Is speed an issue when it comes to Bitcoin transactions?
George Peabody, Senior Director of Glenbrook Payment consultants, writes about Bitcoin transaction speed and questions the digital currency in terms of its failure to match the transaction speed of electronic payment methods.
Peabody breaks down the payment speed into 3 categories:
Slow: A ten minute wait for the merchant to be informed that the transaction has been confirmed after six nodes on the network have cleared, with little risk when delivering goods (cost of 0.0005 btc).
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Medium: The merchant is informed after one node has cleared, a faster transaction but some risk is rendered regarding the safety of delivering goods (cost of 0.0005 btc).
Fast: The merchant receives an unconfirmed message very quickly and risks the transactions completion by delivering goods before security checks have taken place (cost of 0.0005 btc).
Alternative: A miner/processor picks up and writes the transaction at no cost with an estimated hour predicted for receiving a transaction confirmation, depending on the transaction volume of the network.
He goes onto explain that risk is thus proportional to delivery time. For example, in e-commerce, Bitcoin processing speed is less of an issue than it is in POS whereby an immediate exchange of goods and services is rightly demanded by the consumer. With e-commerce, this immediacy is not required except for products such as movie downloads or e-books in which cases, the merchant may take the risk of a fast transaction time even if confirmation is unconfirmed (without enough time for security checks before delivery). He explains that the risk tends to be worth the taking here because of the small value of the goods in question.
Several Bitcoin supporters have responded to Peabody’s evaluation with interesting idea to add to the Peabody’s conversation. One such commenter says: “With one confirmation you are pretty much guaranteed the Bitcoin funds are irrevocably settled. Sure, there may be a black swan every hundred thousand blocks like the hard fork a few months ago that might possibly affect a tiny percentage of users. But the probability of being personally affected, the effect being material and there not being other recourse is essentially nil.”