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Author Topic: Ok, but seriously how will I pay for my $250 grocery bill with bitcoin?  (Read 2689 times)
cypherblock
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June 09, 2014, 02:59:44 PM
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So really, how do brick and mortar merchants accept bitcoin payments in 1 second or less without risking double spending? Do we actually have a solution for that which doesn't require me (and merchant) to use a proprietary bitcoin app but let's me use a generic wallet app?

I wouldn't be surprised, but haven't checked, if Coinbase or somebody has a solution for this, but I'm guessing it requires both merchant and customer to be using Coinbase.

I guess if the larger bitcoin firms like Bitpay, Coinbase, etc provide guarantees to merchants that the transaction will be confirmed and they take the risk of fraud (double spending attacks) then that is certainly one solution.  They can quickly (1 second?) do a check to make sure transactions look ok (based on current blockchain) and hope that double spending attacks will be rare.
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June 09, 2014, 04:50:52 PM
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I've never used one of those online wallets, but they don't provide you the private key, do they?  So essentially they're providing a service to you (the wallet) while retaining complete control over it.

Unless the security of the site itself was compromised, then there wouldn't be any issues..

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June 09, 2014, 05:49:28 PM
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I've never used one of those online wallets, but they don't provide you the private key, do they?  So essentially they're providing a service to you (the wallet) while retaining complete control over it.

Unless the security of the site itself was compromised, then there wouldn't be any issues..
(speaking of Coinbase, at least) Yep, you're right: they don't give you the private keys to the money in your balance, so they should be able to provide no-risk transactions (at the cost of trusting Coinbase with your coins) if you and the merchant both have accounts there. Imported private keys might be an exception to that (I don't know if they only sweep them, or let you keep a balance on them).
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June 09, 2014, 05:55:04 PM
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I've never used one of those online wallets, but they don't provide you the private key, do they?  So essentially they're providing a service to you (the wallet) while retaining complete control over it.

Unless the security of the site itself was compromised, then there wouldn't be any issues..


Right, but coinbase was just an example in this case of a larger firm providing services to both merchants and the general population. Yes they generally sweep your bitcoins into their own accounts and in fact use their internal accounting to know who owns what. When you spend coins from coinbase they have to first send a transaction from their hot wallet to your wallet, then from your wallet to whomever you are sending to. But they don't really have to do it that way. I think Blockchain.info let's you keep control of your keys and coins while providing on online wallet.



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June 09, 2014, 06:21:01 PM
 #5

Well , I see an inputs.io lookalike as the best solution.
It permeated almost all the Bitcoin websites and it had off-chain transactions.

But the problem is , the inputs.io scare has put everyone off the idea for a loooong time.

Your idea is interesting , but on-chain transactions can not happen under 10 minutes.

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June 09, 2014, 06:29:20 PM
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There used to be this concept of green addresses. And now with multisig you can even have a similar service without the risk for the coin owner to get robbed by the green address provider, though at the expense of bigger transactions and thus higher fees.

But in general, you should know that bitcoin has not been designed to support fast payments.
People who think that Bitcoin can do such things have been deluded.

Bitcoin is much faster than most of the irreversible payment methods known before (e.g. bank wires), but it has never been meant for instant payments.
Although it provides a solid base for a possible instant payment services that would be developed over the bitcoin protocol.
I general, what you need for instant payments is some kind of a central authority, an insurer which the parties accepting payments would trust.

Check out gocoin - my original project of full bitcoin node & cold wallet written in Go.
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June 09, 2014, 06:30:38 PM
 #7

On-chain solutions like greenaddress.it's 2-of-2 signing allow 0-conf transactions, provided the merchant trusts ga.it not to double-spend.
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June 09, 2014, 06:43:07 PM
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i like the othercoin idea.
basically it allows offchain spending of bitcoins

edit:
https://bitcointalk.org/index.php?topic=321085.0
https://bitcointalk.org/index.php?topic=319146.0

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cypherblock
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June 09, 2014, 06:53:47 PM
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Well , I see an inputs.io lookalike as the best solution.
It permeated almost all the Bitcoin websites and it had off-chain transactions.

