Author: Justus Ranvier 2015-02-22 16:00:05
Published on: 2015-02-22T16:00:05+00:00
In a message signed by Matt Whitlock, he recounted an incident that happened to one of the merchants at the Bitcoin 2013 conference in San Jose. The merchant had sold some T-shirts and accepted zero-confirmation transactions which depended on other unconfirmed transactions that never confirmed, leaving the merchant without their money. Whitlock has repeatedly warned people not to accept transactions with zero confirmations but no one seems to be listening. However, he suggests a better solution is to track the failure rate of zero confirmation transactions and adjust prices accordingly to cover the expected loss. In his opinion, this is what every merchant already does since there are no payment methods with a 0% fraud rate. Even physical cash has a probability of being counterfeit, and the prices you pay for things at a convenience store already have that risk priced in. He argues that the idea that zero-confirmation transactions require a 100% guarantee is a strawman, especially since there exists no number of confirmations that actually produce a 100% irreversibility guarantee. Zero-confirmation transactions can work as long as the risk of reversal is measurable and reasonably stable.
Updated on: 2023-06-09T17:38:37.845870+00:00