors (as they do today).

Point of sale transactions are instantaneous - because we are not actually doing a bank transfer at the point of sale. Even if a coin appeared with 1 5-second confirmation time, it would still never be able to match the speed and functionality that Visa / Mastercard payment processors provide.

You'll still be paying with a 'card' it's just that the money will be coming from a cryptocurrency account managed by the appropriate payment processor. (This is already happening - look how the cryptocurrency exchanges work right now).

[OceanWhispers]

Regarding the speed of transactions. It's all about risk. you aren't going to wait 15 minutes to get 6 confirms for your coffee. Your house is another matter.

Also, I use Coino, and am quite invested in this coin. It is fully confirmed in 50 seconds. I routinely send funds or withdraw funds, and am able to spend or do whatever I want in less than one minute. There are always other altcoins if we need speed, But I don't think we ever need a faster BTC.

No. We will not. Please go back and read my previous posts about this. Confirmations and blockchain transactions have nothing to do with how Bitcoin sales will be conducted on a large scale. It doesn't matter what type of currency is in use - US Dollars, Euro's, Bitcoins, Litecoins, squirrels, pigs, barrels of oil, Storepoints - ALL these currencies get handled and WILL be handled by payment processors (as they do today).

Point of sale transactions are instantaneous - because we are not actually doing a bank transfer at the point of sale. Even if a coin appeared with 1 5-second confirmation time, it would still never be able to match the speed and functionality that Visa / Mastercard payment processors provide.

You'll still be paying with a 'card' it's just that the money will be coming from a cryptocurrency account managed by the appropriate payment processor. (This is already happening - look how the cryptocurrency exchanges work right now).

This will be the future. A payment processor which "okays" the payment instantly to the seller, allowing the buyer to leave with his item before the 6 confirms.

[AnonyMint]

On this issue of having accounts to pay with instead of use BTC base money (i.e. cash), I already pointed out upthread that if I must have a zillion separate accounts, it is going to drive me crazy. I already have too many accounts on the internet to keep track of.

Instead a dominant set of providers would take over and we are right back to VISA, Mastercard, and Paypal again. Nothing gained. Why did we waste our fucking time inventing Bitcoin then.

So I entirely disagree that we need accounts for most things. We can build services that operate on the block chain without needing store funds in an account for those services. We can pay as we go, utilizing the block chain. This is the future.

We need less overhead in our lives, not more. Accounts are proliferated overhead and/or centralizing. We need decentralized freedom.

Also if accounts are holding our balances then they will naturally end up leveraged, i.e. fractional reserves. This is a repeating phenomenon throughout the history of man. We needed accounts when base money was gold, but we don't need them now. Our technology has improved. Money is no longer physical.

To backup our keys without giving a masterkey to a coinbase, we need to have physical copies of backups. Use a Print key or copy to removable memory card. Your software should tell you when to print/copy and store in your physical safe. If you find it more convenient and safe to have coinbase hold your masterkey, then you are giving up your anonymity because they will need to identify you if ever you lose your password.

In practice using 5 minutes or even 1 minute doesn't help as much as you'd expect, because it's still too long to wait in retail. It has a downside in that it leads to more resources wasted on discarded blocks.

As I explained upthread, a design is possible to bring each block chain confirmation down to 30 seconds or less and avoid the orphaned blocks.

Please don't be disingenuous to imply it is not possible. If you are merely stating that no altcoin has yet done such a holistic design, then I agree with you.

[toknormal]

We can build services that operate on the block chain without needing store funds in an account for those services

If thats the case, why don't any of the exchanges do this ? Not one single cryptocurrency exchange anywhere in the world uses the blockchain for any of its trades.

Even Coinbase doesn't do it if it can avoid it. Watch this video - you'll see demonstrated how incredibly easy it is to do account-to-account transactions as opposed to blockchain-based ones. The presenter even demonstrates sending bitcoin to **email addresses ** when the receiver doesn't have a blockchain address.

http://www.youtube.com/watch?v=OOoffwOJbY8

[enuma]

Worldcoin is also fast when cames to confirmations. Only 30 secs.

