> There are many context where a 0conf tx makes sense, mostly IRL.
I'm curious, like what? To me this is more like "someone wrote a cheque but there's no guarantee that they'll give it to you".
I'm curious, like what? To me this is more like "someone wrote a cheque but there's no guarantee that they'll give it to you".
I'd be curious to see the percentage likelihood on both, as well, as I suspect they are very different. Would businesses accept checks if half of them were bad?
Which, again maybe showing my complete lack of knowledge of cheques, is how I thought they worked in the first place.
Bank cheque is a bank-guarantee binded by banker self-verification (almost always good) with no takeback (voiding) mechanism. “block-chain confirmed” is always a good transaction with no clawback mechanism so you must wait until it’s confirmed before receiving your merchandise.
“Cash is king.”
In this case, Steam was selling a digital good that they could be fully revoke if the funds never arrived, so the check ability works very well.
It would have been even better on a smart contract platform where the game license would exist on the chain itself and couldn’t be purchased via a double spend, Chain re-orgs would also sort themselves out in a fully on-chain system.
The security and confirmation of a transaction is not a function of number of blocks, but time since inclusion in a block and total amount of work (hashes) piled on top of your transaction. Generally, 6 blocks (1 hour on average) is considered sufficient certainty of immutability for normal functioning of the blockchain (i.e. not under active attack). One hour for final, and completely irreversible, settlement is absurdly fast in the context of the traditional financial system, which takes days at least for final settlement, and can be much longer for some international transfers.
Small, individual scale purchases only really make sense to do on higher layer transaction protocols, like lightning network (non-custodial and open) or some custodial networks (like a bitcoin backed Visa credit card).
The only model that makes sense for bitcoin is the layer one base chain is a settlement network, with payment networks build on top that aggregate many transactions into one on chain transaction. Think OSI model for networking.
Do you think this applies to cyrptocurrencies that has faster confirmations/block generation? Or is only important when there is a lengthy confirmation?
The amount of work (hashes) represents a real world cost (electricity and mining chips) that can't be undone without massive commitment of these real world resources.
This is the foundation of why bitcoin works.
So basically, people who say their blockchain with shorter block times is "faster" are either fools who don't understand what's going on or conmen trying to pump and dump their bags. Layer one transaction confirmation is about settlement finality, not how fast you can pay for coffee.
(You could empirically estimate by how much by looking at abandoned chain history in a real network, though.)
Proof of stake doesn't solve this problem, as the top stakers end up needing to control (or get coopted by) the monopolies on violence. The traditional banking system is effectively an obscured proof of stake system.
Proof of work also has the nice feature that every watt of energy used to acquire and secure bitcoin is a watt that can't be used for violence.
You might like the work of Jason Lowry, a US Space Force Major who's currently studying bitcoin conceptualized as a new kind of military technology, https://twitter.com/JasonPLowery
How so? Assuming (pseudo-)anonymity for stakers is possible.
And anonymity of stakers who have unassailable control of the network consensus is exactly the problem. If you don't know who the king is or where he lives, then the peasants have zero ability to countervail his control authority when he starts abusing his power. No sovereign nation or person will sign up for a system like that without being violently coerced, like the US does to keep the rest of the world on the petrodollar standard.
Your bank abstracts the underlying inter bank settlement complexity and aggregates all the minor transactions and transfers that individuals do to a small number of larger settlement transactions, likely on the SWIFT network.
When you make a payment, that transfer of money isn't instantly settled. The instantaneous feeling is a service that the bank provides you, but it's an illusion. There are similar experiences being built now on top of bitcoin, like http://strike.me, although the lightning network that Strike and CashApp are building upon actually is instant finality, unlike Visa/Paypal.
This is why comparing bitcoin to Visa or PayPal is fundamentally flawed, since those are both layer 2/3 networks on top of SWIFT.
The proper comparison is with other settlement networks that create finality, like SWIFT. Where SWIFT may take days to create final settlement of a transfer, bitcoin takes ~1 hour depending on how much confidence you want. Where SWIFT is secured by nation state monopolies on violence and global banking gatekeeping, bitcoin is secured by the most powerful computer network on the planet that no single nation state has the power to disrupt. Bitcoin is open and permissionless and anyone and everyone can join. SWIFT is tightly permissioned because it relies heavily on exclusive networks of humans who trust each other.
Bitcoin does not provide sufficient privacy which allows exchanges to freeze tainted coins and authorities to track down real identities.