Bitcoin Commerce and Ecosystem Flashcards

What is a Bitcoin payment processor primarily used for in e-commerce?

Answer: To convert Bitcoin payments into fiat currency for merchants

Bitcoin payment processors like BitPay or Coinbase Commerce convert customer Bitcoin payments into fiat currency, reducing volatility risk for merchants.

Which of the following is a key advantage of Bitcoin for cross-border commerce?

Answer: It eliminates foreign exchange fees and banking intermediaries

Bitcoin allows direct peer-to-peer cross-border transfers without currency conversion fees or correspondent banking delays.

What does 'zero-confirmation' (0-conf) mean in a Bitcoin transaction context?

Answer: The transaction has been broadcast but not yet included in a block

A zero-confirmation transaction has been broadcast to the mempool but has not yet been mined into a block, making it unconfirmed.

A merchant accepting Bitcoin for a $50 item wants to minimize exposure to price swings. What is the best approach?

Answer: Immediately convert Bitcoin received to USD using a payment processor

Using a payment processor to auto-convert Bitcoin to fiat at time of sale eliminates volatility risk for the merchant.

What is the role of a Bitcoin exchange in the ecosystem?

Answer: To provide a marketplace where Bitcoin can be bought and sold for fiat or other assets

Bitcoin exchanges provide liquidity and price discovery by matching buyers and sellers of Bitcoin against fiat currencies or other assets.

What is 'merchant chargeback risk' and how does Bitcoin address it?

Answer: Bitcoin transactions are irreversible, eliminating chargeback fraud that affects card payments

Unlike credit card payments, confirmed Bitcoin transactions cannot be reversed, protecting merchants from fraudulent chargebacks.

Which Bitcoin ecosystem participant is responsible for relaying transactions to the network?

Answer: Full nodes

Full nodes relay valid transactions across the Bitcoin peer-to-peer network and enforce consensus rules.