SOMEALTEXT

What Are Bitcoin Transactions With Zero Confirmations?

kingdice"

An interesting topic was raised on Reddit a while ago about whether or not Bitcoin transactions with zero confirmations should be accepted or not. Most Bitcoin payment processors will protect users against any double-spend attack that might occur, and process payments as soon as the transaction is unconfirmed on the network. But what about those people not relying on payment processors?

Also read: How Does The Fold App Work?

Bitcoin Transactions With Zero Confirmations Are A Risk

TheMerkle_Bitcoin Transactions Zero Confirmations

Even though most people are not too worried about becoming the victim of a Bitcoin double-spend attack these days, there are always certain risks that are all but impossible to mitigate. The Bitcoin transactions with zero confirmations, for example, pose a real threat to digital currency enthusiasts and companies, although part of that risk can be mitigated by the payment processor.

While companies such as BitPay, BitKassa, and various others will convert Bitcoin payments to its fiat currency value when there are zero confirmations, they are taking a big risk in doing so. Bitcoin double-spend attacks are very uncommon, and even if it would occur for a small amount, no significant damage has been done. But not everyone is using a payment processor account to accept bitcoin payments.

Freelancers, artists, and most everyday Bitcoin users will deal with payments coming directly from other users. Most people will wait until the full six network confirmations have been reached before spending the funds, but that is not always possible. Sometimes, payments have to be sent out again immediately, to an exchange or a different user.

Coinkite’s Rodolfo Novak explained Bitcoin transactions with zero confirmations as follows:

“0-conf is not Bitcoin; you can never fully trust those inputs, no matter how amazing your snake oil statistical algorithm. If you are selling a digital good, you could still release the item, for physical things they won’t ship for a few hrs, for in person things you can just wait or wait for judgement, etc.“

In the end, there is no way anyone can ever trust Bitcoin transactions with zero confirmations as they always carry a particular risk. The more confirmations on a  transaction, the better. However, as this process can take between several minutes and a few hours, a lot of people prefer not to wait around and take the risk by spending incoming funds right away.

Source: Reddit

Images credit 1,2

If you liked this article follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin and altcoin price analysis and the latest cryptocurrency news.