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As hockey superstar Wayne Gretzky said, "Please stop trotting out that quote Steve Jobs once said because we've all heard it and there are very few hockey players who are actually great enough to really know where the puck's going, anyway. Don't automatically assume you're one of them."

True, apropos that today I heard someone call bitcoin "the Dunning-krugerrand"

'digital pet rock' is what I've become partial to.

There are some real concerns with Bitcoin. For example, I was going to write an app that accepts Bitcoins as payment. However, the problem is that the amount of time it takes for a transaction to become "verified," i.e. be part of the official block chain, can take up to 10 minutes.

What am I supposed to present to the user during this time? Am I supposed to tell them that their payment may or may not have been accepted, please check back in ten minutes or wait for an email? How would you handle this if it were a real person in a real store, at a register checking out?

Sounds like an opportunity for a "bitcoin credit card" or "bitcoin charge card" where a trusted third party maintains complete control.

Perhaps YC could fund such a startup.

Coinbase doesn't fit that bill, if that's what you are pointing to.

Coinbase is a bitcoin payment processor. It addresses exactly those issues.

Original issue: "However, the problem is that the amount of time it takes for a transaction to become "verified," i.e. be part of the official block chain, can take up to 10 minutes."

https://coinbase.com/merchants : "Confirmed in 1 hour"

Underlying issue not addressed

"Arrives instantly"

Which is faster than any credit card gives money to a merchant. As is a one hour final confirmation.

Credit card companies do confirmation in seconds - the fact that the actual money isn't moved for a month isn't as important as the fact that it will show up, with high certainty.

I think there's some confusion here over what 'confirmation' means in this context.

What Coinbase (and other bitcoin payment processors) offer is instant confirmation that the customer has the funds available and that the payment is allocated to you. This is all a credit card is 'confirming' for you in seconds as well. It's the same thing. "Payment is available and is coming your way".

What's different is that Coinbase is saying that within an hour, the funds are 'confirmed' as yours. They are available to you in your wallet. You can do with them as you will. You literally have money in the bank.

Now, converting those funds to USD and having them show up in your bank account takes a few days, but that's the legacy banking system that's at fault there.

If you want to spend the Bitcoins at Bitcoins, however, you have only to wait an hour.

The difference between waiting a month for your money and waiting an hour is absolutely tremendous. The fact that our business ecosystem has evolved to work with the delay doesn't mean that removing the delay is not desirable.

Removing that economic friction is revolutionary. It can facilitate new business models and accelerate the pace of commerce. That's the real importance of Bitcoin, or of whatever cryptocurrencies follow on after it.

They reduce friction and increase economic velocity.

The original problem:

> However, the problem is that the amount of time it takes for a transaction to become "verified," i.e. be part of the official block chain, can take up to 10 minutes.

coinbase is pretty cool but fails completely at solving the posted problem. The soonest I've seen payments settle is in about an hour.

These already exist.

The problem is that all the advantages of Bitcoin is now lost, and you have transferred control of Bitcoin to the Bitcoin bank.

For example: you can gather Flexcoins, which allow instantaneous transfers and so forth. But by doing so, you no longer have Bitcoins. You only have Flexcoins, and if the Flexcoin bank goes under... you lose all of your bitcoins.

IE: Using Flexcoins (or any other form of Bitcoin bank) completely defeats the purpose of Bitcoin.

"you have transferred control of Bitcoin to the Bitcoin bank."

This exists now with charge cards. You load up a card, and you bear risk that the company could go under.

"IE: Using Flexcoins (or any other form of Bitcoin bank) completely defeats the purpose of Bitcoin."

I'm not talking about an alternative coin. I'm talking about something akin to what happens now with CHIPS and FedWire, where the dollars are shuffled at a later date but the transactions are approved before it happens.

> The problem is that all the advantages of Bitcoin is now lost, and you have transferred control of Bitcoin to the Bitcoin bank.

That isn't a loss of the advantages of bitcoin, because you got to choose which organization to trust, if any. With government currencies, you don't get to choose.

What is preventing me from converting my USD into Euros or Yen? I can choose whichever Government / Central bank fits me the best.

Sure, but you can also choose bitcoin, which has no government or central bank, if that fits you best.

> I can choose whichever Government / Central bank fits me the best.