But the problem is , the inputs.io scare has put everyone off the idea for a loooong time.

Your idea is interesting , but on-chain transactions can not happen under 10 minutes.

I'm not familiar enough with off-chain transactions, or the inputs.io debacle,  but starting to look at it (I'm a bit late to the party I know). Found an old post http://gavintech.blogspot.com/2012/07/off-chain-transactions.html from Gavin Andresen (possibly pre-dating inputs.io) about it, so reviewing now.

Anyway, not sure if off-chain is really the answer but we need some way for more instantaneous transactions. Multi-sig may have the answer there somewhere.

CatheryneN
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June 09, 2014, 11:13:56 PM
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I don't think off-blockchain is the answer. This completely undermines and defeats the purpose of the block chain being an open ledger. You might as well be another Paypal. The reasons invoked for off-block chain transactions are that the merchants’ volume is too high for the block chain, that the fees are too high or that confirmation time is too long. For every single of those problems there are known solutions that aren’t detrimental to the block chain ecosystem.
onemorebtc
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June 10, 2014, 12:10:41 AM
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I don't think off-blockchain is the answer. This completely undermines and defeats the purpose of the block chain being an open ledger. You might as well be another Paypal. The reasons invoked for off-block chain transactions are that the merchants’ volume is too high for the block chain, that the fees are too high or that confirmation time is too long. For every single of those problems there are known solutions that aren’t detrimental to the block chain ecosystem.


i dont think any p2p-blockchain can handle the volume if many people use it for buying groceries.

so i see huge value in secure (less then blockchain itself but still secure) offchain transactions.

edit: to clarify: only trustless one which only requires trust in my card (or key or whatever). not a second inputs.io

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June 10, 2014, 12:21:03 AM
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As a merchant you should feel safe accepting a transaction the moment you are able to see it on the network. The amount of hashpower a user would need to control in order to double spend is going to cost WAY more than the $5 coffee you are trying to buy. And even if they did somehow control that much power (hacking a pool or similar) they will probably go after a much larger transaction to make it worth their time and in that case, for a large transaction, I would be willing to wait 10-30min for a few confirmed blocks. Buying a house, for example, isnt a process that can be done in 3sec or less anyway. So once you send the Bitcoin and fill out all the paperwork and do the inspection, the whatever.... you will have plenty of confirms saying the coin is in your wallet.

I really think people are too wrapped around the "6 confirms" thing.

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June 10, 2014, 01:07:45 AM
 #13

In the short term the solution is probably you register your CC with the grocery store and then they let you pay w/ Bitcoins zero confirm.  If you pull a double spend then just charge your CC the amount plus a penalty.   It would be no more risky than accepting CC directly and saves the store the CC fee on most transactions.
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June 10, 2014, 01:17:36 AM
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As a merchant you should feel safe accepting a transaction the moment you are able to see it on the network. The amount of hashpower a user would need to control in order to double spend is going to cost WAY more than the $5 coffee you are trying to buy.

I suggest you spend some time playing with my replace-by-fee tools, especially the doublespend.py script. Double-spending zeroconf transactions is really easy.

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June 10, 2014, 01:30:02 AM
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As a merchant you should feel safe accepting a transaction the moment you are able to see it on the network. The amount of hashpower a user would need to control in order to double spend is going to cost WAY more than the $5 coffee you are trying to buy.

I suggest you spend some time playing with my replace-by-fee tools, especially the doublespend.py script. Double-spending zeroconf transactions is really easy.


Maybe Im mistaken.... I'll have a look at these. Any other info on the topic, I dont want to derail this thread...

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June 10, 2014, 02:04:46 AM
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It may not be bitcoin that makes it safe, but reality.

