Why should retailers prefer bitcoin over other cryptocurrencies that have shorter confirmation time?


Considering that,

  1. waiting 10 minutes for confirmation is too long in the retail world;
  2. "zero confirmations" will become more risky once bitcoin popularity is high enough and people come up with services (automatic scripts) that try to do massive double spending,

why should retailers consider bitcoin over other cryptocurrencies that have shorter confirmation time, and therefore less potential risk?


Posted 2015-08-07T03:17:06.580

Reputation: 123



Bitcoin is the incumbent in the space with a strong lead. It is not feasible to create faster blocks than about 60 seconds (as short block intervals create a host of other problems). 60 seconds however, is still way too long to wait at a cash register for a payment to confirm, and would be incompatible with current checkout processes.

This means:

  1. Confirmation times cannot be short enough in another crypto currency to make waiting for confirmations feasible.
  2. There are payment processors in Bitcoin that assume the risk of accepting zero confirmation transactions, while this is much less common in other cryptocurrencies. The risk is somewhat calculable, by assessing priority and other features of the transaction.
  3. Retail payments is not where Bitcoin will break into mainstream, as it is the area where it has the least advantages.

So: Right now, zero confirmation payments are possible through payment processors. Later, when "Bitcoin's popularity is high enough and people come up with services that try to do massive double spending", other services will be made use of to curb it. If and when this becomes a huge problem, e.g. multi-signature payments could be used more to change incentives.


Posted 2015-08-07T03:17:06.580

Reputation: 51 063


Because retailers (and everyone else) care about getting their money first (not getting scammed) and about speed second.

That means that security is what matters. Anything less than 10 minutes reduces the security of a blockchain.

Another reason why altcoins fail as a valid alternative is that absolute security depends on the total speed of all miners combined and therefore the size and value (market cap) of the network. Bitcoin had the network effect causing altcoins to remain insignificant.

No need to despair though, Lightning Network will allow instant zero trust transactions. Maintaining the security of the bitcoin network.


Posted 2015-08-07T03:17:06.580

Reputation: 6 046