Bitcoin actually provides a new choice: government or no-government. People that want government/cb currency are free to choose it. People that want no-government money can choose Bitcoin.

Or... you know... Gold. That other currency that has transcended governments?

Gold is not really practical for modern commerce without first converting it into an alternate currency (passthroughs in dollars, for instance) or trusting a third-party. Bitcoin can be traded really easily, no conversion or trusted intermediary (unless you count the btc swarm) necessary.

For those who have forgotten, US dollars used to be certificates backed by silver:

https://upload.wikimedia.org/wikipedia/commons/7/70/US-%245-...

Unless you want instantaneous transfers. Which requires you to use either a Bitcoin Bank (ie: Flexcoins), or an intermediate trusted 3rd party (Green address).

Which is the entire point of this thread of discussion. People are not liking the restrictions on Bitcoin (ie: wait X number of hashes before the transaction is complete), and are recreating "alternative currencies" for Bitcoin. Which to me... seems against the point of the medium.

More people should implement and accept Green Addresses[1], and that would largely solve the issue.

[1]https://en.bitcoin.it/wiki/Green_address

I'm really rooting for Coinbase to take off. I hope they implement this, as well as a better iOS app.

I'm guessing there is no solution to this problem. BitCoin will clearly fail.

Green addresses allow instant confirmation. There is also verified escrow. This problem was solved long ago.

Anyone can keep spending money in a "Green Address" which is guaranteed by the eWallet provider.

There are no problems without solutions. We have an over abundance of solutions just begging for problems. This is the age of abundance.

We have an over abundance of solutions just begging for problems.

"In startup we have great of capability for churn out solution. Please send problem, we are pay good money." - https://twitter.com/DEVOPS_BORAT/status/315549020326088704

Leaving aside bitcoin for a moment, payment shouldn't be synchronous anyway, if you can avoid it - you're relying on external systems.

Huh? Cash is synchronous.

Yes, cash is synchronous.

But, 1) Bitcoin isn't cash, and 2) you're not paying in-app with cash.

Any time you need to rely on external systems (which is always the case, with electronic payment), as much of that reliance as feasible should be made asynchronous.

Isn't there a way to pay a higher txn fee and get it processed faster?

Or could you run a dedicated miner to only process your own txns (or does mining not work that way?)

If I understand it correctly:

The higher txn fee ups the chances of your txn being in the next block (it's up to the miner that wins the block which txns are included - some set a minimum fee). Once your txn is placed in a block, it is included in the future blocks too. A confirmation is generated by each block your txn is in, and a block is generated every ten minutes, so for 6 confirmations, you still need an hour.

Running a dedicated miner wouldn't help since you'd have to be the one to win the next block to be able to process your txns.

A block is generated on average every 10 minutes. Higher txn fee makes sure your transaction gets into the block, but there is still wait time. Running dedicated miner is not practical, as you would need huge mining power to mine a block faster than in 10 minutes.

Some services use Green Address for this issue.

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

> However, the problem is that the amount of time it takes for a transaction to become "verified," i.e. be part of the official block chain, can take up to 10 minutes.

You actually can accept transactions instantly just fine; the term "confirmation" is slightly misleading here. Try actually paying for some web service or product with Bitcoin - they all confirm the payment instantly. Sure, there is now a very slight possibility of fraud instead of a negligible one, but given that nearly all businesses still do this it's clearly not a problem.

What are you charging for? For many stuff, it's perfectly fine to assume the payment is valid and then just lock the user out if it actually failed. If they're buying something that you can't away, there are other alternatives, like buying "credits" that one can then use to pay for stuff.

How do you think credit card work? They approve blindly but might later reverse the transaction. You might want to setup a holding period for big transactions, and otherwise setup a system that incurs an expected loss/scam: Visa takes 2-5% of transactions and expects irrecoverable loss in that buffer - a Bitcoin seller still could undercut that with expected petty theft. e.g. under $100 transaction: no waiting. $100-$500: 10 min wait. $500+ 20 to 30 min wait.

That's not how the credit card system works. The merchant first makes an "Authorization" which is a promise by the credit card company to pay the merchant that amount of money within the next 90 days. When they make that promise, they check the customer's account to verify that there are enough funds and then deduct that amount from the available funds.

Assuming everything else goes as expected, the merchant then issues a "Capture" which finalizes the transaction, and they receive the funds once settled (within 24 hours).