If you try to double spend at a supermarket, that would probably be your last visit there since they now know your face, there's CCTV etc.

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piotr_n
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June 10, 2014, 09:14:15 AM
 #17

I don't think off-blockchain is the answer. This completely undermines and defeats the purpose of the block chain being an open ledger. You might as well be another Paypal. The reasons invoked for off-block chain transactions are that the merchants’ volume is too high for the block chain, that the fees are too high or that confirmation time is too long. For every single of those problems there are known solutions that aren’t detrimental to the block chain ecosystem.

I think the "another Paypal" solution is exactly what you want here.

The only difference is that this paypal would also provide anonymity and non-reversibility of transactions.
You could create an account there without providing any personal data, possibly even from behind Tor.
The service doesn't care who you are because it does not need such knowledge. It is there to provide instant payments using the coins you first deposited there.

And this approach could also address the transaction volume size.
Because the service does provide insurance for non-confirmed bitcoins transactions, but bitcoin trasnactions will eventually become expensive so the merchants will have an incentive to get single bills paid not through the chain, but "internally". And only withdraw it like once a day.

Of course a decentralized solution for off-chain transaction would be much better, but it is also a much harder problem to solve, so IMHO centralized solutions that focus on anonymity will come out first as more popular (just like centralized black markets or centralized mining pools have).
There is no reason why a service like Bitcoin Fog couldn't be turned into a payment processor - they already have good privacy protection infrastructure and only need to start supporting internal transfers between accounts.

Of course the governments will not like it and their minions will quickly attack the idea all over, using all kind fo cheap propaganda, but who cares about these dicks anyway. Smiley

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June 10, 2014, 11:03:06 AM
 #18

Well , I see an inputs.io lookalike as the best solution.
It permeated almost all the Bitcoin websites and it had off-chain transactions.

But the problem is , the inputs.io scare has put everyone off the idea for a loooong time.

Your idea is interesting , but on-chain transactions can not happen under 10 minutes.

I'm not familiar enough with off-chain transactions, or the inputs.io debacle,  but starting to look at it (I'm a bit late to the party I know). Found an old post http://gavintech.blogspot.com/2012/07/off-chain-transactions.html from Gavin Andresen (possibly pre-dating inputs.io) about it, so reviewing now.

Anyway, not sure if off-chain is really the answer but we need some way for more instantaneous transactions. Multi-sig may have the answer there somewhere.



Well , that post is an awesome idea , requiring lesser trust.

Inputs.io was one of the systems that required complete trust.

You send your coins to Inputs.io , and they write down a balance for you. You can send your coins to other users of that service for low or negligible fees , as the Bitcoins are not really transacted but just the inputs.io records are changed.

You would be charged only when you withdraw , which covers the fees for transferring your inputs.io funds to an external wallet.

I have to say though , inputs.io worked remarkably well , even though it was centralized. Sadly though , it got hacked (or some say it was a man-in-the-middle attack) and the Bitcoin community is not likely to trust something similar again.

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June 10, 2014, 11:14:36 AM
 #19

If only there was some way to establish a network of transaction-risk management companies to assist in cases like these...

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June 10, 2014, 11:20:50 AM
 #20

There is of course the option to lower the block interval, perhaps using Litecoin's code, or developing a different solution to minimise orphaned blocks. I don't like that idea much, there seem to be hard limits to the range of improvement.

Perhaps the POS could accept payment only from devices that sign transactions via RFID (the putative Sigsafe, for example). This would require more sophisticated/expensive attempts at double spend attacks, and so the economic sweet spot for such a trade-off could move into a range where the value of the transaction is worth waiting for 1 confirm anyway.

Another would be to use an ID protocol as a part of the purchase. You shouldn't necessarily be forced to give personal details, just allow the shop to verify and record an ID token that you carry the key for on your mobile phone. The staff verifies the ownership and checks the amount you paid/sacrificed for the ID, then decides whether that's good enough surety for the circumstances and permits a zero-conf.


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