It has its downs sides, faster confirmations contribute into having bigger mining pools, since joining the bigger one is advantegious because you will have less blocks being created as orphans.



 

[Robert Paulson]

Also if accounts are holding our balances then they will naturally end up leveraged, i.e. fractional reserves.

This in my opinion is one of the most important points that the community misses.

if people start accepting bitpay (or any other service) balances as bitcoin, then effectively we are now using BitPayCoin because nothing stops them from changing the amount of coins people have in their database.
this will effectively break bitcoin's 21 million coin limitation and enable the same inflation we have today with fiat.

if we are to win the war for sound money the only bitcoin that must be accepted by people are bitcoins that reside on the blockchain, where the bitcoin protocol rules are actually enforced.
otherwise we have gained nothing and simply created new bitcoin banks.

[AnonyMint]

Worldcoin is also fast when cames to confirmations. Only 30 secs.

It has its downs sides, faster confirmations contribute into having bigger mining pools, since joining the bigger one is advantegious because you will have less blocks being created as orphans.

I will be revealing a proposal of how to keep pools small.

We can build services that operate on the block chain without needing store funds in an account for those services

If thats the case, why don't any of the exchanges do this ? Not one single cryptocurrency exchange anywhere in the world uses the blockchain for any of its trades.

Even Coinbase doesn't do it if it can avoid it. Watch this video - you'll see demonstrated how incredibly easy it is to do account-to-account transactions as opposed to blockchain-based ones. The presenter even demonstrates sending bitcoin to **email addresses ** when the receiver doesn't have a blockchain address.

http://www.youtube.com/watch?v=OOoffwOJbY8

Cool idea to virally spread Bitcoin adoption by sending via email. Realize that when sending BTC via coinbase via email, anyone who can access the email can access the BTC, thus a wallet could just send the private key in the email too, even hide it in HTML with <form method='POST'> to https website which accomplishes the same thing but stores the private key locally on the computer with the option to back up keys by printing and memory card. There might need to be a browser plugin to be installed for the wallet to allow to write to the local hard disk.

I don't see anything on the coinbase user interface in that video that couldn't be accomplished just as easily and seamlessly with the keys stored locally and all activities being recorded in the block chain. The only extra hassle for local storage is doing your own backups, but you gain anonymity and you can prevent all your balance from being stolen by malware by keeping most of your balance on paper.

He claims in the video that Coinbase holds the private keys. He claims Blockchain.info does not hold the private keys in an online database but I haven't verified it.

Coinbase keeps 95% of the private keys off line. They bring more online as needed during heavy demand for liquidity. Yet that 5% pool is apparently shared between all users. Malware could still record your coinbase login and spend your entire balance.

A user could do similarly, they wouldn't want to keep all their BTC private keys on their computer which is connected to the internet due to fear of malware stealing it.

One might argue that the safest would be to never use memory card either, and instead only print and re-type private keys from paper. Because malware can spread via USB drives too. However that is not true in this case, since the purpose is not to use the memory card in the interim time rather only to store it and reinsert when ready to spend the balance. Nevertheless I would also print, since memory cards can fail and malware could potentially delete it as soon as you reinserted it. So you would normally not have to retype, but keep these for the worst case scenario. At some point, I would like to look into if there is a way to create a memory card interface that can't transfer executable malware.

[augustocroppo]

Presently, the global bitcoin hashrate is approximately 25,000,000 GH/s (http://blockchain.info/charts/hash-rate).

The market value of 1 GH/s is approximately $16 (https://www.cex.io).

In your example, you suggested that it may be worth acquiring 6% of global hashrate to double spend on groceries.  Let's do the math:

6% of global hashrate = 0.06 * 25,000,000 = 1,500,000 Gh/s

Market value of this 6% = 1,500,000 x $16 = $24,000,000.