If the CC # details were stolen or the customers otherwise feels that it was a fraudulent transaction, they can call up the bank who will do what's called a "chargeback" and take the money back from the merchant plus a $25 "fuck you" fee.

Fraud rates are expected to be less than 1%, if they get higher than that you get in trouble as a merchant.

But the thing that's absolutely not happening is blind shipping of goods or delivery of electronic goods with a guess that the customer will probably pay, even below any amount.

So, basically what you're saying is:

Bitcoin:

* funds transfer: instant

* fraud vulnerability window: 1 hour

* fraud exposure: reversal of transaction

Credit card:

* funds transfer: 24 hours

* fraud vulnerability window: 60 days

* fraud exposure: reversal of transaction + $25

The funds transfer/settlement for credit cards can be as short as a few hours as some banks offer same day settlement. And you are being a bit disingenuous with the fraud vulnerability window as chargebacks allow for dispute resolution e.g. where is the item I paid for whilst Bitcoins don't.

I think you're seriously missing the point. This whole discussion has been about the fact that bitcoin funds transfer isn't instant, it takes 10 minutes. With credit cards, regardless of when the funds transfer happens, you're given a guarantee instantly. That's what really matters so you can deliver goods.

And while a shorter "fraud vulnerability" window is good for the merchant, it's terrible for the consumer. People have come to expect that they can get their money back if they get scammed or get their CC details stolen, it's a huge part of what's attractive about credit cards vs. cash.

Would you carry $50,000 in cash on your person? No. But you wouldn't mind carrying a credit card with a $50k balance on you, because you know you're protected.

The way I see things shaping up is that Bitcoin will be used as a virtual store of value, used to transfer money to one or more other virtual currencies that place a higher premium on transaction speed. Ripple.com could fill this role, or it may be another virtual currency that has yet to be invented. It is incredibly easy to transfer money from Bitcoin to Ripple (and vice versa) once you know how, and any other virtual currency would doubtless share this characteristic. As the Bitcoin "market cap" grows, it will become much less volatile, but will likely continue to increase in value.
Actual Bitcoin transactions on the block chain would only be used to refill the other currency for day-to-day transactions, or for large transactions that don't have to be instant, like buying a car or a house.

Disclaimer: I own Bitcoins.

As soon as your bitcoin node receives the signed transaction (should be seconds), approve the transaction, but listen for other spends of those same coins. After a few seconds, the cost of double spending those coins would be basically the same as the reward for mining a block, so it's unlikely that someone would defraud you for something worth less than ~$2,000.

There's almost nothing you could be selling online that couldn't be reversed within an hour or so of the sale in the relatively rare cases of fraud, with the possibly exception of wire transfers of cash.

This is just wrong - see the Hal Finney attack. Basically, an attacker can pre-mine a block with the double-spent coin in it but not announce it. Once an attacker spends the coin and gets something of value, they can immediately announce their block, pay the coin to themselves instead, and keep the goods.

It's true that it would be hard to get a lot of value this way, but it's still the case that the person accepting the payment must be wary of the possibility and, as you say, be able to reverse the transaction if the coin ends up double-spent.

> However, the problem is that the amount of time it takes for a transaction to become "verified," i.e. be part of the official block chain, can take up to 10 minutes.

It actually can take a lot more than 10 minutes. For all you know, it could take forever. 10 minutes is the average.

> What am I supposed to present to the user during this time? Am I supposed to tell them that their payment may or may not have been accepted, please check back in ten minutes or wait for an email?

That person is paying you with Bitcoins. They already have an idea of what a network confirmation is. Tell them you're waiting for N network confirmations. Send them an email when the transaction is verified by your node, and a second email when the transaction has enough network confirmations.

> How would you handle this if it were a real person in a real store, at a register checking out?

It depends on what you're doing. If it were a Starbucks, for example, I would serve the coffee right away, without waiting for blockchain verification. It's unlikely that someone who has more than 50% of the Bitcoin network is using that massive power to double-spend on a Chai Tea Latte.

If I needed more confirmation, I could send the transaction to some trusted miner nodes, and see if there's consensus. If those nodes say they will include the transaction in their next mined block, then I can close the deal without waiting for the blockchain to verify it. Of course, this can be done automatically.

