Credit card transactions can be reversed weeks/months after they are made
Exactly.
The instant approval from the credit card company is a close analogue to a signed transaction. Both prove that the person has the funds available and that they have the authority to authorize the transaction.
The 40-minute confirmation delay is roughly equivalent to the 6 months or so that it takes before credit card transactions become irreversible. At approximately one block mined every 10 minutes, after 40 minutes there would a 4-block-long chain including the transaction. The idea that someone with the resources necessary to discover 5 blocks before everyone else in the network could discover one block would bring them to bear to steal a cup of coffee is insane.
If I'm selling convenience goods - say, under $100 - I'm fine with zero-confirmation transactions. If we're talking $100-$1000, I'd wait until the network confirms it once. If I'm selling you a house, then I'll buy you lunch while we wait an hour or so for 6 confirmations.
Grocery shopping is regularly over $100. A single network confirmation typically takes 10 minutes, but can take as long as an hour. (Block 152218 took 1 hour 40 minutes). Of course, there are plenty of examples where a blockchain was calculated in seconds... but such is the random nature of waiting for blockchain confirmations.
A quick back-of-the-envelope calculation says that 30% of the time, blockchains will take 20 or more minutes... and 5% of the time, blockchains will take 30 or more minutes. Are your customers willing to wait 30 minutes 5% of the time while doing their groceries?
Hell no. Waiting for even a _single_ blockchain takes too damn long, even if you reserve it for substantial amounts of money like $100+ transactions.
As a merchant, I would certainly prefer to suffer the loss of a few small transactions than pay 2 to 3 percent of every transaction to a payment processor. I imagine losses due to double-spends would be comparable to those of accepting counterfeit currency--miniscule, due to the high-risk of perpertrating fraud for such a small reward.
Comments
Exactly.
The instant approval from the credit card company is a close analogue to a signed transaction. Both prove that the person has the funds available and that they have the authority to authorize the transaction.
The 40-minute confirmation delay is roughly equivalent to the 6 months or so that it takes before credit card transactions become irreversible. At approximately one block mined every 10 minutes, after 40 minutes there would a 4-block-long chain including the transaction. The idea that someone with the resources necessary to discover 5 blocks before everyone else in the network could discover one block would bring them to bear to steal a cup of coffee is insane.
If I'm selling convenience goods - say, under $100 - I'm fine with zero-confirmation transactions. If we're talking $100-$1000, I'd wait until the network confirms it once. If I'm selling you a house, then I'll buy you lunch while we wait an hour or so for 6 confirmations.
Grocery shopping is regularly over $100. A single network confirmation typically takes 10 minutes, but can take as long as an hour. (Block 152218 took 1 hour 40 minutes). Of course, there are plenty of examples where a blockchain was calculated in seconds... but such is the random nature of waiting for blockchain confirmations.
A quick back-of-the-envelope calculation says that 30% of the time, blockchains will take 20 or more minutes... and 5% of the time, blockchains will take 30 or more minutes. Are your customers willing to wait 30 minutes 5% of the time while doing their groceries?
Hell no. Waiting for even a _single_ blockchain takes too damn long, even if you reserve it for substantial amounts of money like $100+ transactions.
As a merchant, I would certainly prefer to suffer the loss of a few small transactions than pay 2 to 3 percent of every transaction to a payment processor. I imagine losses due to double-spends would be comparable to those of accepting counterfeit currency--miniscule, due to the high-risk of perpertrating fraud for such a small reward.