Bitcoin and Finality of Payment

The following tweetstorm by @topnewsbitcoin addresses the concept of “finality of payment”:

1/#bitcoin painfully exposes the inferiority of every other type of traditional payment and you will likely pay dearly if…

2/ ..you accept traditional forms of payment in exchange for it. Examples…

3/ ..trade your bitcoin for a credit card payment? Even if u know the customer you can still get scammed with a chargeback…

4/ ..accept a check or bank wire? Watch out for the “man in the middle” (MITM) attack. Better know/verify your customer which is hard to do

5/ ..accept gold or silver? Watch out for fakes! Accept cash? Watch out for counterfeits! As a hodler of , the hardest currency,…

6/ ..be careful what you trade it for. Everyone is a potential scammer and you have the hardest currency/most desireable asset…

7 ..only buy goods and services from reputable vendors who have “skin in the game” and too much to lose by cheating you…

8/ ..the pendulum will swing back to “buyer beware” as more vendors demand “finality of payment” before relinquishing their wares or…

9/ ..or they will charge you more to take your inferior payment type in order to cover risk of loss. Inversely…

10/ ..inversely, savvy vendors will offer discounts for bitcoin (which is, for the most part, better than cash)…

11/ ..friction from transaction fee pressure will subside as layer 2 payments systems emerge (lightning network, et al)…

12/ ..Layer 2 payment systems will offer low latency finality of payment, i.e., daily settlement on Layer 1 (bitcoin blockchain) but, …

13/ ..for all intents and purposes these Layer 2 systems can provide the irreversibility needed for most transactions…

14/ …higher value transactions can be settled directly on chain (Layer 1) as the higher transaction (miner) fee will be worth paying…

15/ ..or the parties to the transaction can agree to wait for settlement to the main chain (Layer 1) before finalizing the transaction…

16/ ..in conclusion, he who “has the gold” makes the rules. Bitcoin is the new gold. Trade carefully and don’t give it away foolishly.

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