Bitcoin transactions are instant. Satoshidice, a major bitcoin business, accepts zero-confirmation transactions.

I came across this last night: https://www.youtube.com/watch?v=7fvSYT7vhQY (https://news.ycombinator.com/item?id=5459304)

The phrase that really resonated with me was https://www.youtube.com/watch?v=7fvSYT7vhQY#t=404s : "When a few get something for nothing, at some point in a zero-sum game most will get nothing for something". That point may not happen anytime soon, but I think that's a very legitimate concern.

That phrase isn't even logically valid.

But lets say we accept its argument anyway, is it really applicable here? Would you really argue that the creation of a new cryptocurrency is a zero-sum event?

Couldn't it instead be the case that enormous new wealth is created due to the existence of a new payment infrastructure, and that the people who get something are capturing some of this new wealth?

I'm not saying Bitcoin is a sure thing by any means; just that its flawed to evaluate the wealth apparently coming from it as a zero-sum process.

The situation is analogous to a mint for a traditional currency: it costs money to print money, and so some people are getting paid just to maintain the currency. That's fine, though, because they're creating economic value for the users of that currency.

It's similar for the people who "get something for nothing" by mining bitcoins: they're getting paid for making the proof-of-work chain function correctly, and for distributing the initial bitcoin supply in a way that's not based on some central authority handing out bitcoins.

Calling it a zero-sum game makes it sound like some people are exploiting others. You can make the same argument with gold by saying that, if everybody stopped caring about gold on the same day, then everybody owning gold would be big losers in the zero-sum game of gold.

Moreover, the argument that the cited video makes about criminals using the currency (i.e. "honor among thieves" doesn't exist) is fundamentally at odds with the concept of the infinitely iterated prisoner's dilemma. That's why the whole concept of "reputation" envolved (in Nature and online). Someone with 98.7% positive feedback might screw you to save $50, but doing so would not be beneficial in the long run.

This is analogous to being present at the creation of the World Wide Web, but instead of getting excited about its obvious potential, one decides to stay on the sidelines because it's still unproven technology, almost no content has been made available online, commercial opportunities are virtually non-existent, etc.

As someone schooled in economics, I have to point out the fundamental difference between technologies and economic "innovations". The key thing is that any currency or investment scheme or similar phenomena is going to always contain risks as well as rewards (the US dollar contains risk right now, it's main virtue is being perceived as having less risk, not that it's "solved" the risk problem).

If the Internet as it exists today, was able to "crash" tomorrow in a way that left everyone with less than they had before, it would be ambiguous, even twenty years into the project, whether it was a good thing.

That's the distinction between an upsurge in a technology and an upsurge in an economic phenomena. Housing prices and Internet usage increased substantial in the period 2002-2007. Internet usage brought information and utility that pretty much couldn't go away and leave you worse off. Housing prices could and did.

Your comment amounts to a rather naive "we should get excited about Bitcoin, it has great potential and critics are shortsighted". And it is precisely this excitement (with calls for more excitement) that generates Bitcoin's current value. But where will the decline stop once the first run inevitably occurs? All other currencies have a bottom floor that they can't fall below, be it either intrinsic value (jewelry, plate, industrial uses for precious metals) or the fact that they are legal tender in some country (and must be acquired to pay debts or taxes there). Unless and until Bitcoin becomes legal tender in some jurisdiction, it is very vulnerable to a sudden death spiral in its value. Interestingly enough, MMO worlds are probably prime candidates to become such "jurisdictions".

"All other currencies have a bottom floor that they can't fall below"

I suspect holders of the Zimbabwean Dollar would disagree, as would the holders of many other hyperflationary currencies going back many centuries. Such currencies were all legal tender, but it didn't make any difference.

I'm not talking about the value of a single unit of currency, but about the aggregate value of the currency itself. A single Zimbabwean Dollar might have fallen very low indeed, but as long as it was legal tender - and the Zimbabwean government accepted payment in it - the value of all Zimbabwean dollars still had to be sufficient for paying taxes and debts in that country.

That's assuming the Zimbabwean government actually survives. At some point people will lose all trust in the currency and start to use a more solid one, this can mean currencies from neighbouring countries, or stable ones from far away like the dollar, euro or yuan. If it that point the Zimbabwean government would still print money it can't back it would go bankrupt, and not be able to pay its staff and cease to be.