So, yes, with a $24 million dollar investment you'll be able to fraudulently acquire groceries 6 - 12% of the time, until you eventually get caught and have your $24 million in mining equipment siezed.  

LoL

How naive and fool you are...

Who said the entity willing to double spend needs to buy any equipment? They already have it all they want.

...and no, their equipment will be not seized. Bitcoin double spend is not a crime anywhere.

[AnonyMint]

Presently, the global bitcoin hashrate is approximately 25,000,000 GH/s (http://blockchain.info/charts/hash-rate).

The market value of 1 GH/s is approximately $16 (https://www.cex.io).

In your example, you suggested that it may be worth acquiring 6% of global hashrate to double spend on groceries.  Let's do the math:

6% of global hashrate = 0.06 * 25,000,000 = 1,500,000 Gh/s

Market value of this 6% = 1,500,000 x $16 = $24,000,000.

So, yes, with a $24 million dollar investment you'll be able to fraudulently acquire groceries 6 - 12% of the time, until you eventually get caught and have your $24 million in mining equipment siezed.  

LoL

How naive and fool you are...

Who said the entity willing to double spend needs to buy any equipment? They already have it all they want.

...and no, their equipment will be not seized. Bitcoin double spend is not a crime anywhere.

His calculation is wrong. To double-spend when the seller requires only 0-confirmations, i.e. only confirmation of Tx send, then my understanding is that one doesn't need any mining hashrate, they just send out two spend transactions with one sent to self. As I explained upthread, the system will probably (silently!) reject both as duplicates, but the seller has already given your the product and you are long gone. Randomly (rarely?) the system might get one of the spends in a found block and reject the other as a double-spend.

His math is apparently for trying to double-spend to a seller who accepts 1-confirmation.

[DeathAndTaxes]

His calculation is wrong. To double-spend when the seller requires only 0-confirmations, then one doesn't need any mining hashrate, they just send out two spend transactions. As I explained upthread, the system will probably reject both as duplicates, but the seller has already given your the product and you are long gone. Randomly the system might get one of the spends in a found block and reject the other as a double-spend.

How can you get this wrong after being here so long.

1) The network will never reject BOTH transactions.  If the transactions are valid one will be confirmed.

2) To be included in the next block the attacker's tx will need to win the "race" of course if the merchant sees the attack tx it becomes very obvious that a double spend is being attempted and the sale can be halted.

Merchants (or their processors) can improve the odds by using listening nodes which communicate out of band width the merchants (or processor's wallet).  If a merchant had 8 geo located listening nodes with an average of 2,000 peers each that would be 16,000 peers.  Now if any one of those 16,000 peers are relayed the double spend the merchant will be aware of this.  The merchant can nearly instantly detect attempts to double spend.  The merchant can delay the sale by a few seconds to ensure good propagation and see if there are any double spends.

If the attacker waits until after the sale is complete, the entire network will already be aware of the merchant's tx and reject the attacker's as a double spend.
If the attacker sends both tx simultaneously within seconds some node connected to the merchants listening network will see it and a "DOUBLE SPEND. ASK FOR ALTERNATE PAYMENT" can be displayed to the cashier.

This type of detection would not be able to see Finney attacks however 0-confirm isn't suitable for all transactions and there are significant costs and complicates with pulling off a Finney attack in all situations.

[DannyHamilton]

His calculation is wrong. To double-spend when the seller requires only 0-confirmations, then one doesn't need any mining hashrate, they just send out two spend transactions. As I explained upthread, the system will probably reject both as duplicates, but the seller has already given your the product and you are long gone. Randomly the system might get one of the spends in a found block and reject the other as a double-spend.

How can you get this wrong after being here so long.

I put him on "Ignore" long ago so I wouldn't be tempted to respond to his silly, mis-informed, useless drivel.

Good to see that I made the right decision on the matter.