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Comment by toomuchtodo | Hacker News Reader

Does Overstock.com have to wait at all for the transaction to be verified by the hashing network? Or do they consider it immediately verified?

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There's no actual bitcoin transaction going on that needs to be verified. When he purchased his watch, Coinbase decremented his balance in its database, and incremented Overstock's balance in the same database. No currency (crypto- or fiat) is involved until someone wants to make a deposit or a withdrawal.

So... sort of like a bank?

Coinbase is the PayPal of Bitcoin.

For Aaron: Aside from the 53 money transmission agent licenses both are required to hold, but only PayPal actually has.

Considering they aren't charging a 20% transaction fee, I like them better already.

Yes, just like a bank. Is that a bad thing?

Having a Bitcoin bank as a middleman is probably the best model for the majority of payments. But Bitcoin's appeal lies in its flexibility. Bitcoin is just a protocol: payments can go through a bank, but they don't have to.

An open source currency if you will.

I think you're reading too much into my comment.

One of the primary advantages of Bitcoin is its decentralization. I realize that Bitcoin != Coinbase and that Bitcoin provides a foundation for many potential services, but if everybody starts using Coinbase/<insert third-party name here> to handle their transactions, what's the difference? Where is the decentralization?

Just because overstock is using coinbase doesn't make it any less decentralized. Either party on both ends of the transaction can be using coinbase, or they can use another service, or they can just send things manually via the commandline (bitcoind, et al). If they were using something like dwolla, then as a consumer, I too would have to use dwolla ... but bitcoin is open.

For this customer specifically, yes. However, anyone that doesn't use a Coinbase account will be sending actual Bitcoin.

No one will be sending Bitcoins to Overstock.com. All of the Bitcoin payments will be processed through Coinbase.

That's the half of the transaction the grandparent comment didn't talk about. He was talking about the fact the customer in question paid using his Coinbase account so no crypto currency was technically moved as a result of that transaction.

...Not that I think it's a bad thing if a bunch of Bitcoin transactions (especially microtransactions) go off the blockchain, I just wanted to point out that off-blockchain transactions weren't inherent to accepting Bitcoin through Coinbase.

Dunno about overstock but when i'm buying humble indie bundles with bitcoin, they use coinbase too and i have no coinbase account. I just scan the QR code using my android bitcoin wallet (called mycelium) and tap 'send'. No confirmations needed, beause it's small ammounts. Maybe overstock will need some confirmations for larger purchases.

So yes, there is actual bitcoin transaction going on if you don't have coinbase account.

I would think that most merchants who asynchronously fulfill will assume the transaction was successful, then have a callback to validate before shipment and handle failure scenarios.

Completely agree. Was just curious if it showed up in the UX at all.

For a transaction that either isn't shipped immediately (any retailer of physical goods) or that you can rescind (digital item with DRM), it's perfectly safe to accept a transaction that has been propagated to the network but that hasn't been 'confirmed' yet.

However, you wouldn't want to, for example, run a gambling site that accepts and pays out bets immediately after they show up as 'unconfirmed' because you wouldn't have recourse if they managed to double spend.

I used the Bitcoin client on my phone, after the transaction went through I clicked "Confirm transaction" and it has already accepted it. I'm guessing with smaller transactions they just assume it went through, otherwise they don't ship it within the hour you get the order, so they have some protection against doublespends.

I'm guessing that Coinbase monitors the Bitcoin network to detect double spends. A malicious double spender has to broadcast the second transaction very soon after the first. If you're processing Bitcoin transactions, you can just look for a second one. I think the chances of a second transaction succeeding if it's issued 30 seconds or more after the first are pretty low.

You can't spend Bitcoin without the public knowing, and that goes for double spending as well.

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