This is educational video series explaining common stumble blocks and misconceptions about Bitcoin!
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Here is a transcript of the video:
First lets get our facts straight.
Bitcoin transactions are not slow, infact they are INSTANT! But confirmations take 10 minutes on average.
A double spend is an attack where the same bitcoin is sent to two different receivers, effectively defrauding one of them, since only 1 can get the coin for real. And the confirmation is supposed to take care of that problem because confirmation is a process during which the network checks if that bitcoin, has NOT been spent already.
So, after the first confirmation the risk of double spending is small and decreases exponentially with every next confirmation. Making it harder and more expensive for an attacker to execute it.
But who wants to wait 10 minutes to SAFELY pay for a coffee? Well that’s not necessary, here are the most common use cases:
– Let’s say you buy some online service and double spend it to your own address right after that. They will know you cheated within 10 minutes when the first confirmation occurs and cancel your service.
– What if you buy a tangible item online? Well nobody ships within 10 minutes, so again they will find out before they ship.
– What if you buy $10 000 TV in a local store and walk out before the first confirmation? Well it will be like paying with fake money or stolen credit card, in either case you give them nothing. Which is actually a crime and they have long established practices to counter-act those scenarios. And most probably you will be on camera. Well some merchants might require 1 confirmation for larger amounts but then waiting 10 minutes is usually ok.
– If you buy small stuff like coffee you don’t wait at all. The merchcant simply takes the risk. There is risk calculated in the prices anyway because of fake money and credit card fraud. Infact it’s easier with bitcoin, because they will know you scammed them within 10 minutes, while with fake money they will find out at the bank, and won’t know who gave the fake notes. With credit card fraud it often takes months for the chargeback to hit them. So, you can do that only once per coffee shop and you have to be fast 🙂
– The only case where there is significant risk is when you get intangible items instantly, it can be content or another crypto currency from an exchange. That’s why there is no exchange that lets you use your coins before you get at least 3 confirmations of the deposit.
So, it might look impractical and cumbersome to use at first, but as soon as you try it for real you will see that it’s FAST, SAFE and EASY.
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