Bitcoin And Consumer Protection
When Bitcoin became better known, one of the most publicized characteristics of it was the protection against double-spending. It would ensure that no money would be lost or stolen within the system. In this article, we will review this protection model and its relationship with the consumer protection.
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Protection against double-spending is composed of two mechanisms.
Transactions public record (blockchain)
When a transaction is made, it is recorded in a global ledger called blockchain, which has existed since the creation of Bitcoin. There is a record of all the transactions ever made until today. This record is like a bank statement. It contains all credit and debit transactions of all Bitcoin wallets that have been around since the beginning of the network. That is why it is possible to know the current balance of each one of them. This information is public and constantly audited for checking its veracity.
Impossibility of transaction rollback
If there was a mechanism to reverse a transaction issued, to return the Bitcoin sent from one address to another, this would mean having to delete a record in the blockchain. And also subtract the balance within a wallet and add this value again in the wallet that made the payment. This mechanism, by itself, is extremely complex to program. It could open enormous possibilities for malicious people try to find ways to subtract money from other people. So, this mechanism was not created, and the transaction, when confirmed by the network, cannot be undone.
How about the consumer protection?
All this ensures that a transaction, once made, cannot be undone. And that the balance of your Bitcoin wallet will always be updated. But it does not give you any protection as a consumer, am I right?
One thing we must remember is that the Bitcoin processing network was made to give the owner of the money (you) more control over ways to handle it. It's like having physical cash in your wallet. But with the extra security that if someone steals your wallet and do not know the password, they will not be able to steal the money from the wallet. This is your guarantee that no money will be taken from your wallet if you do not let it happen. Therefore it would not be necessary to have a reversal operation to return a money improperly removed.
But, as a cash transaction (for example, pay the painter who works for you), if something does not happen as expected, your protection as a consumer resides in a system outside of Bitcoin processing network (protection laws to the consumer, for example). The Bitcoin was only the payment method chosen for the transaction. It is not an entity that guarantees your money back if something undesired happens.
So always seek to buy services or products from companies that you can trust. Also, search for the ones that have an efficient customer service system. The better one is that you can call to get your consumer rights respected and have any damage repaired.
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