Can bitcoin be used for instant payment?

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As transactions have to be confirmed, does it imply bitcoin cannot used for instant payment?

Harold Chan

Posted 2016-09-13T04:59:25.287

Reputation: 111

Answers

2

There are situations where accepting a 0-confirmation transaction is low risk, but that's certainly not generally advisable. Double spending a 0-conf transaction is very easy to do with high success rates. So yes, in general waiting for a few confirmations is required.

But Lightning Network is being developed right now by several parties, which is a layer on top of Bitcoin that will allow instant payments without waiting for confirmations at all. It will also allow much smaller payments (micro payments), fast rate (many payments per minute) and lower fees.

In time, LN should eliminate the need for 0-conf transactions completely.

Jannes

Posted 2016-09-13T04:59:25.287

Reputation: 6 046

0

It depends on the willingness of the merchant to risk a very small percentage of failed payments. When the customer sends a transaction with sufficient fee, and all inputs of that transaction have confirmations, the risk of not getting the payment is pretty low. Double spending attacks are economically unfeasible with small payments. However, depending on the miner fees, micro payments may be unattractive for the customer who has to pay the fee.

Hans-Martin Mosner

Posted 2016-09-13T04:59:25.287

Reputation: 564

Does it mean the merchant has to connect to the internet for confirmation in short time? How about street bazaar? Thanks. – Harold Chan – 2016-09-13T06:50:29.960

1Actually, both parties need to have a working connection to the internet; the customer to create a valid transaction (although they might get away with creating a transaction they believe to be valid), and the merchant to check the transaction validity. On a street bazaar, the merchant might have to use mobile internet, and they would certainly not operate a full node on their mobile device. – Hans-Martin Mosner – 2016-09-13T07:17:02.497

1Can't agree with this answer. "very small risk" and other risk downplaying is way too simple (and dangerous) a statement: it very much depends on the sort of merchant, the sort of products etc. For some it may be an unbearable risk. There are several examples of merchants stopping accepting 0-conf transactions. Also: paying party doesn't necessarily need internet, they can bluetooth/direct wifi to the merchant. Merchant doesn't strictly need internet for receiving, but he does for checking validity and confirmations. – Jannes – 2016-09-14T09:02:51.300