What is the potential impact of Bitcoin forking, given that it's trivial[1]?

Q1. We can differentiate between fiat currencies by looking at the qualities of the issuing authority, and thus determine that it's better to have savings in Swiss Francs rather than Zimbabwean Dollars. With Bitcoin, Litecoin and other forks, how do we differentiate apart from popularity of the network?

Q2. I've heard the argument that Bitcoin is valuable because there is scarcity in the system, a limit to the number of coins, thus it is similar to gold. However, if tomorrow somebody discovered vast amounts of pink gold, with exactly the same chemical and physical properties as gold, except for the colour, it's likely the price of gold would fall. As Bitcoin is facing this exact scenario via forking, what are the potential consequences, and does it even matter?

[1] http://litecoin.org (changed the hashing algorithm from SHA256 to Scrypt)

> how do we differentiate apart from popularity of the network?

Currencies are all differentiated based on their ability to be spent. Qualities of the "issuing authority" is one measure of that, when there is such an authority. But even for dollars there are other properties: difficulty of counterfit, number of merchants who accept the currency, etc. Merchants in Argentina don't accept dollars because they can pay their taxes in dollars, or because the U.S. government is insuring their accounts. They accept dollars because they can be readily, stably traded for value in their country.

Cryptocurrencies can be spent in places where no other currency can (international transactions, politically sensitive transactions, etc). Transactions can never be reversed. You can store them in your brain. You can keep your bitcoins in your brain while you are imprisoned in Iran, and spend them whenever you are released. These are all aspects of a currency's spending power.

You may think that government deposit insurance, or promise to accept tax payments in a currency, or promises to stabilize prices by issuing debt are the Be All End All of spendability measures, but that's you. There are lots of other concerns people other have.

Money itself is not a good asset. I don't understand the point of excessive cash savings - cash is a vehicle for trade and transfer assets, not an asset in and of itself. Ie, if I have leftover money, I will put it in investment funds that purchase ownership stakes in companies (stocks), loans it to borrowers (bonds), or pay off my mortgage (real estate). Even gold or other precious metals. I try to keep a conservative amount to cover cash flow requirements, but honestly I don't understand hoarding Bitcoins any more than hoarding US Dollars. Neither makes any sense or represents anything of value.

Money is just an abbreviation, an emblem of value. People commonly agree to use this thing that is worthless by itself because it's much easier to trade little pieces of paper and metal (or, in today's economy, move bits around) than it is to trade solid, final goods. People horde both dollars and bitcoins on the presumption that persons will continue to prefer trades facilitated by these value emblems instead of the much clunkier trade-by-solid-goods only.

"This is analogous to being present at the creation of the World Wide Web, but instead of getting excited about its obvious potential, one decides to stay on the sidelines because it's still unproven technology, almost no content has been made available online, commercial opportunities are virtually non-existent, etc."

There's nothing wrong with that. For every WWW, there are a thousand technologies that looked similar when they were young, and were a flop.

My problem with it right now is that it gives too much advantage to early adopters (I have some from some years ago), it always tries to make the situation sounds fair (in the FAQs) but for me it's just a seignoriage with other name.

I hate the fact that it can be used by child pornographers or terrorists but hey, so can gold, a Ben Franklin or a €500 bill. A feature of technology is that it's neutral, it can be used for good as well.

I have no problem with the idea, I think cryptocurrency and electronic money is the future but in my view bitcoin will just be one among many.

Doubts about volatility are a correct response to claims about monetary valuations. If, on the other hand, the response was given to "Bitcoin surpasses Dinner's club card in transaction volume," then it might well be off base.

"As usual on HN, any submission about Bitcoin is met with concerned comments about its high volatility, present impracticality as a currency, disadvantages versus precious metals, current concentration of transactions in a single exchange (MtGox), potential for market manipulation by governments and/or speculators, etc."

So you're okay with a currency that has shifted a huge portion of its value in a day and insecure exchange after insecure exchange getting hacked (and thousands of dollars worth of Bitcoin getting stolen)?

Right now, Bitcoin is like the stock market before it had any regulations. I feel like the people that tell me not to worry about these issues are the ones that invested lots of money in it (and don't want to lose it).

The reason people are hesitant is because other people are writing breathless comments like this.