One particular online Bitcoin shop was the victim of several double-spend attacks while using BitPay as a payment processor. While BitPay lets merchants accept payments as “completed’ at zero- network confirmations, it is still; possible to double-spend funds. This highlights the need for payment processor ‘insurance’ all transactions will be honoured when dealing with zero-confirmation payments.
A Bitcoin Double-spend For US$20
According to the Reddit post, this online shop sells in-game items, mainly for CS: GO. Throughout the years, this game has become increasingly popular. Gamers are always looking for the newest skins to show off. Some of these items can go for several hundred dollars on the market.
Due to the correlation between Bitcoin and gaming purchases, the online shop signed up for BitPay as a cryptocurrency payment processors. This means the shop will always receive the funds, and payments are deemed complete once they are visible on the blockchain. In most cases, this would not be a reason for concern, as most transactions go through without a hitch.
But things started going astray not too long ago, as several double-spend transactions were recorded. While this will not cause financial losses to the store, it is an intriguing event. Most people would not even consider double-spending to be an issue for small purchases. Then again, with next to zero costs associated with an attempted zero-confirmation double-spend, it is always worth a shot to some people.
At the same time, people have to keep in mind a zero-confirmation double spend has no 100% success rate either. It is certainly possible to do so without much technical knowledge. However, the particular buyer in this case managed to successfully to do so for all five transactions, which is rather worrisome.
All of this goes to show Bitcoin payment processors will need to work on denying double-spend attacks from happening. For now, BitPay is not even using replace-by-fee yet, which would only make the problem worse. Thankfully, these attacks will not work for buying physical goods, as those transactions usually verified more carefully.
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